Sales Activities

TGC-1 is a participant of the wholesale electricity and capacity market and carries out operations of electricity and capacity purchase and sale both within the framework of regulated contracts and at free prices.

One of the mechanisms of the capacity trade by the transitional model rules is the capacity purchase and sale based on the results of the competitive capacity selection (CCS) determining the list of generating facilities, whose capacity will be on sale on the wholesale market, and prices.  According to the results of CCS conducted in 2009, the entire new equipment passed the selection procedure, and NP Market Council approved the 2010 tariffs for facilities to be commissioned.

Russian Federation Government Regulation No. 89 dated February 2010 approved the amendments to the wholesale market rules ensuring the start-up of a long-term capacity market model.  The long-term capacity market model differs significantly from the transitional one. The differences bear upon, primarily, the economical principles provided for by the model and that impacts all mechanisms of the capacity trade.

According to the new rules, the long-term CCS is the primary competitive mechanism ensuring the sufficient volume of capacity with the required specifications on the wholesale market. Such CCSs are conducted for four years to come that corresponds to the period, for which a new CHPP can be built and provides suppliers with an opportunity to participate in it with respect to generating facilities to be yet constructed.  In view of the fact that capacity supplies against the new rules shall start from the 1^st of January 2011, the first long-term selections for the period from 2011 to 2015 are conducted much earlier to the year of the capacity supply.

Thus, CCS for 2011 was conducted on December 8, 2010 as the first selection carried out in accordance with the new rules. As a result of CCS for 2011, in the European energy zone the maximum price for capacity was established in the amount of RUR 118.1 thousand for 1 MW per month, in Siberia – RUВ 126.4 thousand, and in the free flow zones of the Centre and the Ural - RUВ 123 thousand for 1 MW per month.

Power purchase agreements (PPA) constitute a new mechanism, which was not included in the transitional wholesale market model. PPA shall be concluded by suppliers with respect to generating facilities specified in the list approved by the Russian Federation Government.  The contractual structure implies that suppliers enter into agency contracts with ZAO FSC. By concluding agency contracts and PPA, a supplier assumes obligations of construction and commissioning of the generating facilities, with respect to which PPA are concluded, and their capacity delivery.  On the other hand, a supplier obtains a guarantee of the payment of the capacity, which will be delivered within 10 years at the price ensuring the return of capital expenditures for the construction with a certain rate of return and the recovery of operational costs.

The first campaign for the PPA execution was finished in December 2010.