The Ural power grid sector suffers from a series of problems: profit and production have dropped, financing of investment programs has been cut, accounts receivable have become looming for power companies. However JSC IDGC of Urals has already launched a cost optimization plan. The company representatives inform us that besides cost optimization they plan to cooperate with consumers directly.
Today the power grid sector in Sverdlovsk region is also affected by the current economic situation. The specialists of JSC IDGC of Urals are open about it. However, Alexey Bobrov, President, states that problems exist but we should not overestimate them as we also have ways out.
The Interregional Distributive Grid Company of Urals has identified its acute problems. «First of all, the production of the IDGC of Urals slumped by about 15% in January in comparison with the last month. Second, earlier we obtained loans for investment programs. Today's loans have become more expensive: our interest rate is 15-17%, just near the upper limit we can pay back. Third, the debts payable by dealers amount to 3.35 billion rubles now. This is all serious for us and equals to 10% of our earnings. I should say that the whole investment program of 2008 cost 3.4 billion rubles and we completed it in full. We don't have any problems with the household sector, only production enterprises have debts,» Alexey Bobrov told us.
Today the IDGC of Urals cut all the expenses aimed to provide extra comfort (for example, business class travelling), the company has also reduced its car park by 900 transport units. The essence of optimization is to reduce auxiliary transport (buses, trucks) and leave only special-purpose vehicles necessary for the power system operation. Besides, the company cut expenses on mobile calls to a large extent. The company cut the administrative personnel payroll. «However the reliability, quality and efficiency of power supply will remain on the same level, it goes without saying. Reducing repair and maintenance payments is simply unacceptable,» Mr. Bobrov explains.
The completed investment program-2008 will be adjusted. «It is irrational to expand capacities if some projects are interrupted and some are terminated. To invest money into something which is not in demand is unwise. Even if there is money to spend, there is still a problem with liquid assets as our accounts receivable in the amount of 3.35 billion rubles can be invested into the construction of two power stations of 220 kW. But in spite of the corrections made in our plans we don't put any obstacles to somebody because we postpone only those projects which happen to be non-demanded today. It refers only to the investment program. Our repair programs will barely flinch during the crisis,» Mr. Bobrov explains.
Today the whole distributive grid companies implement a new cooperation model based on direct contracts with no sales companies in between. It leads to more efficient cooperation with power suppliers, reduced expenses and helps avoid the risk of limited power supply of prompt payers due to dealer debts payable to grid companies, as well as provides free choice of a dealer company
The representatives of the IDGC of Urals drew up letters addressed to consumers where they offer to pay the January bills directly, bypassing the sales company. It is caused by the fact that Sverdlovenergo has not signed the power transmission contract for 2009 with the grid company yet. At present the sales company continues to transmit power to consumers through the grids of the IDGC of Urals. The company has not taken any legal action yet.
To respond to such a delay in contract formation and the fact that the dealer company receives payments from consumers including the transmission services the IDGC of Urals appeals to its customers. Legally, due to the lack of contract between the grid company and the dealer consumers should divide their payments: they should pay power bills to Sverdlovenergo and transmission services bills to JSC IDGC of Urals. The letters inform consumers about it. «Our clients should have 69-90% direct contracts with our company. Those who cooperate with us directly are, for example, Sukholozhskcement, Krasnogvardeysk Crane Plant, CJSC Uralskaya Bumaga, CJSC Uraltekhmash, Municipal Unitary Enterprise Tagilenergo,» Alexey Bobrov said. «Today the company continues negotiations with some large businesses which make preparations for new cooperation model with the distributive gird company. Among these businesses are Sverdlovsk Poultry Farm, the Ural Turbine Works, the Ural Diesel Motor Plant, Ural Works of Civil Aviation, Nizhniy Tagil Iron and Steel Works (NTMK)".
Alexey Bobrov emphasizes that they don't want to undermine cooperation with their partners. But if the sales companies stick to the policy they have chosen the company will be more stringent. «We know about the problems of Sverdlovenergo, but we don't accept its position and will defend our company interests as well as those of our shareholders and consumers step by step in a tough way, as we are responsible for the power safety of our region,» said Mr. Bobrov.
The amendments made to the guidelines concerning the connection fee approved on 7 October last year (550 rubles incl. VAT for all consumers up to 15 kW) which could not be applied to the IDGC of Urals will soon inure. The amendments made to the Federal Law «Tariff Regulation in Public Utilities» which contemplate that those engaged in construction and (or) reconstruction of a building, facility, etc., should be relieved from connection payment if such construction leads to increased consumption, are already in effect.
But the company takes the governmental actions with a heavy pinch of salt. «The sector may suffer from a serious system crisis. Everything given free of charge vanishes sooner or later. For example, we have free roads and they are our permanent pain. Positive consequences of such a decision are, putting it mildly, obscure. Yes, we understand support of businesses, including small businesses. We can connect everybody free of charge. However it happens when a company can connect 10 kW but consumers demand 200 kW for free, how can we provide such amount? We won't be able to construct new facilities because there will be no actual grid development resources. There is no compensation of profit loss to grid companies and it is unknown whether it will be granted sometime. Sooner or later industry will take heart, consumption will become stable again, investment programs will be in operation. But the figures of power facilities commissioning will be lagging behind the actual economic demand,» Mr. Bobrov said.