DJ PJSC RusHydro: Results of the Board of Directors Meeting on December 23, 2020
PJSC RusHydro (HYDR)
PJSC RusHydro: Results of the Board of Directors Meeting on December 23,
2020
24-Dec-2020 / 15:45 CET/CEST
Dissemination of a Regulatory Announcement that contains inside information
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
Results of the Board of Directors Meeting on December 23, 2020
PJSC RusHydro (ticker symbol: MOEX, LSE: HYDR; OTCQX: RSHYY) announces that
the Company's Board of Directors held a meeting in absentia on December 23,
2020.
Resolutions passed on Items of the agenda:
Item 1: On Approval of the Report on Implementation of the RusHydro Annual
Integrated Purchasing Program for 9 Months of 2020.
Adopted Resolution:
The report on implementation of the PJSC RusHydro Annual Integrated
Purchasing Program for 9 months of 2020 (Schedule No. 1 to the Minutes) be
approved.
Item 2: On Approval of the RusHydro Annual Integrated Purchasing Program for
2021.
Adopted Resolution:
The RusHydro Annual integrated Purchasing Program for 2021 (Schedule No. 2
to the Minutes) be approved.
Item 3: On Approval of the Company Register of the Non-Core Assets, updated,
and the Action Plan for the Non-Core Assets Sale.
Adopted Resolution:
The following be approved:
? Register of the Non-Core Assets of RusHydro, in the new revision
(Schedule No. 3 to the Minutes);
? Action Plan for the RusHydro Non-Core Assets Sale for 2020 (Q4) - 2021
(Schedule No. 4 to the Minutes).
Item 4: On Review of the Report on Compliance with the RusHydro Information
Policy.
Adopted Resolution:
The Report on Compliance with the RusHydro Information Policy be taken into
consideration (Schedule No. 5 to the Minutes).
Item 5: On Authorizing to Concurrently Hold Positions in management bodies
of other organizations .
Adopted Resolution:
Viktor Viktorovich Khmarin acting as the RusHydro sole executive body be
authorized to hold positions in management bodies of other companies as well
as other paid positions in other organizations, as follows:
? All-Russia Association of Employers "Russian Union of Industrialists and
Entrepreneurs", member of the Management Board;
? Global Sustainable Energy Partnership, member of the Board of Directors;
? Global Energy Association, member of the Supervisory Board;
? PJSC Inter RAO, member of the Strategy and Investments Committee under
the Board of Directors.
Item 6: On Consideration of Issues of Material Importance for the Company:
6.1. Confidential.
Adopted Resolution: Confidential.
6.2. On the Status of Execution of the Priority Projects for the
Construction of Facilities in the Far East.
Adopted Resolution: Information on the status of execution of the priority
projects for the construction of facilities in the Far East as of September
30, 2020 (Schedule No. 6 to the Minutes) be taken into consideration.
6.3. On Recognition of Members of the Company's Board of Directors as
Independent.
Adopted Resolution:
1) Pursuant to the recommendations of the HR and Remunerations
(Nominations) Committee under the Board of Directors of the Company
(Minutes dated December 21, 2020), the information be taken into
consideration on the results of assessment of the Board members'
compliance with the independence criteria provided for in Appendix 4 to
the Moscow Exchange Listing Rules (hereinafter, "the Listing Rules").
2) In accordance with Clause 2 of Section 2.18, Appendix 2, and Appendix 4
to the Listing Rules, recognize:
2.1. Pavel Sergeyevich Grachev as Independent Director, despite the
existence of formal criteria of relatedness on the grounds specified in
Schedule No. 7 to the Minutes.
2. In accordance with Clause 2 of Section 2.18, Appendix 2, and Appendix 4
to the Listing Rules, recognize:
2.2. Maksim Sergeyevich Bystrov as Independent Director, despite the
existence of formal criteria of relatedness on the grounds specified in
Schedule No. 8 to the Minutes.
