Moscow, 31 August 2007. The Board of Directors of RAO "UES of Russia" approved the Company's participation in the establishment of Not-for-profit Partnership "All-Russia Combustion Engineering Research Institute" (NP "VTI").

The partnership is to be established on the basis of OAO "All-Russia Combustion Engineering Research Institute". The Institute is a national centre for knowledge generated in the 85 years of electricity engineering research in Russia. The scope of research work carried out by the Institute is expanding every year; the Institute has identified priority research areas to be investigated for decades to come. However, due the Centre's low profitability, potential owners are not likely to be interested in continuing the research business of OAO "VTI" for commercial reasons.

As a result, the most stable and appropriate form of organization for a national knowledge centre for the electricity industry, i.e. OAO "VTI", is that of a not-for-profit partnership.

RAO "UES of Russia", as the founder of NP "VTI", will contribute its 100 percent stake in OAO "VTI" as the initial contribution to the partnership's capital. The other founders, RAO UES subsidiaries, will contribute cash which will serve as a basis for the partnership's development and implementation of new tasks, primarily those related to the implementation of the RAO UES five-year investment Programme.

To further implement this resolution, the Board of Directors of RAO "UES of Russia" instructed the Company's representatives on the management bodies of the RAO UES subsidiaries and dependent companies to FOR their participation in the establishment of NP "VTI". These SDCs will include all thermal WGCs and TGCs, as well as the leading engineering centers and design bureaus.

* * *

The Board of Directors approved the sale of the shares in OAO "Engineering Centre" held by RAO "UES of Russia".

Currently, the Company holds a 14.1798 percent stake in OAO "Engineering Centre", an engineering company spun off from OAO "Novosibirskenergo". Engineering Center's core business is providing integrated repair and maintenance services.

This asset is not related to the Company's core business and should be divested in accordance with the RAO UES Strategy Concept. The fair market value of this stake determined by an independent appraiser and approved by the Appraisal Committee of the RAO UES Board is RUB257.3 million.

* * *

At today's meeting, the Board of Directors noted the report of its HR and Remunerations Committee and the Strategy and Reform Committee.

Also, some changes were made to the composition of the HR and Remunerations Committee. "KES-Holding" Director General Mikhail Slobodin was replaced with Alexey Glushchenko, Senior Vice President for Asset Management of ZAO "Complex Energy Systems" (KES), and Head of the Russian Government's Energy Department Anatoly Romanovsky was replaced with Sergey Bubnov, Director of the Alternative Investment Department with Renaissance Capital Management. August 2007 saw the sixth anniversary of the Strategy and Reform Committee. Since its creation, the Committee has become a reputable management body whose suggestions and recommendations are often taken into account by the Board of Directors in the decision-making process.

The Board of Directors of RAO "UES of Russia" approved some changes to the rules of procedure for the RAO UES Investment and Fuel Supply Commission.

These changes were due to the fact that the Commission has 24 members, and it is sometimes impossible to secure a quorum when it is necessary for most of its members to physically attend the Commission's meetings.

Practice suggests that because of their heavy workload, the Commission's experts are sometimes unable to attend two or more consecutive meetings. However, these experts possess a wealth of knowledge and it would not be prudent to remove them from the Commission.

The amended Commission's Regulations provide that a physical meeting of the Commission will have a quorum if at least half of the Commission members are present in person at the meeting or provide their written comments, without taking into account the members absent from the two previous meetings.

* * *

The Board of Directors of RAO "UES of Russia" gave instructions to RAO UES representatives for voting at the general shareholders' meetings and Board meetings of some SDCs of OAO RAO "UES of Russia".

The Board instructed the RAO UES representatives on the Board of Directors of WGC-4 -8 to vote FOR the establishment of OOO "WGC-4 Finance", an entity to implement the WGC-4's stock option programme.

The Board of Directors also instructed the Company's representatives on the Board of Directors of OAO "UES Engineering Center" to vote for the sale of a property not related to the company's core business, namely, a non-residential building in Spartakovskaya street, Moscow. This decision was taken in line with the RAO UES non-core assets divestment strategy.

The building will be sold through a public auction in Q4 2007. The property slated for sale is a non-residential building having a floor area of 3,300 square meters and a one-storey extension of 1,000 square meters.

The start price should be not lower than the fair market value determined by an independent appraiser and approved by the RAO UES Board's Appraisal Committee. The property is expected to be sold through a public auction.

The Board of Directors instructed the RAO UES representatives on the Board of Directors of OAO "WGC-1" to vote for WGC-1 joining Not-for-profit Partnership "Interregional Exchange of Oil-and-Gas Complex" (NP "MBNK").

WGC-1's membership in NP "MBNK" will enable the company to take part in the drafting of the rules for natural gas trading on the exchange so that the rules are most convenient for energy companies.

The Board of Directors of RAO "UES of Russia" approved amendments to the Charters of the WGCs and TGCs. The Board removed from the companies charters certain provisions which require a special resolution by the Board members.

These include matters submitted to generation companies' general shareholder meetings, such as approval of the annual report, annual financial statements, profit distributions, recommendations on the dividend amount and procedure for dividend payments, etc.

