Foreign trade price risk
Adverse price changes, including changes in the prices for electricity and/or capacity in the spot segments of WECM, changes in the prices under foreign economic contracts, and increased cost of services provided by infrastructure organizations may lead to a decline of the Group’s marginal profit.
The risk of changes in foreign trade supply volumes
The growing competition on the export/import electricity market, reduced electricity consumption in the neighboring states, system electricity export/ import restrictions by the system operator, changes in the electricity export/ import laws of Russia or neighboring states, or the effect of various forcemajeure circumstances on the volumes of trade transactions cause changes in the supply volumes.
To manage these risks, the Group:
- manages its trade portfolio on the domestic and foreign markets to ensure return on its trade operations at the target level;
- enters into contracts with counterparties for electricity (capacity) purchase/sale at a fixed price;
- takes part in inter-agency working groups, such as the Association “NP Market Council,” JSC SO UES, the Federal Grid System of Unified Energy System PJSC, and representatives of the market community, and forms joint proposals on making changes to the regulatory framework and models and rules of WECM to take into account the foreign trade specifics;
- takes part in international working groups of the Electricity Council of the Commonwealth of Independent States, BRELL, KOTK, EurAsEC, and the Eurasian Economic Commission to reconcile the WECM rules with the rules of foreign power markets and to establish uniform technical standards and rules regulating the parallel IPS/UPS operation.