Board of Directors has considered the problem of formation of target structure of JSC "TGC-2", providing refusal of a merger of JSC "Arkhangelsk generation Company" to JSC "TGC-2". According to this scheme, formation of JSC "TGC-2" will be carried out by entering shares of JSC "Arkhangelsk Generation Company", belonging to RAO "UES of Russia" and to other shareholders of the Company, in payment of additional shares of JSC "TGC-2" placed on closed subscription.

Necessity of change of the scheme of the Company formation is caused by a heavy financial condition of the Arkhangelsk Company. Therefore in the merger of JSC "Arkhangelsk Generation Company" with JSC "TGC-2" has been suspended.

Sharp growth of cost of black oil being the basic fuel for power stations of the Company, in 2005-2006 has resulted an essential difference between actual developed price for fuel and the price used by regulating body at calculation of tariffs on electric and thermal energy for JSC "Arkhangelsk Generation Company" in 2005 and 2006. In result forecast losses of the Company in 2006 will be more than 2,5 billion roubles.

In case of the merger of JSC "Arkhangelsk Generation Company" with JSC "TGC-2 " losses of the Arkhangelsk company would not allow to pay dividends to shareholders of the profitable generating companies which shares have been converted in the shares of JSC "TGC-2". The merger under earlier authorized scheme would make the incorporated company unattractive for investors, including carrying out of floating of issue of additional shares.

Now together with RAO "UES of Russia" is carried out financial improvement of the Company. There are opportunity of indemnification of losses from federal and regional budgets and also the maximal approximation of tariffs to economically justified level.

Board of Directors has charged with Board of Management of RAO "UES of Russia" to determine and submit for consideration Board of Directors the questions of JSC @TGC-2" formation in February, 2007 .