Other items of business include determining priority investment projects; procedure for the use of proceeds from the additional share offerings; approval, amendment or cancellation of an investment programme or investment project; determining the terms for the selection and approval of the general contractor to implement the investment programme; approval of the appointment of an independent engineering expert (technical agent) for control the performance of the investment programme and preparation of quarterly progress reports on the investment programme; deciding on the entry into, amendment or termination of an agreement with the independent engineering expert (technical agent); approval of the director general's reports on the implementation of the Company's investment programme, and approval of the format for presentation of reports by the generation company's director general.

The fact that approval by a qualified majority of votes is required on certain matters does not allow the strategic shareholders in the WGCs/TGCs to prepare consolidated financial statements of the companies which comprise their group of persons. Furthermore, the amendments to the charter relating to removal of some provisions which require that resolutions on certain matters are to be approved by three-fourths of votes do not prejudice the rights of RAO "UES of Russia" as a minority shareholder, as the shareholder agreements entered into with the new shareholders provide that resolutions on those matters may only be taken subject to approval of RAO "UES of Russia".

The Board of Directors of RAO "UES of Russia" resolved to terminate the agreement between RAO "UES of Russia" and OAO "TGC-1" on the fiduciary management of shares of OAO "Karelia Energy Retail Company".

This resolution was taken in connection with the auction to sell the shareholding in OAO "Karelia Energy Retail Company" owned by RAO "UES of Russia" scheduled for 19 September 2007.*

By way of reminder, the 'second-tier' public auctions to sell the RAO UES stakes in energy retail companies will be held on 18-19 September 2007.

* The Board of Directors of RAO "UES of Russia" took a decision in principle on 8 December 2006 to dispose of its stakes in ERCs. The Board then resolved that the principal method to be used for the disposal of ERC shares would be sale through a public auction, with the reserve price not lower than the fair market value determined by an independent appraiser.

The ERC sale will significantly increase the number of independent energy retailers employing advanced methods of retailing, expand the range and improve the quality of services provided by them owing to the growing market competition among the retailers.

* * *

The Board of Directors approved the programme for the additional share offering by OAO "Kaluga Retail Company" in order to raise funds needed to implement an investment project to build a gas-turbine CHPP in Obninsk.

OAO "Kaluga Retail Company" is pursuing a business diversification strategy. The company owns four boiler houses having an installed capacity of 58 MW and providing heat to 264 consumers. The company's management has significant experience in the energy retail business as well as in energy generation and sales.

Currently, the city of Obninsk in the Kaluga Region does not have any electricity generation capacity, and electricity is supplied from other cities via electricity transmission lines. The lack of electricity generation facilities affects the reliability of electricity supply to the city's consumers. The electricity consumption in 2007-2011 is expected to grow by an average of 7.4 percent annually. The heat consumption is projected to rise to 120 Gcal/h in the next few years. The city is experiencing rapid residential housing development and construction of two technology parks.

The construction of a gas-turbine CHPP with the capacity of 15.8 MW of heat and 23 Gcal/h of heat will help reduce the capacity shortage in the energy node, increase the reliability of electricity and heat supply, and increase the share of OAO "Kaluga Retail Company" on the electricity and heat market.

The power plant is scheduled for commissioning in Q3 2009. The value of the project, including the construction of utility networks is estimated at RUB686 million. The project is expected to be financed with a mixture of internally generated funds and funds raised from outside, including through additional share offerings.

OAO "Kaluga Retail Company" plans to sell 33 million shares of RUB0.2 par value (which makes 32.78 percent of the company's increased authorized capital) to the public ("open subscription") not later than March 2008.

In order to interest potential strategic investors and maximize the share offering price, it is expected that the stake held by RAO "UES of Russia" in OAO "Kaluga Retail Company" will be sold together with the new shares, thus brining the stake offered to investors to 35.12 percent of the company's authorized capital after the additional share issue. As a result of the transaction, the buyer will be able to acquire a controlling interest in OAO "Kaluga Retail Company", and the latter will attract a strategic investor and will be able to finance its project to build the gas-turbine CHPP in Obninsk.

* * *

The Board of Directors approved the sale of the shares held by RAO "UES of Russia" in OAO "Volzhskaya TGC" and attributable to the "government stake".

The Board of Directors approved the sale of 9,645,676,916 shares in Volzhskaya TGC which will be transferred to OAO "State Holding" under the spin-off balance sheet in the course of the final reorganization of RAO "UES of Russia". Their sale is planned to take place simultaneously with the issuance of additional shares.

If the Board of Directors of OAO "Volzhskaya TGC" approves the placement of additional shares to financial investors, the decision on the terms of sale of the "government stake" shares will be taken by the Board of Directors of RAO "UES of Russia".

If the new shares are acquired by a strategic investor, a share purchase agreement will be made with such investor providing that it will also purchase the shares comprising the "government stake" at the same price as the new shares.

The share sale will be subject to a mandatory condition that an Agreement shall be made between Volzhskaya TGC, ZAO "Center for Financial Settlements", and NP "ATS" providing for the supply of new capacity to the wholesale market.

The shares purchased by the strategic investor will not be registered into its name until they are fully paid up, and a shareholder agreement is approved and executed by RAO "UES of Russia". The strategic investor will be able to suggest its modifications to the shareholder agreement, provided that such suggestions are submitted within 30 days after the execution date of the share purchase agreement, subject to their approval by RAO "UES of Russia" and Russia's Ministry of Economic Development and Trade.

