Key Risks

СР 1

Failure to achieve power supply reliability targets

S

S

1. Repairs of facilities based on their technical condition, taking into account risks and shutdown data. Implementation of measures on taking control readings of electricity meters with the involvement of additional personnel.
2. Continuous professional development of personnel and practical training in safe working practices and methods, including the development of safe behaviour in the workplace and the prevention of hazardous situations.
3. Development and updating of provisions on technological interaction with related electric power engineering entities.
4. Public awareness campaigns via the media about the dangers of approaching and being in electrical installations, the inadmissibility of violating electrical safety regulations, conducting electrical safety lessons in children’s institutions, and installing the necessary safety signs and placards.
5. Organisation of selective follow-up of measures taken based on the results of investigations into process disruptions (accidents).

СР 2

Deterioration of macroeconomic conditions affecting the Company’s operations

S

S

Where there is an actual decrease of over 30% in the volume of electricity transmission services provided compared to the approved parameters of the business plan for the current reporting period (year) due to objective geopolitical, macroeconomic, man-made, natural and other factors, it shall initiate a change in the approved parameters of the Company’s business plan for the current year in terms of reducing the volume of electricity transmission services provided.

СР 4

Failure to achieve the Digital Transformation Strategy targets

S

S

1. Monitoring of information resources, regular interaction with leading manufacturers of domestic software platforms and solutions in order to assess compliance with the necessary requirements for specific classes of software used in the Company. Working with leading domestic platform and solution providers to create test sites to determine the readiness of their solutions for the Company’s needs.
2. Preparation of a business plan for PJSC Rosseti South for the new financial year, making sure to meet the required share of spending on Russian software and related work (services) in the total spending on software and related work (services).

ОР 2

Occurrence of a work‑related accident

C

C

1. Working with staff in accordance with the requirements of regulatory legal acts in the field of occupational safety.
2. Provision of personal protective equipment and washing agents that have been certified in accordance with the procedure established by the legislation of the Russian Federation, in accordance with occupational health and safety requirements and established standards for employees engaged in work with harmful and/or hazardous working conditions, as well as work carried out in special temperature conditions or involving contamination.
3. Checking that safe working conditions are in place, that employees follow health and safety rules, and that they use personal and collective protective equipment properly.
4. Implementation of measures under the Comprehensive Programme to Reduce Personnel Injury Risks at PJSC Rosseti South.

ОР 5

Overrun of the established target value for electricity losses (%)

C

C

1. Implementation of programmes to reduce electricity losses and programmes to develop smart electricity metering.
2. Scheduling of loss-prevention measures at feeders/transformer substations that are hot spots for electricity losses.

ОР 6

Failure to comply with the deadlines for grid connection

S

S

1. Making sure the Company meets its obligations under previously signed grid connection contracts.
2. Organisation of control over the timely execution of grid connection contracts (at each stage: development of technical specifications, calculation of grid connection costs, conduct of procurement procedure, conclusion and execution of contracts, execution of grid connection contracts by in-house resources) including automation of grid connection activities.
3. Claims and litigation work to monitor the applicant’s compliance with the deadlines for implementing grid connection measures.
4. Timely preparation and submission of materials for approval of the investment programme in accordance with applicable law.
5. Monitoring and conduct of scheduled inspections of grid connection activities.

ОР 7

Failure to comply with the commissioning schedule

S

S

1. Control over the timing of procurement procedures, conclusion of contracts for the preparation of preliminary permissions, design and survey work, and construction and installation work.
2. Supervision of the fulfilment of contractual obligations by contractors.
3. Control over the implementation of investment project schedules.
4. Checking that the Company’s branches carry out commissioning activities in accordance with the Procedure for the commissioning of completed construction projects of PJSC Rosseti South, approved by the Company’s Order No. 10 dated 9 January 2020.

ОР 9

Disruption and/or cessation of the functioning of critical information infrastructure facilities as a result of computer attacks

S

S

1. Administration of information security systems.
2. Timely purchase and renewal of licences for specialised software.
3. Timely maintenance of the Information Security System.
4. Funding for licence purchases and manufacturer’s support.

ОР 10

Unauthorised access to confidential information

S

S

1. Briefing of for newly hired employees.
2. Regulation of processes in the field of confidential information protection.
3. Official investigations into breaches of confidentiality.