Schedule No. 7 to the Minutes
Having assessed the compliance of P. S. Grachev, a member of the Board of
Directors of the Company, with the criteria for determining the independency
of the Board members, as envisaged by Appendix 4 to the Listing Rules, the
HR and Remunerations (Nominations) Committee (Minutes No. 105 dated December
21, 2020) established that P. S. Grachev is not a party related to:
? the Company;
? any substantial Company shareholder;
? the Company competitors;
? the state (the Russian Federation, a Russian Federation constituent
entity), or any municipal entity.
Based on the results of the assessment, the criteria of P. S. Grachev's
relatedness to the Company's substantial counterparty - PJSC FGC UES*, were
revealed due to the Company's contractual relations in the field of
technological connection of the Company's generating facilities to PJSC FGC
UES power grids and due to the contractual relations in the field of
electric capacity sales by the Company. Therewith, the amount of liabilities
under contracts between the Company and PJSC FGC UES exceeds 2% of revenues
according to the consolidated financial statements of each party, prepared
under IFRS for the preceding fiscal year.
The HR and Remunerations (Nominations) Committee under the Board of
Directors of the Company established that the existing relatedness to the
substantial counterparty is of nominal nature, and recommended the Board of
Directors of the Company to recognize P. S. Grachev as an Independent
Director. The above relatedness cannot affect P. S. Grachev's ability to
form unbiased and independent opinions as to the agenda items considered by
the Board of Directors and act for the benefit of the Company and its
shareholders due to the reasons as follows:
1) Pursuant to Order No. 804-r dated March 30, 2020 of the Government of the
Russian Federation (hereinafter, the Russian Government), P. S. Grachev was
nominated, by the Russian Federation, to the Company Board Members as an
Independent Director, thereby there is no duty for P. S. Grachev to vote in
pursuance of the Russian Government directives (Clause 16 of Regulation No.
738 of the Government of the Russian Federation dated December 03, 2004);
2) PJSC FGC UES is an organization for managing the unified national
(all-Russian) power grid under Article 8 of the Federal Law "On Electric
Power Industry" and provides services for the transmission of electricity
under conditions of natural monopoly. As a participant in the wholesale
electricity and capacity market, the Company sells electricity and capacity
as produced, which requires that the Company's generating facilities be
connected to the PJSC FGC UES power grids. The connection to the power grids
is performed by entering into contracts with PJSC FGC UES in accordance with
the procedure and on the terms specified by the Government of the Russian
Federation, and at prices determined in accordance with the acts of the
Government of the Russian Federation.
Considering the above, P. S. Grachev has no opportunity to influence the
terms of the technological connection contracts between the Company and PJSC
FGC UES.
3) The Company is a subject of the wholesale electricity and capacity market
(WECM) and a party to the Contract for Joining the Wholesale Market Trading
System (hereinafter referred to as the "Joining Contract"). The Company
concludes contracts in accordance with the WECM Rules and the WECM
Regulations, which are appendices to the Joining Contract. The terms and
conditions of the Joining Contract are binding on the parties when they
participate in relations on the wholesale electricity and capacity market
(WECM).
The Company and PJSC FGC UES, in accordance with Sub-Clause 4 of Clause 4 of
the WECM Rules, have entered into agreements for the supply of capacity at
free prices based on the results of competitive capacity takeoff
(hereinafter, the "CCT Agreements"), where the Company acts as a capacity
supplier.
Prices under the CCT agreements are determined in the course of / on the
basis of competitive procedures (competitive selection) conducted in
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DJ PJSC RusHydro: Results of the Board of Directors -2-
accordance with the WECM Rules and Joining Contract provisions.
Considering the above, P. S. Grachev has no opportunity to influence the
terms and conditions of the CCT Agreements between the Company and PJSC FGC
UES.