The Board of Directors instructed the Management Board of RAO "UES of Russia" to ensure that the cash proceeds (less the selling expenses, taxes and other mandatory payments) from the sale of the "government stake" shares are transferred to OAO "State Holding". These funds will be used to finance the Federal Grid Company's investment programme.

After the placement of the new shares and the sale of the "government stake", the interest held by RAO "UES of Russia" in Volzhskaya TGC will decline from 54.47 percent to at least 15.28 percent.

By way of reminder, the issuance of additional shares by Volzhskaya TGC was approved by the Board of Directors of RAO "UES of Russia" on 25 May 2007. The maximum number of shares authorized for issuance is 3,859 million, which makes 14.78 percent of the company's authorized capital prior to the share issue, and 12.87 percent of the capital after the issue).

The Board of Directors instructed the Management Board to finalize the programme for the preparation and placement of additional share of OAO "Volzhskaya TGC" by including a provision which makes it possible for a strategic investor to acquire the new shares being offered and the "government stake" shares put up for sale by RAO "UES of Russia".

Moreover, the Board of Directors instructed the Management Board of RAO "UES of Russia" to ensure that, in the course of additional share offerings by the WGCs/TGCs, strategic investors are given an opportunity to make bids for the entire amount of the "government stake" shares at the price stated in the strategic investor's bid for the additional shares in the WGC/TGC concerned.

* The Board of Directors of RAO "UES of Russia" approved the structure for the establishment of OAO "Volzhskaya TGC" on 3 September 2004. Volzhskaya TGC (TGC-7) is to be formed in four phases: establishment of TGC-7 and transfer of the generation assets of OAO "Samaraenergo", OAO "Saratovenergo", and OAO "Ulyanovskenergo" as capital contributions to TGC-7; spin off of regional generation companies (RGCs) from OAO "Samaraenergo", OAO "Saratovenergo", and OAO "Ulyanovskenergo"; transfer of shares in OAO "Orenburg Thermal Generation Company" to TGC-7; and merger of the RGCs with and into TGC-7. On 1 July 2005, OAO "Volzhskaya TGC" was registered with the authorities, and started operational activities on 1 January 2006.

On 1 April 2006, OAO "Samaraenergo", OAO "Saratovenergo", and OAO "Ulyanovskenergo" were reorganized and spin-off RGCs were established, OAO "Samara Generation Company", OAO "Saratov Generation Company", and OAO "Ulyanovsk Generation Company". On 9 March 2007, shares of OAO "Orenburg Thermal Generation Company" were contributed to the authorized capital of OAO "Volzhskaya TGC".

On 1 June 2007, OAO "Volzhskaya TGC" completed all legal and corporate procedures required to consolidate its assets.

The aggregate installed generation capacity controlled by Volzhskaya TGC (TGC-7), including OAO "Orenburg Thermal Generation Company", is 6879.7 MW of electricity and 31089.7 Gcal/h of heat.

* * *

The Board of Directors approved changes to its previous resolutions to sell the Company's shareholding in OAO "TGC-1"* attributable to the "government stake".

On 27 April 2007, the Board of Directors approved the sale of the "government stake" shares in TGC-1 owned by RAO "UES of Russia" (approximately 18 percent after the issuance of additional shares) simultaneously with the issuance by TGC-1 of additional shares to raise investments needed to construct new and modernize the existing capacity.

Based on the results of redistribution of shares among OAO "State Holding", OAO "HydroWGC State Holding" and the Special Purpose Holding Companies (SP HoldCos), which were approved by the Board of Directors on 27 July 2007, adjustments were made to the amount of the "government stake" in TGC-1, which was increased from the previously approved 861,388,821,543 (17.94 percent) to 1,104,735,971,846 ordinary shares (23.01 percent).

The Board of Directors also agreed to granting a strategic investor a postponement of payment of the TGC-1 shares to be sold by RAO "UES of Russia".

The postponement is granted until 28 February 2008, with interest accruing on the amount due at 6 percent per annum. The shares purchased by the strategic investor will not be registered into its name until they are paid in full. This measure will help increase the interest of the investment community in the TGC-1 shares, both those being sold by RAO "UES of Russia" and the new shares offered by TGC-1.

This decision was taken within the framework of the financial arrangements approved by the Board of Directors on 25 May 2007, which will afford flexibility in the sale of WGC and TGC shares owned by RAO "UES of Russia" and attributable to the "government stake".

The Board approved the reduction in the Company's interest in OAO "TGC-1" from 55.7 percent to at least 10.92 percent after the new share offering which will take place simultaneously with the sale of the "government stake" shares. Previously, it was expected that the stake in TGC-1 held by RAO "UES of Russia" would decline to no less than 15.98 percent.

The Board of Directors instructed the Management Board of RAO "UES of Russia" to take steps to ensure that the cash proceeds from the sale of the "government stake" in TGC-1 are transferred to OAO "State Holding".

* * *

The Management Board of RAO "UES of Russia" was instructed to make a provision which will allow strategic investors in a particular WGC or TGC to postpone the payment of shares in the course of sale of the "government stake" shares in that WGC or TGC simultaneously with the placement of new shares in these companies. Such postponement will be granted to investors on equal terms.