ОР 12

Failure to achieve the required staffing levels

M

S

1. Organisation of staff recruitment (from the external labour market, talent pool).
2. Organisation of staff training.

ФР 1

Failure to achieve the planned level of revenue from electricity transmission services

S

S

1. Monitoring and forecasting of electricity consumption broken down by voltage levels, by which the price (tariff) for electricity transmission services is differentiated, and by consumer categories, as well as monitoring of physical parameters of the balance of electricity and capacity.
2. Implementation of measures on taking control readings of electricity meters with the involvement of additional personnel.

ФР 2

Failure to achieve the planned level of revenue from grid connection services

S

S

1. Regular updating of demand for grid connection under previously concluded contracts.
2. Recognition of applicants’ obligations to pay grid connection fees (including advance payments under the payment schedules specified in the grid connection contract).
3. Timely preparation and submission of materials for approval of the investment programme in accordance with applicable law.
4. Monitoring and conduct of scheduled inspections of grid connection activities.

ФР 3

Failure to achieve the planned level of revenue from additional (non-tariff) services

S

S

1. Execution of activities under the roadmap for the development of additional (non-tariff) services.
2. Development of detailed sales plans for competitive services, work to achieve Rosseti’s target indicators for FOCL placement on the Company’s power grid facilities. A set of auxiliary solutions was put in place to optimise internal business processes and hit the targets set out in the business plan.

ФР 4

Overrun of uncontrolled operating expenses

• for the purchase of electricity to compensate for losses,
• for the payment of services for the electricity transmission via TGO, UNPG grids

S

S

1. Working with TGOs and FGCs to agree on planned service volumes for the next regulatory period, including declared capacity, for subsequent planning and submission to state tariff regulators.
2. Contacting the executive authorities of the constituent entities of the Russian Federation in the field of state regulation of tariffs in relation to the tariff balance solutions adopted for the current accounting period.

ФР 5

Overrrun of other operating (controllable and uncontrollable) expenses

S

S

1. Verification of contracts being concluded at the stage of their approval for the presence of planned income (expenses) under the contract in the approved income and expense budget of the relevant financial responsibility centre of the Company.
2. Analysis of factors affecting deviations of actual operating expenses from planned targets and taking measures to compensate for the negative impact of external and internal factors on the Company’s operating expenses.

ФР 6

Overrun of interest expenses

S

S

1. Negotiations with representatives of banking organisations on reducing (not increasing) interest rates.
2. Auctioning to attract credit resources, with the total amount of auctions broken down into several lots, establishment of basic lending parameters based on existing conditions in current loan agreements and monitoring of indicative lending rates of banks to attract more participants to the procurement procedures.
3. Quarterly monitoring of compliance with covenant restrictions under loan agreements.

ФР 7

Overrun of overdue accounts receivable for electricity transmission services

S

C

1. Imposition of penalties (forfeitures) on counterparties that have violated payment deadlines, as provided for by Federal Law No. 307-FZ dated 30 December 2008 ‘On Auditing Activities’.
2. Monitoring of payments and coordination of monthly payment schedules with guaranteeing suppliers.
3. Restriction of the consumption regime in respect of counterparties that violate the terms and conditions of concluded agreements on payment for electricity transmission services rendered.
4. Interaction with the Federal Bailiff Service of the Russian Federation in aid of execution, signing of cooperation agreements with the Federal Bailiff Service of the Russian Federation, control over debt repayment within the framework of enforcement proceedings on received court decisions on collection of overdue debts.
5. Initiation of bankruptcy proceedings against debtor companies. Protection of interests in bankruptcy proceedings of debtors.

ФР 8

Overrun of debt burden level

S

S

1. Achievement of economically sound tariff balance solutions, taking into account the need to ensure that tariffs are not below the level approved in the business plan.
2. Formulation and implementation of a programme to improve operational efficiency and reduce costs.
3. Implementation of measures to reduce overdue receivables for electricity transmission services and settlement of disagreements, control over achievement of the planned level of electricity payment collection.

ФР 11

Failure to achieve planned financial results from electricity sales

S

S

Monitoring and forecasting of electricity consumption broken down by voltage levels, according to which the price (tariff) for the electricity supplied is differentiated, and by consumer categories.