Throughout the period of filling the Board Member vacancy, P. S. Grachev has
been involved actively in the activities of the Board of Directors of the
Company - he has been participating in the absolute majority of meetings
held by the Board of Directors and Committees under the Board of Directors
of the Company (including those of the Board of Directors, Audit Committee,
HR and Remunerations (Nominations) Committee, Strategy Committee, and Far
East Power Industry Development Committee, as held since the beginning of
2020).
P. S. Grachev's track record with the Company Board of Directors and
Committees under the Company Board of Directors in 2016 - 2020, as well as
his active stands in the discussions at the in-person meetings, have been
demonstrating his ability to provide independent, unbiased and fair
judgments, since the P. S. Grachev's stands as to the agenda items of
meetings of the Board of Directors and the Committees are based on his
professional expertise and experience, being rational and independent, and
the nature of resolutions adopted by P. S. Grachev previously and at present
allow coming to a conclusion that occurrence of his nominal relatedness to a
substantial counterparty of the Company will affect neither independence of
P. S. Grachev, nor his ability to act for the benefit of the Company and all
shareholders thereof.
P. S. Grachev signed a Declaration of a Member of the Board of Directors of
the Company Recognized as Independent, in the form recommended by Moscow
Exchange.
* P. S. Grachev is a member of the Board of Directors of PJSC FGC UES.
Schedule No. 8 to the Minutes
Having assessed the compliance of M. S. Bystrov, a member of the Board of
Directors of the Company, with the criteria for determining the independency
of the Board members, as envisaged by Appendix 4 to the Listing Rules, the
HR and Remunerations (Nominations) Committee (Minutes No. 105 dated December
21, 2020) established that M. S. Bystrov is not a party related to:
? the Company competitors;
? the state (the Russian Federation, a Russian Federation constituent
entity), or any municipal entity.
According to the assessment results, for M. S. Bystrov, a criteria were
revealed of being related to:
? a substantial Company shareholder - the Russian Federation**,
as M. S. Bystrov is a Board Member at more than two organizations
controlled by the Russian Federation, namely Rosseti PJSC, SO UES JSC, and
RusHydro;
? the Company - M. S. Bystrov has been a Member of the Board of Directors
of the Company since 2013, i.e. as of June 28, 2020, the period of his
holding the Board Member position amounted to over 7, but less than 12
years (7 years 3 months).
? the Company substantial counterparties: ATS JSC, SO UES JSC, CFR JSC,
Market Council TC ANO***, Karachaevo-Cherkesskenergo JSC, Kabbalkenergo
JSC***, STC UPS Protivoavariynoe Upravlenie JSC****, and PJSC FGC
UES*****, because the amount of liabilities under agreements between the
Company and each of the aforesaid counterparties has exceeded 2% of the
book value of assets as of the immediately preceding reporting date and/or
2% of the revenues for the preceding fiscal year, of each of the
counterparties, and as regards liabilities to PJSC FGC UES also exceeds 2%
of the Company's revenue under consolidated statements prepared under IFRS
for the preceding fiscal year.
The HR and Remunerations (Nominations) Committee under the Board of
Directors of the Company established that the existing relation to the
Company, its substantial counterparties and its substantial shareholder, is
of nominal nature, and recommended the Board of Directors of the Company to
recognize M. S. Bystrov as an Independent Director.
M. S. Bystrov's relatedness to the Company substantial counterparties: ATS
JSC, SO UES JSC, CFR JSC, Market Council TC ANO, Karachaevo-Cherkesskenergo
JSC, Kabbalkenergo JSC, STC UPS Protivoavariynoe Upravlenie JSC, PJSC FGC
UES, and with the Company substantial shareholder is of nominal nature and
cannot affect his ability to form unbiased and independent opinions as to
the agenda items considered by the Board of Directors and act for the
benefit of the Company and all shareholders thereof, due to the reasons as
follows:
? Pursuant to Order No. 804-r dated March 30, 2020 of the Government of
the Russian Federation (hereinafter, the Russian Government), M. S.