* OAO "TGC-1" was registered with the authorities on 25 March 2005 and launched operations on 1 October 2005. At the Board meeting held 29 September 2006, the Board of Directors of RAO "UES of Russia" included TGC-1 in the list of pilot projects to issue additional shares of WGCs and TGC in order to raise funds needed to develop the thermal generation. The terms of the additional share offering of OAO "TGC-1" were approved by the Board of Directors of RAO "UES of Russia" on 9 February 2007. The representatives of RAO "UES of Russia" taking part in the shareholder meeting of OAO "TGC-1" were instructed to vote FOR the approval of the maximum number of additional shares that TGC-1 is authorized to issue at 1,875,228,129,448 ordinary shares, par value RUB0.01 each.

* * *

The Board of Directors of RAO "UES of Russia" instructed RAO UES representatives on the management bodies of OAO "TGC-1" to vote FOR the acquisition by the company of a stake in ZAO "Vasileostrovskaya Energy Company" (ZAO "VEC").

TGC-1 will purchase additional ordinary shares in VEC, RUB1,000 par value per share, by closed subscription. The number of shares to be purchased should be such as to ensure that TGC-1 holds at least 25 percent plus one share in VEC. TGC-1 will make payment for the shares in kind, i.e. the property located on the Vasilievsky Island in Saint Petersburg, Vasileostrovskaya CHPP-7 and the heating grid facilities of Teplovaya Set ('Heating Network') enterprise, Nevsky branch.

The reason for TGC-1 acquiring a stake in VEC is the fact that the VEC model is based on the project modernize and develop the energy supply system on the Vasilievsky Island in Saint Petersburg. The project provides for the commissioning of new capacity at the existing first phase of CHPP-7 (50 MW and 100 Gcal/h) and extension of the service life of the existing part of the power plant; the commissioning of CHPP-7 (370 MW and 545 Gcal/h), as well as the overhaul and development of the electricity and heating grids on the Vasilievsky Island.

As a result, TGC-1, in addition to acquiring a blocking stake in VEC, which will supply energy to the hydraulic-fill sea foreside project which is of strategic importance for the city, will consolidate advanced electricity generation technologies (combined-cycle CHPP), control the entire market for the Vasilievsky Island (aggregate capacity of 510 MW and 1657 Gcal/h, and the connected capacity of 1559 Gcal/h) and the related network infrastructure.

* * *

Information in this part of the press release is not intended for distribution in Australia, Canada, Japan or the United States of America.

The Board of Directors took a decision to optimize the structure for the additional share offering of OAO "WGC-2", including the sale of bonds which can be exchanged for Global Depositary Receipts representing additional shares in WGC-2.

By way of reminder, WGC-2 will offer investors up to 12 billion of its new shares, which makes 45.32 percent of its current authorized capital and 31.18 percent of the authorized capital after the offering. The proceeds from the sale of the new shares will be used to finance WGC-2' projects to build new generation capacity and modernize the existing facilities.

* * *

The Board of Directors of RAO "UES of Russia" heard the Management Board's report on the measures designed to prevent monopolization of the electricity market.

On 27 July 2007, the Board of Directors commissioned the Management Board to present a report on this question.

At today's meeting, the Board noted that RAO "UES of Russia" was actively cooperating with the Federal Antimonopoly Service of Russia (FAS) and the infrastructure organizations to foster competitive relationships in the electricity industry.

The Rules for the Wholesale Electricity (Capacity) Market approved by the Russian Government on 31 August 2006 provide for a mechanism to control and reveal price manipulations on the wholesale market, and to take measures against the electricity suppliers which engage in non-competitive practices on the wholesale market in form of fines affecting capacity payments.

In order to develop these mechanisms, the FAS is currently finalizing a Procedure for identifying electricity (capacity) price manipulations on the wholesale market. This document will determine the procedure for price monitoring and reporting such manipulations to the antimonopoly regulator. FAS experts will review the reports and decide on whether price manipulations on the wholesale market exist or not. If manipulations are determined to exist, the antimonopoly authorities will have the right to issue mandatory orders to the companies that are in violation of the procedure. Under the wholesale market Rules and regulations, the capacity payment for such violating players will be reduced by the amount of damages to be paid to the other market participants in connection with the electricity price "spikes" on the wholesale market.

As these measures may only be applied after a price manipulation is revealed, the antimonopoly bodies are now preparing amendments to the Federal Law On the Electricity Industry in order to prevent and suppress violations by the wholesale market participants. These amendments are designed to clearly determine the peculiarities of antimonopoly regulation and control on the wholesale and retail electricity (capacity) market in light of the general antimonopoly legislation. Also, the amendments to the Law are intended to strengthen the powers of the FAS of Russia in carrying out the antimonopoly regulation and control of the electricity markets, expand the possibilities for preventing and suppressing price manipulations and abuse of the dominant or privileged position on the markets.

These measures will make it possible to put in place efficient mechanisms designed to ensure fair competition among market participants and will prevent unfounded price spikes on the market and the harm to electricity consumers and the market as a whole.

The Board of Directors deemed it necessary to continue the efforts by the Management Board of RAO "UES of Russia" together with the energy-related ministries and agencies in shaping the regulatory framework and enforcement measures designed to enhance control over antimonopoly compliance in the electricity industry, and report on the progress made at physical meetings of the Board of Directors.

* * *

Information in this part of the press release is not intended for distribution in Australia, Canada, Japan or the United States of America.

