In 2011, the Company’s revenue from providing technological connection services decreased. In comparison with 2010 indicators, income from this activity decreased 23%. This was caused by amendments to the legislation in force governing the setting of fees for technological connection and by IDGC of Centre, JSC’s transfer, from January 1 21011, to RAB-based regulation resulting in the reconsidering of tariff decisions by Russia’s Regional Energy Commissions (REC). As a result of the prioritising of small and medium businesses and the implementation of major investment projects, the growth of Technological Connection is outstripping the revenue growth rate.

The size of the fee for establishing a network connection is established by a Regional Energy Commission, as set out in the guidelines of the federal regulatory authority, the Federal Tariffs Service (FTS) of the Russian Federation (Order No.365-e/5 of the Federal Tariffs Service of the Russian Federation, “On the Approval of Guidelines for Determining the Amount of Charges for Technological Connection to Power Grids” of November 30, 2010).

The charge for a Technological connection should compensate reasonable expenditure for the undertaking of measures to connect a facility to the power grids by calculating the gross revenue requirement (GRR) for Technological connection. As of January 1, 2011 the fee for a Technological connection includes expenses incurred by the construction of power grid facilities (from existing power grid facilities to connected power receivers and/or power industry facilities (“last mile” delivery).

In the same way, since January 1, 2011 the expenses of grid companies on the development of existing infrastructure, including co-operating grid debottlenecking, have been excluded from Technological connection fees and included instead in the power transmission service fee, in accordance with the requirements of Federal Law No 35-FZFederal Law, “On the Electric Power Industry,” of March 26, 2003. This brought about the reduction of the average fee for Technological connection in the area of operations of IDGC of Centre, JSC by 42.5% in 2011 as compared to the previous year.