Bystrov was nominated, by the Russian Federation, to the Company Board
Members as an Independent Director, thereby there is no duty for M. S.
Bystrov to vote in pursuance of the Russian Government directives, if
elected into the Board of Directors in 2020 (Clause 16 of Regulation No.
738 of the Government of the Russian Federation dated December 03, 2004);
? ATS JSC***** (Wholesale Electricity and Capacity Market Trading System
Administrator Joint Stock Company) is a wholesale electricity and capacity
market (hereinafter, the wholesale market) commercial operator, and
renders services, to the Company, in the sphere of arranging electricity
and capacity trading at the wholesale market, as prescribed by Article 33,
Clause 7 of Federal Law No. 35-FZ dated March 26, 2003, "On Electric Power
Industry" (hereinafter, the Russian Federal Law on the Electric Power
Industry), under the Contract for Joining the Wholesale Market Trading
System. The Contract terms and conditions are and shall be binding on the
parties. Commercial relations between the Company and ATS JSC are based on
the principle of non-discriminatory access to the services providable by
the wholesale market commercial infrastructure organizations (Article 20
of the Russian Federal Law on the Electric Power Industry) and the
principle of the state regulation of tariffs for the wholesale market
commercial operator's services (Article 23.1 of the Russian Federal Law on
the Electric Power Industry);
? SO UES JSC (System Operator of the Unified Energy System Joint-Stock
Company) renders services, to the Company, in the operational dispatch
management in the electric power industry owing to its system operator's
status assigned thereto by Article 12, Clause 1, of the Russian Federal
Law on the Electric Power Industry, under the Contract for Joining the
Wholesale Market Trading System. Commercial relations between the Company
and SO UES JSC are based on the principle of non-discriminatory access to
the operational dispatch management in the electric power industry
(Article 20, Clause 6, of the Russian Federal Law on the Electric Power
Industry) and the principle of the state regulation of tariffs for the
operational dispatch management services (Article 23.1 of the Russian
Federal Law on the Electric Power Industry);
? CFR JSC (Center of Financial Settlements Joint-Stock Company) is a
Russian Federation wholesale electricity and capacity market commercial
infrastructure organization that ensures functioning of the wholesale
market contractual structure and the system of financial settlements
between the market participants, and renders services, to the Company, in
estimating requirements and liabilities under the Contract for Joining the
Wholesale Market Trading System. The said Contract was executed in
pursuance of Article 32, Clause 1, of the Russian Federal Law on the
Electric Power Industry, and Clause 40 of Rules of the Wholesale
Electricity and Capacity Market as approved by the Russian Government
Resolution No. 1172 dated December 27, 2010) (hereinafter, the "WECM
Rules").
Commercial relations between the Company and CFR JSC are based on the
principle of non-discriminatory access to the services providable by the
wholesale market commercial infrastructure organizations (Article 20 of the
Russian Federal Law on the Electric Power Industry). The amount of payment
for the CFR JSC service package, the same for all counterparties, is and
shall be as approved by the NP Market Council Association Supervisory Board;
? Market Council TC ANO (NP Market Council Training Center Continuing
Professional Education Autonomous Non-Commercial Organization) established
under NP Market Council Association, a wholesale and retail electricity
and capacity trading infrastructural organization, renders services, to
the Company, in educating and training specialists in the sphere of
arranging effective wholesale and retail electricity and capacity trading
system.