The Board of Directors approved the sale of the shares in OAO "TGC-10" held by RAO "UES of Russia", which are attributable to the "government stake", simultaneously with the issuance of additional shares by OAO "TGC-10".

The Company will offer for sale 255,455,754 ordinary shares in TGC-10, par value of RUB1 per share,

The share sale will be subject to a mandatory condition that an Agreement be made between OAO "TGC-10", ZAO "Center for Financial Settlements", and NP "ATS" providing for the supply of new capacity to the wholesale market.

The investor will not become the owner of the shares purchased by it until the shares are fully paid, and a shareholder agreement is approved and executed by RAO "UES of Russia". The strategic investor will be able to suggest its modifications to the shareholder agreement, provided that such suggestions are submitted within 30 days after the execution date of the share purchase agreement, subject to their approval by RAO "UES of Russia" and Russia's Ministry of Economic Development and Trade.

The Board of Directors instructed the Management Board of RAO "UES of Russia" to ensure that the cash proceeds (less the selling expenses, taxes and other required payments) from the sale of the "government stake" shares are transferred to OAO "State Holding".

The Board approved the reduction in the Company's interest in OAO "TGC-10" from 81.56 percent to at least 12.68 percent after the new share offering and the sale of the "government stake" shares.

At its meeting of 22 June 2007, the Board of Directors of RAO "UES of Russia" approved the Programme for the preparation and issuance of additional shares by OAO "TGC-10" by open subscription. The maximum number of ordinary shares authorized for issuance at 500,000,000 ordinary shares, RUB1.66 par value each (which makes 115.63 percent of the authorized capital of OAO "TGC-10" prior to the offering, and 53.62 percent after the offering). The actual amount of additional shares to be issued will be determined by the Board of Directors of TGC-10 according to the need to raise RUB32 billion in equity to finance the company's investment programme. It is expected that the dual track system will be used for the TGC-10 offering.

If the new shares are acquired by a strategic investor, a share purchase agreement will be made with such investor, which will provide that the investor will also be able to purchase the shares comprising the "government stake" at the same price as the new shares.

If the Board of Directors of OAO "TGC-10" approves the placement of additional shares to financial investors, the decision on the terms of sale of the shares comprising the "government stake" will be taken by the Board of Directors of RAO "UES of Russia" which will consider the matter once again.

* * *

The Board of Directors of RAO "UES of Russia" approved the programme for the preparation and issuance of new shares by OAO "Yeniseyskaya TGC" (TGC-13).**

At its meeting of 29 September 2006, the Board of Directors of RAO "UES of Russia" included OAO "Yeniseyskaya TGC" on the list of the "second-tier" companies to offer new shares in order to raise the funds needed for the company's investment programme.

The Board of Directors instructed the representatives of RAO "UES of Russia" taking part in the shareholder meeting of OAO "Yeniseyskaya TGC" to vote FOR the approval of the following maximum amount of additional shares authorized for issuance: 1,334,000 ordinary shares, RUB226.42 par value each (which makes 23.57 percent of the authorized capital of Yeniseyskaya TGC prior to the offering, and 19.07 percent after the offering, without taking into account the changes connected with the completion of the company's establishment contributing shares of "Kyzylskaya CHPP" to its capital).

The actual amount of shares to be issued will be determined by the Board of Directors of Yeniseyskaya TGC depending on the amount of funds needed for the company's investment programme which is currently estimated at RUB7 billion.

The company's shares will be offered to the general public (by "open subscription") with payment for the shares to be made in cash. The Board of Directors of OAO "Yeniseyskaya TGC" will determine the price at which the new shares will be offered, including to the persons entitled to the pre-emptive right to purchase such shares, based on the results of the book-building process and/or the results of the tender process among strategic investors. The price will be the same for potential investors and the existing shareholders of TGC-10 entitled to the pre-emptive right to purchase the new shares.

It is expected that the dual track system will be used for the TGC-10 offering. The dual track system provides for carrying out simultaneous measures to prepare for a public share offering (with listing on the Russian and/or international stock exchanges) and for the private placement of the shares to a strategic investor, with subsequent implementation of one of these options. The choice between the above options will be made at a later stage of the transaction, depending on which of the alternatives best meets the interests of the generation company.

Simultaneously with the placement of additional shares of Yeniseyskaya TGC, RAO "UES of Russia" will sell its shares in the company attributable to the "government stake". The Board of Directors of RAO "UES of Russia" has approved the sale of such shareholding.

The Company will offer for sale 1,003,337 ordinary shares in Yeniseyskaya TGC.

If the Board of Directors of OAO "Yeniseyskaya TGC" approves the placement of additional shares to financial investors, the decision on the terms of sale of the "government stake" shares will be taken by the Board of Directors of RAO "UES of Russia", which will consider this issue once again.

If the new shares are acquired by a strategic investor, a share purchase agreement will be made with such investor providing that it will also purchase the shares comprising the "government stake" at the same price as the new shares.

The purchase of these shares will be subject to a condition that an Agreement be made between OAO "Yeniseyskaya TGC", ZAO "Center for Financial Settlements", and NP "ATS" providing for the supply of new capacity to the wholesale market.

The investor will not become the owner of the shares purchased by it until the shares are fully paid, and a shareholder agreement is approved and executed by RAO "UES of Russia" and the buyer, which is a strategic investor, provided that the buyer's suggestions on modifications to be made to the shareholder agreement are submitted within 30 days after the execution date of the share purchase agreement, subject to their approval by RAO "UES of Russia" and Russia's Ministry of Economic Development and Trade.

