Tyumenenergo

Key goals of the Company personnel and social policy intended to ensure targets of the power grid development strategy are:

• Workforce requirements planning — provision of reliable information on operational and forecasting numerical and qualitative demand for labour resources necessary and sufficient for execution of tasks set for the Company;
• Timely meeting of the Company demand for personnel of required qualification;
• Provision of personnel efficiency, increase of the Company labour productivity.

The above key goals of personnel and social policy are achieved by implementation of a set of measures in various activities directions and specified targets attaining.

The main conditions of the Company personnel and social policy implementation are as follows:

• To develop a set of activities and methods of work with the personnel making it possible for the Company to adjust to corporate and external changes quickly and efficiently;
• To create conditions for the personnel labour potential unlocking, assure implementation of an approach “behaviour toward personnel of the power grid companies as the human capital assets” providing for investment in personnel development and maximum investment performance;
• To create conditions in which professional competence, efficiency, motivation for professional development and corporate-wide values sharing are necessary requirements and the only guarantee of advancement in the Company;
• To form the Company image as a socially responsible preferable employer in order to improve the Company attraction for highly skilled employees;
• To work in conditions of integrated personnel space, use integrated solutions and shared information resources of the power grid company in order to increase efficiency of personnel management and provide cost reduction.

When meeting the Company personnel requirements, preferences are given to operating personnel and personnel development in accordance with qualification requirements and to involvement of recent graduates having industry-specific vocational education.

Personnel Number and Composition

In 2014, the average personnel number of JSC Tyumenenergo reached 7,503 people that is 2.5% lower in comparison with 2013. Decreased personnel number in 2014 is caused by optimization of administrative, management personnel ranks, and simultaneous employment of industrial personnel.

Category-wise personnel composition is typical for an electric power transmission company: most of the staff is industrial workers — 49%, specialists/office staff — 34% and senior managers — 17%.

The age composition of the personnel has not changed significantly. It is associated with activities, aimed at keeping down personnel number growth at its optimum.

Company personnel can be described as quite highly qualified; about 80% of the staff have professional education.

Personnel Training and Development

Personnel training and development system is based on timeliness, consistency and continuity principles and targeted to unlock the potential and develop the personnel taking into consideration long-term requirements, changes of external environment and competency development level of an employee.

Appreciating the necessity to ensure reliable and continuous power supply of consumers and observe process safety regulations the main personnel training branches are:

• Professional and advanced training for workers;
• Pre-examination and advanced training for managers and specialists;
• Training and development of the candidate pool;
• Professional re-training of employees.

Over 85% of the total number of training events can be classified as compulsory education.

These events are advanced training of operating personnel related to up-grading and a grade confirmation, emergency response drills, advanced training for managers and specialists, pre-examination preparation and employees` appraisal according to industry-specific rules.

In 2014, the number of employees who have undergone training in various fields is 6,470 people, which is 86% of the average number (6757 people/87% in 2013). The number of trained employees was 2358 people and 31% of the personnel number (2496 people and 32% in the year 2013) without considering pre-examination industrial training.

Collaboration with educational institutions

The Company pays great attention to expansion of collaboration with the regional higher and secondary education institutions providing professional training in electric power related qualifications within the habitat of JSC Tyumenenergo. Now JSC Tyumenenergo has concluded long-term Cooperation and Joint Operation Agreements with 19 education institutions with associated departments. Among basic education institutions there are Surgut State University of Khanty-Mansiysk Autonomous District — Yugra, Tyumen State University, North Trans-Ural State Agricultural University, Omsk State Technical University, Yugra State University.

A program of additional training for students occupied in electric power technology related qualifications is carried out in collaboration with education institutions.

Along with general and special subjects, the students are offered different forms of participating in the industrial life of the Company, i.e. gradual integration of interests both of the student and the enterprise.

In 2014, the Company together with Surgut State University participated in proposals development to the project of federal special purpose program “Engineers of the XXI Century” of high-priority national character.

In 2014, 138 students undertook on-the-job and pre-graduation practical training at JSC Tyumenenergo, 10 of them have been employed at the Company branches after graduation.

In summer, 2014 the Company introduced an innovation — Student Construction Brigade worked at JSC Tyumenenergo sites.

30 students attended industry-specific regional higher education establishments were engaged in a student construction brigade “Energetic”. These higher education establishments are as follows: State Budget-Funded Education Institution of Higher Professional Education North Trans-Ural State Agricultural University, State Budget-Funded Education Institution of Higher Professional Education Omsk State Technical University, State Budget-Funded Education Institution of Higher Professional Education Tyumen State Oil and Gas University. The first experience of such collaboration with education institutions has shown a mutual benefit: the student construction brigade “Energetic” has become the best construction brigade of Russian Power Grid and offered an invitation to participate in the Russian National Meeting of Students Brigades in the Kremlin.

