Client: Russian Joint Stock Company - Unified Energy System of Russia (RAO UES)

CARANA is providing technical assistance to the Russian Joint Stock Company - Unified Energy System of Russia (RAO UES) and its subsidiaries, regional electricity companies. The project involves establishment of competitive and non-discriminative wholesale and retail electricity markets and restructuring of major vertically integrated industry players to promote competition. CARANA is working to establish a new regulatory agency to remove remaining legal and regulatory barriers to a competitive electricity market, ensure adequate consumer protection, and develop safeguards to minimize fraud. Under the project, the CARANA team has prepared concept papers and basic legislative documents, designed wholesale and retail electricity market models, including financial and information management systems, and negotiated various reform issues with the government. An important component of the project has been the reorganization of the parent company, RAO UES, and its subsidiaries in order to create competitive and profitable enterprises that offer attractive investment opportunities. Project accomplishments include:

• Prepared a concept paper on the electricity sector restructuring. CARANA recommendations were incorporated in Government Resolution No. 526, "On Reforming Electricity Sector in the Russian Federation" adopted on July 11, 2001.

• Along with counterparts, drafted electricity sector legislation, including Law on Electricity Sector in Russia.

• In partnership with Cameron McKenna, designed the Competitive Wholesale Electricity Market Model adopted in April 2001.

• Designed a computer simulation system for the Competitive Wholesale Electricity Market.

• Provided support to RAO UES in discussions with the government regarding restructuring the electricity sector.

• Prepared a business plan for establishing the Federal Transmission Company.

• In collaboration with Cameron McKenna, developed a restructuring plan for the electricity regulatory agency, originally set up to regulate natural monopolies and electricity markets in Russia.

• Developed a new organizational structure for RAO UES.

• Continue to develop and implement restructuring plans for regional energy companies.

• Design of a model for the retail electricity market.