The Board of Directors instructed the Management Board of RAO "UES of Russia" to ensure that the cash proceeds (less the selling expenses, taxes and other required payments) from the sale of the "government stake" shares held by RAO "UES of Russia" in Yeniseyskaya TGC are transferred to OAO "HydroWGC State Holding".

These funds will be used to finance the HydroWGC investment programme.

The Board approved the reduction in the RAO "UES of Russia" interest in the authorized capital OAO "Yeniseyskaya TGC" from 56.92 percent to at least 31.72 percent after the new share offering and the sale of the "government stake" shares.

The minority interests in TGC-10 and TGC-13 after the share offering and sale of the "government stake" shares will make 12.68 percent and 31.72 percent, respectively. These shares will be retained by OAO RAO "UES of Russia" until the second phase of the Company's reorganization is completed and will be distributed among the Company's minority shareholders.

* TGC-10 is to be established on the basis of the generation assets located in the Chelyabinsk Region, Tyumen Region and Kurgan Region of Russia. The intended corporate structure of TGC-10 will be achieved after the generation assets of OAO "Kurgan Generation Company" are included in TGC-10. The authorized capital of the Company is RUB717,827,085.3 and is divided into 432,425,955 ordinary shares of RUB1.66 par value each. The combined installed capacity of the TGC's power plants, taking into account the capacity of Kurgan Generation Company, will make 3,129 MW of electricity and 14,675 Gcal/h of heat. TGC-10 shares are traded on the Classical Market and Exchange Market of OAO "RTS Stock Exchange" and on ZAO "MICEX Stock Exchange".

** OAO "Yeniseyskaya TGC" (TGC-13) was registered on 1 July 2005 in the city of Abakan, and on 21 December 2006 in the city of Krasnoyarsk. On 31 December 2006, the first phase of the company's establishment was completed, with OAO "TGC-13" and OAO "Krasnoyarskaya Generatsiya" merging into OAO "Khakassia Generation Company", which changed its name to "Yeniseyskaya TGC" (TGC-13). It is planned that the intended corporate structure of Yeniseyskaya TGC (TGC-13) will be achieved not later than 1 October 2007, after OAO "Kyzylskaya CHPP" merges with TGC-13. The aggregate installed generation capacity controlled by Yeniseyskaya TGC is 2,458 MW of electricity and 6,113 Gcal/h of heat. On 27 March 2007 , the company's ordinary shares started trading on the Exchange Market and Classical Market of the RTS Stock Exchange, and on 11 April 2007 its shares were admitted to trading in the MICEX system and were included in the Section "Non-listed securities".

* * *

The Board of Directors approved the Agreement on joint actions to be taken by RAO "UES of Russia", the Moscow City Government to consolidate the heating network assets located in Moscow.

The Agreement provides that in the process of consolidation of the heating network assets the Moscow City Government and/or a company fully controlled by it will acquire all shares in OAO "Moscow Heat Distribution Company" ("MHDC") owned by RAO "UES of Russia" (50.9 percent) at the fair market value of RUB13.66 billion determined on the basis of an independent appraiser's report.**

The above agreement was entered into as part of the process to implement the Agreement on Cooperation in the course of reforming the Moscow city energy sector executed by RAO "UES of Russia", the Moscow City Government, OAO "Mosenergo", and the Moscow City Regional Energy Commission in September 2003. The parties then agreed that, after OAO "Mosenergo" is unbundled by lines of business, the city heating grid company spun off from Mosenergo would be consolidated with the assets and thermal grid facilities owned by the city of Moscow.

* OAO "Moscow Heat Distribution Company", a spin-off of OAO "Mosenergo", was registered with the authorities on 1 April 2005. MHDC supplies heat to consumers in the city of Moscow and some of its suburbs. The company is managed by OAO "Moscow Management Energy Grid Company" established on a parity basis by RAO "UES of Russia" and the Moscow City Government in order to ensure reliable operation of the heating grid facilities in Moscow.

** The valuation of the shareholding in OAO "Moscow Heat Distribution Company" was conducted by ZAO "Deloitte and Touche CIS" and OOO "Institut Problem Predprinimatelstva" ("Institute for Entrepreneurship Problems"). The results of the valuation and the fair market value of the MHDC shares was agreed by the parties to the Agreement and the Appraisal Committee of the RAO UES Board of Directors.

* * *

The Board of Directors consented to the waiver by RAO "UES of Russia" of its pre-emptive right to purchase the ordinary shares of OAO "Power Machines" from Burbot Limited.

Under the agreement entered into by the major shareholders of OAO "Power Machines" on 6 December 2005, if one of the shareholders decides to sell its shares, the other parties to the agreement would have a pre-emptive right to purchase those shares. On 27 June 2007, Burbot Limited gave notice to RAO "UES of Russia" and invited the Company to purchase its shares. As a result of the transaction, the interest held by RAO "UES of Russia" in Power Machines would rise from 25 percent plus one share to 55.416 percent.

Having reviewed the terms of the pre-emptive right to purchase Power Machines shares, the Board of Directors came to the conclusion that for such purchase RAO "UES of Russia" would have to divert significant financial resources for a long term.