The Company Candidate Pool Management

The Company implements system approach to perform a critical task in the field of personnel management — management of candidate pool formed at the level of branch offices and the Company executive branches.

In accordance with corporate regulatory documents including JSC Tyumenenergo Candidate Pool Management Procedure approved in 2014, the Company exerts methodical effort to form and develop an administrative and youth candidate pool.

In 2014, the Company candidate pool contained 501 people.

In 2014, the Company management positions were supplied with candidate pool at 98%.

The candidate pool efficiency directly depends on facilities provided for professional development of succession candidates. There are target positions approved, individual development programs developed and tutors from among the most qualified Company`s personnel assigned for each member of the Company candidate pool.

In 2014, there was a curriculum of master classes for the Company candidate pool members held in an innovative format involving practising consultants and psychologists of Federal Educational Centre “Russian School of Management”. Thirty-six employees participated in the master classes on topics: Complex Business Communication Management, Thread Creation and Personal Marketing.

In total 242 succession candidates were trained in all the training fields in the Company in 2014.

In 2014, JSC Tyumenenergo team consisting of six employees — members of the youth candidate pool — participated in the regional educational project Yugra Business Management Cup. This project aims to improve the management skills of young specialists through participation in the team competition based on a comprehensive business simulation modelling the company activities in a competitive environment.

During preparation for the Youth Forum within the framework of SPIEF-2015, JSC Tyumenenergo succession candidates took active part in qualifying events to form a cross-function team of JSC Rosseti.

Key Performance Indicators (KPI)

The system of key performance indicators of the Company General Manager is based on:

• Paragraph 12.1.1 of Article 12 of the Company Charter
• Decision of the Company Board of Directors dated 30 October 2012 (Minutes of Meeting No. 11/12 dated 01 November 2012) regarding the issue “Determination of the Company`s business priorities: changing the system of key performance indicators of the Company General Manager and senior managers”

The Company KPI system reflects implementation of goals and targets of the Electric Grid Complex Development Strategy, approved by the Federal Government decree dated 03 April 2013 No. 511-p. The main targets taken into account in KPI system of the Company General Manager are:

• Improvement of power supply reliability and quality
• Increase in power supply safety
• Reduction of investment and operational expenditures
• Investment program implementation

In 2014, the following KPI composition was used:

Annual figures:

1. Availability of Net Income (bonus payment condition)
2. Reduction in expenses for the goods (works/services) procurement per unit by at least 10 percent a year within three years in real terms at 2010 values (bonus payment condition)
3. Operation Reliability — an average duration of electrical energy transmission interruption
4. Accounts receivable turnover for electrical energy transmission services
5. EBITDA
6. The growth rate of controlled operating expenses in the period to the previous period fact
7. Losses level of electric power to be supplied to networks
8. Investment Activity Efficiency:
   • Implementation of Capacity Commissioning Schedules, Financing, and Investment Volume Plan completed by Acts of Acceptance (on an annual basis)
   • Newly commissioned capacities utilization
9. Provided Services Quality Level:
   • Utility connection services quality level index
   • Electric power transmission quality index
   • Quality of service index
10. Investment Activity Efficiency

Quarterly Figures:

1. The absence of lethal industrial accidents or a group accident if there is a seriously injured person by reasons of failure to perform (poor-quality performance) of duties by the Company employees (bonus payment condition)
2. Attainment (availability) of a Readiness certificated in due time (1st, 4th quarter) (bonus payment condition)
3. Operation Reliability:
   • Prevent accidents exceeding a predetermined number
4. Investment Activity Efficiency:
   • Meet Quarterly Financing and Investment Volume Schedules completed by Acts of Acceptance and the investment program on a cumulative total from the beginning of the year (on a quarter basis)
5. Control of Cash Flow from Operations
6. Main Equipment Repair Schedule Completion Rate.

Prospective (Annual) Figures:

1. Operation Reliability:
   • SAIFI
   • SAIDI
   • Technical condition dynamics (Δ Condition Index/Δ Cost)
2. Information Flow Quality
3. Market share of electricity transmission services within the corporate footprint.

Indicative (Annual) Figures:

1. Total Shareholder Return (TSR)
2. Controlled cost over-run/saving over the approved OPEX base in RAB regulating system

Annual KPI implementation index is 90%, quarterly — 86%.