Whereas wholesale market regulations, as approved by the NP Market Council
Association Supervisory Board (hereinafter, the "WECM Regulations"), change
regularly, for the purposes of maintaining high level of knowledge in the
area of wholesale market procedures and obtaining information on the
wholesale market actual and planned changes, the Company employees must be
trained at the original source of the changes, namely at Market Council TC
ANO. Contracts for education and training, between the Company and Market
Council TC ANO, are concluded on an arm's length basis;
? Karachaevo-Cherkesskenergo JSC and Kabbalkenergo JSC are the only
guaranteed supply companies in the territory where they operate, that
acquire energy resources at the wholesale market and sale them to any
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DJ PJSC RusHydro: Results of the Board of Directors -3-
offtaker having addressed them, by entering into public contracts with the
latter. Under the contracts, Karachaevo-Cherkesskenergo JSC and
Kabbalkenergo JSC sell electric power to the Company for business and
administrative needs thereof. The payment is made at the price and/or
pursuant to the price determination procedure fixed as per the provisions,
as in force on the payment date, of Federal Laws, other regulations, as
well as acts adopted by the authorized bodies in the sphere of state
regulation of tariffs;
? STC UPS Protivoavariynoe Upravlenie JSC is a Competency Center for
mathematical, digital and physical modeling/simulation of power systems,
research of electrical modes, steady-state and transient stability,
development and design of devices and systems for relay protection, mode
and emergency control, development of specialized software, and is also
the only organization that can provide such services, with no equivalent
replacement in the market. The contracts between the Company and STC UPS
Protivoavariynoe Upravlenie JSC were executed for the purposes of
implementing measures of accident rate reduction at the industrial sites
specified in a range of binding documents.
? PJSC FGC UES is an organization for managing the unified national
(all-Russian) power grid under Article 8 of the Federal Law "On Electric
Power Industry" and provides services for the transmission of electricity
under conditions of natural monopoly. As a participant in the wholesale
electricity and capacity market, the Company sells electricity and
capacity as produced, which requires that the Company's generating
facilities be connected to the PJSC FGC UES power grids. The connection to
the power grids is performed by entering into contracts with PJSC FGC UES
in accordance with the procedure specified by the Government of the
Russian Federation, and at prices determined in accordance with the acts
of the Government of the Russian Federation;
? The Company is a participant in the WECM and a party to the Joining
Contract. The Company concludes contracts in accordance with the WECM
Rules and the WECM Regulations. The terms and conditions of the Joining
Contract are binding on the parties when they participate in relations on
the wholesale electricity and capacity market (WECM).
The Company and PJSC FGC UES, in accordance with Sub-Clause 4 of Clause 4 of
the WECM Rules, have entered into agreements for the supply of capacity at
free prices based on the results of competitive capacity takeoff
(hereinafter, the "CCT Agreements"), where the Company acts as a capacity
supplier.
Prices under the CCT agreements are determined in the course of / on the
basis of competitive procedures (competitive selection) conducted in
accordance with the WECM Rules and Joining Contract provisions.
Selecting such counterparties was stipulated by unbiased factors such as a
unique status of the counterparties at a particular market, and peculiarity
of the electricity and capacity market structure; part of the contractual
terms and conditions are governable by the RF Government acts. Therefore,
concluding such contracts has no relation to M. S. Bystrov's being Member of
the Board of Directors of the Company.
M. S. Bystrov's relatedness to the Company, which appeared in June 2020, is
of nominal nature and exerts no influence on his ability to form unbiased
and independent opinions as to the agenda items considered by the Board of
Directors and act for the benefit of the Company and all shareholders
thereof, due to the reasons as follows:
? since 2015, M. S. Bystrov has been sitting on the Audit Committee under
the Board of Directors of the Company; from 2015 through July 2019, he was
sitting, and from December 2020 has been sitting, on the HR and
Remunerations (Nominations) Committee under the Board of Directors of the
Company. From 2013 through 2020, he was also sitting on other Committees
under the Board of Directors of the Company. The long period of M. S.