Moreover, it might cause certain difficulties in the preparation for the sale of the RAO UES holding in Power Machines, a transaction which the Board of Directors approved in principle on 30 March 2007. The decision to sell the shares is due to the fact that, by now, the key goals that the Company pursued by purchasing the shares in Power Machines have been generally achieved.

Over the past two years, the market capitalization of OAO "Power Machines" has quadrupled. A target vision for the development of Power Machines has been developed and adopted. By 2013, $1.2 billion in funds will be spent on the implementation of the development programme of OAO "Power Machines".

The programme is designed to ensure that the power engineering company manufactures modern competitive equipment that will meet the growing demand from electricity companies. The programme envisages modernization and upgrade of the manufacturer's existing production capacity and construction of new facilities for the manufacture of turbines and high capacity generators.

The development programme will be primarily financed with the proceeds from two additional share issues of Power Machines, the first of which was completed in August 2007. The proceeds from the share issue amounted to more than $270 million in funds for the company's development.

Moreover, the need to dispose of the RAO UES' holding in Power Machines is due to the completion of the RAO UES reorganization scheduled for 1 July 2008.

As provided by the resolution of the RAO UES Board, the Company will dispose of its holding in Power Machines through competitive process to a closed pool of potential investors. This step will make it possible to admit only those participants that have sufficient financial resources and the relevant experience in the business.

The Board of Directors approved the start price for the competitive sale at RUB5.40 per ordinary shares in Power Machines.

The Board of Directors instructed the Management Board of RAO "UES of Russia" to produce the principal terms for the competitive sale of the holding in OAO "Power Machines" to the pre-agreed potential investors.

* OAO RAO "UES of Russia" currently holds 25 percent plus one share in Power Machines. The other major shareholders are Siemens AG (25 percent plus one share) and Burbot Limited (30.4 percent).

* * *

The Board of Directors made adjustments to the procedure for the distribution of the proceeds from the sale of the blocking stake in WGC-5 held by RAO "UES of Russia".

The public auction to sell a 25.03 percent stake in WGC-5 was held on 6 June 2007. The auction winner was Italy's Enel. The auction price was RUB39.2 billion, nearly 60 percent higher than the reserve price.

According to the resolution to the Board of Directors which was taken some time before the auction, the auction proceeds less the selling expenses, taxes and other mandatory payments were to be used to finance the investment programmes of OAO "UES FGC" and OAO "HydroWGC", and to create a reserve for the reorganization of RAO "UES of Russia".

At its today's meeting, the Board of Directors resolved to use part of the proceeds from the sale of the WGC-5 shares to finance the preliminary feasibility study for the construction of a series of Kambaratinskie HPPs in the Republic of Kyrgyzstan.

The preliminary feasibility study for the construction project of the Kambaratinskie HPPs is being conducted by the energy companies' engineering staff in accordance with the instruction of the Intergovernmental Commission for Cooperation between Russia and Kyrgyzstan. As resolved at today's Board meeting, RUB50 million in funds will be used to finance this work. It is expected that the preliminary feasibility study for the project will be completed by end-Q3 2007.

Also, the energy company's management suggested that part of the proceeds from the sale of the blocking stake in WGC-5 will be used to finance the design and exploration work for the project to export electricity to China. Currently, calculations are being made to substantiate the feasibility of investments in the construction of generation capacity, and to develop a standard plan for the construction of an efficient pulverized coal fired power unit, including the one using the fluidized-bed combustion (FBC) technology. Moreover, the Company is doing a feasibility study for investments in the supply of 3600 MW of new capacity to the city of Shen-yang, China. The proposal to finance the project with the proceeds from the sale of the WGC-5 holding is due to the fact that the fact that Russia's Federal Tariffs Service does not include the cost of financing in the subscription fee for RAO "UES of Russia". However, due to the political importance of the project, the energy company has decided that it will finance the project with its own funds.

The Board of Directors instructed the Management Board of RAO "UES of Russia to present a report on the progress made in the China electricity export project at the next scheduled meeting of the Board of Directors. Depending on what decision is taken by the Board of Directors with respect to the use of the proceeds from the sale of WGC-5 shares to finance the design and exploration work on the electricity supplies to China.

Both of the above projects are of strategic importance for Russia. RAO "UES of Russia" is taking part in these projects in accordance with the intergovernmental understandings on implementing international projects in the electricity industry and expanding the possibilities for energy cooperation in North-East Asia by complementing the electricity generation and consumption facilities.

The amount of funds allocated for the FGC investment programme will make RUB22 billion. OAO "HydroWGC" will receive RUB 3 billion in funds. The remaining part of the proceeds (after the payment of taxes and asset selling expenses) in the amount of RUB1.9 billion will be used to pay the reorganization costs of RAO "UES of Russia".

* * *

The Board of Directors of RAO "UES of Russia" took a decision on the distribution of the cash proceeds from the sale of the "government stake" shares in OAO "WGC-4' and OAO "TGC-1" owned by RAO "UES of Russia".

The shares will be sold simultaneously with the issuance of additional shares by these companies, which is scheduled for September 2007. After the payment of taxes and other mandatory payments, the proceeds are to be used to finance the investment programmes of OAO "UES FGC" and OAO "HydroWGC".

* * *

The Board of Directors considered the matters relating to the preparation for the EGM of RAO "UES of Russia" to decide on the second (final) phase of the Company's reorganization.

