Macroeconomic Analysis
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| Factors in the descending value | |
|---|---|
| State tariff regulation | |
| Description | Electricity transmission and grid connection services are state-regulated activities. Tariffs for the Company's services approved by regulators directly affect the amount of revenue received |
| Current health | The Government of the Russian Federation implements a Tariff Policy based on the "inflation minus" principle |
| Setting tariffs below the economically sound level will lead to underfunding through tariff sources of the Company's current activities and Investment Program | |
| Measures to minimise the impact (if possible) | Economic justification of the costs included in tariffs, including negotiations to factor in the economically justified expenses that are in excess of the costs currently incorporated into the tariffs and the revenue shortfalls incurred during the past periods due to reasons beyond the Company’s control |
| Consistent cost cutting and Investment Program optimising | |
| Implementation of measures to improve pricing in the industry in cooperation with ROSSETI | |
| Power consumption dynamics | |
| Description | Changing energy consumption has direct relevance to the health of the industry |
| Current health | Actual power consumption in the Unified Energy System of Russia in 2020 reached 1,033.7 bn kWh, down 2.4% Actual power consumption in the Krasnodar region and the Republic of Adygea in 2020 amounted to 27,420.5 mln kWh, down 207.6 mln kWh or 0.8% |
| Measures to minimise the impact (if possible) | A range of activities to develop new (non-tariff) types of business and increase non-tariff sources of income |
| Price dynamics on the Wholesale Electricity and Capacity Market | |
| Description | Changes in electricity prices in the wholesale electricity market (WEM) directly affect the amount of compensation for electricity losses in power grids and, accordingly, on all the Company's activities |
| Current health | The single-supply price of electricity on the WEM in 2020 showed a 3.4% increase year-on-year. |
| Measures to minimise the impact (if possible) | Measures to reduce power losses in the grids |
| Current health of the industry | |
| Description | The health of the industry directly affects all aspects of the Company's activities |
| Current health | Heavy wear of the main generating and grid equipment |
| Reduction of the Investment programs in the industry | |
| Default in payment | |
| Tariff policy leading to both under-reporting of financial indicators (cost-plus pricing) and actual unprofitableness of some companies | |
| Reducing power consumption against a backdrop in declining industrial production due to the introduction of restrictive measures to prevent the spread of COVID-19 | |
| Measures to minimise the impact (if possible) | Implementing the concept of digital transformation |
| Introducing the cost management system | |
| Introducing the up-to-date Company’s management tools, automating key functions to improve management decision-making | |