Implementing an Efficiency and Cost Reduction Program
The program for enhancement of operating efficiency and reduction of Kubanenergo PJSC costs for 2018 —2022, approved by the Board of Directors of the Company on December 27, 2017 (minutes of the meeting of the Board of Directors dated 28.12.2017, No. 294/2017). Implementation of the program’s activities is taken into account in the business plan, investment program, energy-saving, and energy efficiency improvement program, innovative development program and other targeted programs developed by the Company.
The performance indicators of the program take into account the targets set by the Strategy for the Development of the Electric Grid Complex of the Russian Federation, approved by the decree of the Government of the Russian Federation of 03.04.2013 No. 511-p, and also by the directive of the Government of the Russian Federation of 16.04.2015 No. 2303p-P13.
The reduction in operating expenses following the directive of the Government of the Russian Federation No. 2303p-P13 dated April 16, 2015, for 2018 relative to the level of 2017 was 2%, which corresponds to the target value.
As a part of improving operational efficiency and generating additional revenues, the Company in 2018 implemented the following measures:
- improving the efficiency of the process of managing the maintenance and repair of equipment, buildings and structures (the implementation of a set of measures aimed at the redistribution of the method of performing work in the technological areas: OTL 35–220 kV, SS 35–110 kV; distribution networks 0.4–10 kV (OTL, transformer substation); optimization of the distribution of works between contracting and business methods);
- improving working capital management (optimization of receivables (reduction of overdue debts for electricity transmission services), destocking of the emergency reserve, including through adjustments in the direction of reducing the volume of reserve stocks, and transferring a part of the inventories for repair and operation of equipment in 2018;
- improving the management of fixed assets, including:
- consolidation of power grid assets
- implementation of the event "Development of Price Expertise",
- reducing the cost of purchasing raw materials and materials, procuring contractor services for new construction, technical re-equipment and reconstruction as a result of regulated procedures in the framework of investment activities;
- improving energy efficiency (implementation of measures to reduce the level of electricity losses under the Kubanenergo PJSC Electricity Loss Reduction Program for 2018–2022 and the Energy Saving and Energy Efficiency Improvement Program of Kubanenergo PJSC; organizational and technical measures to ensure the rational use of fuel and energy resources and water for the production and economic needs of the Company);
- increase in operating efficiency (reduction in unit operating expenses), including:
- reuse of previously used (post-consumer) materials
- reduction of maintenance materials, consumables for office equipment maintenance, reduction of costs for communication services, IT services, write-off of software products,
- optimization of costs associated with the decommissioning of vehicles, the further management of which is impractical, including reducing the cost of fuel, optimizing the fleet of cars to be insured by Compulsory Civil Liability Insurance for Vehicle Owners (CCLIVO),
- reducing the cost of purchasing raw materials and materials, production and non-production services in terms of operating activities as a result of regulated procedures;
- other activities (implementation of measures aimed at reducing non-contractual electricity consumption).
The program to improve operational efficiency and reduce costs creates a useful tool to improve in-process efficiency and ensure profitability through the productive use of the Company’s private reserves to implement the main strategic directions of the Company’s activities.