Inter RAO YEES : Group Announces Operating Results for the First 9 Months of 2016

Inter RAO Group announced operating results for the first 9 months of 2016.

Starting from 2016, Group results do not include the performance of Electric Networks of Armenia or Razdan TPP due to the reduction of our ownership stakes in these entities to non-controlling 50% resulting in their divestment from the Group. Also, we have sold a 100% stake in Georgian Mtkvari Energy in the second quarter of 2016.

The key drivers of the reduction in the key performance indicators of the Generation Segment remained the same as in the first six months of 2016:

• Retirement of 910 MW of legacy low-efficient equipment in Russia, including 420 MW at Cherepetskaya TPP, 376 MW at Verkhnetagilskaya TPP and 35 MW at Yuzhnouralskaya TPP since January 1, 2016; 29 MW at Bashkir power plants (25 MW since May 1, 2015, and 4 MW in 2016); and 50 MW at Omskaya TPP-4 (since June 1, 2015)
• Addition of 100 MW of new CDA capacity at Omskaya TPP-5
• An 85.6 MW increase in power generation capacity and a 29 Gcal/h increase in heat production capacity following the relabeling of Russian generation equipment
• Reduced utilization of low-profit and low-efficiency power generation units, and maintenance downtime of certain power generation units during low-price periods at the Next-Day Market
• Warmer weather during the winter of 2016

The main factors driving the key performance indicators were as follows:

• Divestment of 1.1 GW Razdan TPP and Electric Networks of Armenia, as well as 600 MW Georgian Mtkvari Energy, from the Group
• Increased deliveries from Kazakhstan to Russia resulting in an 877 million kWh (36%) increase in the output of Ekibastuzskaya TPP-2
• Warmer weather during the winter of 2016
• Low water levels at hydro plants in Georgia
• We added 239 kilometers to our transmission grid in Georgia as we built new grid connections and redundancy lines.

* Share of Russian retail market is defined as the ratio of our retail sales to total actual electricity consumption (524.2 bn kWh in the first nine months of 2016 compared to 521.1 bn kWh in the first nine months of 2015 according to current data of the System Operator of the Russian Unified Energy System).

Our customer base kept increasing due to the signing of new power supply agreements by individual Inter RAO Group companies with residential and commercial consumers in new communities, and also due to continued transition of customers from third parties.

Lower electricity sales reflect warmer temperatures in the winter of 2016 and cooler temperatures in May and June 2016.

Key drivers of our export volumes:

• Discontinuation of commercial sales to Ukraine from January 1, 2016
• Higher consumption of Russian energy in Belarus
• Favorable Nord Pool prices in 2016
• Launches of power interconnections between Norway and Lithuania, and between Lithuania and Poland in 2016
• Increased deliveries to Georgia for resale to Armenia

Our exports to other geographies are driven by prevailing market conditions.

Increased import primarily reflects the profitability of supply from Ekibastuzskaya TPP-2.

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Inter RAO Group is a diversified energy holding serving various segments of Russian and international electric power industry. The Group is the leading exporter and importer of electricity in Russia actively increasing electricity generation and sales, and developing new lines of business. The corporate strategy of Inter RAO is focused on making Inter RAO a global energy enterprise, a key player in the global energy market, and Russia's leading electric utility by energy efficiency. Inter RAO Group owns and operates approximately 32.5 GW of installed power generation capacity. www.interrao.ru