ПР 1

Violation of antitrust legislation

S

S

1. Monitoring of legislation in the field of the Company’s activities and changes in court practice in antitrust cases (issues).
2. Appealing against court decisions that are not in favour of the Company.
3. Inclusion of all grid connection facilities in the investment programme for the purpose of executing subsidised grid connection contracts, including consideration of the possibility of allocating additional sources of financing.
4. Enforcement of the Company’s obligations under previously concluded contracts for grid connection, the term of which has been violated by the Company.
5. Monitoring of compliance with the Company’s executive documents governing court proceedings.

ПР 2

Violation of labour legislation

S

S

1. Provision of the Company with qualified personnel who meet the job requirements for solving the current and future tasks of the Company.
2. Timely and high-quality provision of the Company’s needs for highly-qualified specialists to fill key positions and vacant positions of department heads.
3. Provision of advanced training for the Company’s employees, organisation of professional retraining of personnel, monitoring compliance with legislative requirements in the field of compulsory training, ensuring compliance with the mandatory requirements of external control/supervisory bodies.
4. Ensuring compliance with labour legislation and the Company’s by-laws and implementation of talent decisions.
5. Determination of professionally important psychological and psychophysiological qualities of employees/job candidates.

ПР 3

Violation of occupational health and safety legislation

S

S

1. Ensuring that employees have the requisite competence and awareness in occupational safety matters.
2. Planning of occupational health and safety measures, subject to changes in state regulatory requirements for occupational health and safety. Organisation and control of timely implementation of measures.

ПР 4

Violation of industrial and fire safety legislation

S

S

1. Planning and implementation of measures aimed at ensuring fire safety (maintenance and repair of automatic fire alarm systems, warning systems, smoke protection systems and other automatic fire protection systems; operation of fire water supply systems; inspection and recharging of fire extinguishers; fire protection treatment of building structures and cables; purchase of primary fire extinguishing and fire protection equipment; training and education of personnel in fire safety; purchase of personal protective equipment; purchase of placards, stands, training aids, evacuation plans, etc.).
2. Planning and implementation of measures aimed at ensuring industrial safety (conducting industrial safety assessments, inspection and maintenance of lifting equipment, insurance of hazardous production facilities, obtaining licences for the operation of hazardous production facilities, pre-examination and pre-certification training of personnel, industrial safety training).
3. Development and execution of a work plan for production control over compliance with industrial safety requirements.
4. Monitoring of compliance with industrial and fire safety legislation during internal inspections of production activities.
5. Control over the timely implementation of measures based on the results of industrial and fire safety inspections (including inspections by external supervisory bodies).

ПР 7

Violation of legislation on joint stock companies and legislation on securities

S

S

1. Control over compliance by the Company’s employees with the current legislation of the Russian Federation on joint stock companies and securities.
2. Monitoring of changes in Russian legislation on joint stock companies and securities, updating of the Company’s local regulations as necessary.
3. Timely posting of information and materials on information disclosure servers on the Internet.
4. Compliance with the procedure and deadlines for preparing and holding general meetings of shareholders.

ПР 8

Violation of tax and accounting legislation

S

S

1. Staff training and development.
2. Current analysis of tax accounting registers, verification of the accuracy and completeness of tax payments.

ПР 9

Corruption-related offences by Company employees

C

C

1. Organisation of the process of managing corruption risks and internal control within the Company.
2. Prevention and management of conflicts of interest.
3. Development and introduction of standards and procedures to ensure good practice.
4. Formation of the foundations of law-abiding behaviour among employees and their legal education.
5. Review and verification of information on possible facts of corruption.
6. Cooperation with law enforcement agencies in combating corruption.
7. Participation in collective initiatives to prevent and combat corruption.

ПР10

Unlawful actions of legal entities and individuals, including employees of subsidiaries, causing economic damage and harm to business reputation

M

S

1. Compensation for damage caused to the Company.
2. Participation in disciplinary and/or material action against persons found guilty of realising the risk.
3. Development of risk prevention measures (issuing instructions, recommendations, briefing materials to branches on identified risk factors).
4. Interaction with the Federal Bailiff Service of Russia in aid of execution in relation to the services rendered for the transmission of electrical energy, control over the repayment of debts under enforcement proceedings based on court decisions on the recovery of overdue debts in relation to the specified services.
5. Random checks of compliance between the volume of work actually performed and that specified in the contracts.
6. Checking that applications are processed on time, spotting any potential abuse, and setting up checks at branches.
7. Participation in audits (internal investigations) to identify signs of unlawful actions by legal entities, individuals and Company employees.
8. Timely protection of the Company’s interests, involving law enforcement agencies and other authorities as necessary.