RUSAL and ministry of energy agree on wholesale electricity market

UC RUSAL the world’s largest aluminium producer and the ministry of energy of the Russian Federation announced that the terms and conditions governing the purchase by the company’s smelters of energy on the wholesale market due to energy providing agreements entering into effect in Russia have been agreed.

RUSAL, through its Bratsk, Krasnoyarsk, Novokuznetsk and Sayanogorsk aluminium smelters, as well as through Siberian Urals Aluminium Company, has signed power contracts that are necessary for the company’s participation in the purchase of electricity on the domestic wholesale market until 2027. These contracts will ensure RUSAL will be able to benefit from stable long-term electricity rates for the company though access to the wholesale market, and the continuation of the long-term energy supply contracts with major suppliers of electricity.

The Ministry of Energy of the Russian Federation, in turn, undertakes to submit to the Government of the Russian Federation and to take all possible measures for the approval before 31 March 2011 by the Government of draft amendments to the list of objects that are included in contracts for the power supply. The new list is expected to include objects under construction that will be built by RUSAL in line with its strategy and/or by a third party appointed by RUSAL, with a total capacity up to 2.3 GW. Also objects with a similar total power capacity subject to the construction by other investors should be excluded from the list.

In addition, the Ministry of Energy is committed to ensure changes to the Rules of the wholesale market of electric energy that are to assure the demand for generating capacity, introduced in the framework of energy providing agreements, by entering into direct long-term sales contracts of electricity and capacity with qualified consumers, as well as providing major energy-intensive consumers with the opportunity to participate in the energy providing agreements as a supplier of power and enabling the binding of these consumers to their own generation facilities.

Harmonization of these terms and conditions fully corresponds to the development strategy of RUSAL as an energy and metals and mining corporation which aims to create its own energy generating facilities that provides for at least 60% of the company's aluminium production, and also creates a solid foundation for strengthening the competitiveness of the company due to the commissioning of effective and environmentally friendly sources of power generation and the ability to participate in the wholesale electricity market as a seller of excess capacity.