Bystrov's work with the Board of Directors of the Company, HR and
Remunerations (Nominations) Committee and Audit Committee under the Board
of Directors is of advantage for the Company, since M. S. Bystrov has the
necessary many years' professional experience in electric power industry,
investments, economy and finance, and extensive knowledge of the Company
business, which facilitate and enhance the performance of the Board of
Directors of the Company and the Committees thereunder;
? M. S. Bystrov signed a Declaration of a Board Member / a Candidate to
the Board of Directors of the Company Recognized as Independent, in the
form recommended by Moscow Exchange;
? throughout the period of filling the Board Member vacancy, M. S. Bystrov
has been involved actively in the activities of the Board of Directors of
the Company - he has been participating in the absolute majority of
meetings held by the Board of Directors (including all meetings of the
Board of Directors, Audit Committee, and Investment Committee, as held
since the beginning of 2020);
? M. S. Bystrov's track record with the Company Board of Directors and
Committees under the Company Board of Directors in 2013 - 2019 has been
demonstrating his ability to provide independent, unbiased and fair
judgments, since M. S. Bystrov's stands as to the agenda items of meetings
of the Board of Directors and the Committees are based on his professional
expertise and experience, being rational and independent, and the nature
of resolutions adopted by M. S. Bystrov previously and at present allow
coming to a conclusion that his nominal relatedness to the Company and a
substantial counterparty of the Company will affect neither independence
of M. S. Bystrov, nor his ability to act for the benefit of the Company
and all shareholders thereof.
In addition to the aforementioned actual relatedness criteria, M. S. Bystrov
was found to be potentially related to entities controlled by Rosseti PJSC,
operating in the wholesale and retail electricity and capacity markets, due
to the existence or possible conclusion by the Company of the following
contracts with the following counterparties:
A) contracts with the only guaranteed supply companies in the territory,
under which contracts the Company purchases electric power for
administrative and business needs, and the aggregate amount of liabilities
may exceed 2% of the book value of assets and/or 2% of the revenue of a
guaranteed supply company;
Guaranteed electricity supply companies purchase energy resources on the
wholesale market and sell them to any offtaker who applies to them,
concluding public contracts with those offtakers. Under such contracts,
payment is made at the price and/or pursuant to the price determination
procedure fixed as per the provisions, as in force on the payment date, of
Federal Laws, other regulations, as well as acts adopted by the authorized
bodies in the sphere of state regulation of tariffs;
B) contracts for technological connection with grid organizations, under
which the Company acts as an offtaker and the grid organizations connect the
Company's power receivers to their power grids, and the aggregate amount of
liabilities may exceed 2% of the book value of the grid organization's
assets and/or 2% of its revenues.
In order to purchase electricity for its own needs, the Company may be
required to connect its power receivers to power grids owned by grid
distribution companies operating in the relevant territory, which connection
is done on the basis of contractual relations whose price and conditions are
regulated in accordance with the procedure established by the Government of
the Russian Federation.
At the conclusion of such contracts the Company has no opportunity to select
other counterparties or change the material terms and conditions of the
contracts against those prescribed by the respective regulatory legal
procedure.
C) regulated contracts the Company as a seller of electric power (capacity)
concludes (may conclude) in accordance with Clause 4, Sub-Clauses 1, 9, and
10, of the WECM Rules, and competitive contracts the Company as a seller of
electric power (capacity) concludes (may conclude) in accordance with Clause
4, Sub-Clauses 3 through 5, 7, and 13 through 15, of the WECM Rules.
Conclusion of these contracts is conditioned by unbiased factors and
arrangements of the WECM, the standard forms of contracts have been approved
by the Supervisory Board of NP Market Council Association, and the scope,
price and cost of the said contracts are determined by the Commercial
Operator of the WECM in accordance with the acts of the Government of the
Russian Federation and/or the Joining Contract provisions.
The Company is a participant in the WECM, a party to the Joining Contract,
and concludes contracts/agreements in accordance with the WECM Rules and the
Joining Contract provisions. The terms and conditions of the Joining
Contract are binding on the parties when they participate in the circulation
of electric power and capacity in the wholesale electric power (capacity)
market.
Prices (tariffs) under regulated contracts are determined by the federal
executive body in charge of state regulation of tariffs.
Prices under the competitive agreements are determined in the course of / on
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