As resolved by the Board of Directors on 27 July 2007, the EGM will be held on 26 October 2007 by absentee voting (i.e. without holding a physical meeting). The record date for the EGM was 23 August 2007.

According to the model for the second (final) phase of the Company's reorganization, by 1 July 2008 the asset restructuring will be completed via demerger of the companies comprising the ultimate sector structure (FGC, System Operator, WGCs, TGCs, etc.) and the Parent Company, RAO "UES of Russia", will terminate its activities.

Today, the Board of Directors approved the EGM materials, including the ratios which will be used to distribute the shares in the HoldCos which will be spun off from RAO "UES of Russia" during the final phase of the RAO UES reorganization among the shareholders, as well as the share conversion ratios for converting shares in the spin-off companies into shares of the companies of the intended (post-reform) sector structure, and the spin-off balance sheet. These materials were prepared by the Management Board of RAO "UES of Russia" taking into account the comments and suggestions made by the representatives of the Company's shareholders in line with the commission given by the Board of Directors at its previous meeting of 27 July 2007.

Each minority shareholder in OAO RAO "UES of Russia" (except for the state and those minority shareholders who participated in the reallocation of the shares among themselves and the state) who voted for the reorganization or abstained from voting on this matter at the meeting will be entitled to receive for each ordinary share in RAO "UES of Russia" held by it:

• 1 ordinary share in OAO "IDC Holding";
• 1 ordinary share in OAO "RAO Energy Systems of the East";
• 10.1056041051790000 ordinary shares in OAO "UES FGC";
• 3.4531683396016400 ordinary shares in OAO "HydroWGC";
• 0.9620205574069320 of an ordinary share in OAO "WGC-1";
• 0.5008006166421850 of an ordinary share in OAO "WGC-2";
• 0.4114097481764260 of an ordinary share in OAO "WGC-3";
• 1.0273778717938000 ordinary shares in OAO "WGC-4";
• 0.5836484771577890 of an ordinary share in OAO "WGC-6";
• 38.2331857890853000 ordinary shares in OAO "TGC-1";
• 12.9828789875932000 ordinary shares in OAO "TGC-2";
• 0.3359840017950100 of an ordinary share in OAO "Mosenergo";
• 15.8654792945781000 ordinary shares in OAO "TGC-4";
• 15.3258994310428000 ordinary shares in OAO "TGC-6";
• 0.3344068074269590 of an ordinary share in OAO "Volzhskaya TGC";
• 17.2624772854249000 ordinary shares in OAO "Southern Generation Company TGC-8";
• 67.3347215511992000 ordinary shares in OAO "TGC-9";
• 1.4709712305639300 ordinary shares in OAO "TGC-10", taking into account the stock split (or 0.0088612724541053 ordinary shares without taking into account the stock split);**
• 6.1863639563592800 ordinary shares in OAO "TGC-11";
• 0.6991042495845980 ordinary shares in OAO "Kuzbassenergo", taking into account the stock split (or 0.0069910424958460 without taking into account the stock split);
• 1.7232742022754400 ordinary shares in OAO "Yeniseyskaya TGC" taking into account the stock split (or 0.0000761096282252 of an ordinary share without taking into account the stock split);
• 9.7136226718400300 ordinary shares in OAO "TGC-14";
• 41.8643489213398000 ordinary shares in OAO "Sochinskaya TPP", taking into account the stock split (or 0.0041864348921340 of an ordinary share without taking into account the stock split).

and for each preferred share in RAO "UES of Russia" held:

• 1 preferred share in OAO "IDC Holding";
• 1 preferred share in OAO "RAO Energy Systems of the East";
• 9.2547122395228300 ordinary shares in OAO "UES FGC";
• 3.1624115654071800 ordinary shares in OAO "HydroWGC";
• 0.8810184264732720 of an ordinary share in OAO "WGC-1";
• 0.4586332047209130 of an ordinary share in OAO "WGC-2";
• 0.3767690473799700 of an ordinary share in OAO "WGC-3";
• 0.9408726549887700 of an ordinary share in OAO "WGC-4";
• 0.5345052753810990 of an ordinary share in OAO "WGC-5";
• 35.0139515456442000 ordinary shares in OAO "TGC-1";
• 11.8897205768378000 ordinary shares in OAO "TGC-2";
• 0.3076941488438700 of an ordinary share in OAO "Mosenergo";
• 14.5296059379746000 ordinary shares in OAO "TGC-4";
• 14.0354586989490000 ordinary shares in OAO "TGC-6";
• 0.3062497542416090 of an ordinary share in OAO "Volzhskaya TGC";
• 15.8089766979922000 ordinary shares in OAO "Southern Generation Company TGC-8";
• 61.6651379965883000 ordinary shares in OAO "TGC-9";
• 1.3471154529504400 ordinary shares in OAO "TGC-10", taking into account the stock split (or 0.0081151533134697 of an ordinary share without taking into account the stock split);
• 5.6654721112338500 ordinary shares in OAO "TGC-11";
• 0.6402396717695780 of an ordinary share in OAO "Kuzbassenergo", taking into account the stock split (or 0.0064023967176958 of an ordinary share without taking into account the stock split);
• 1.5781745144438500 ordinary shares in OAO "Yeniseyskaya TGC" taking into account the stock split (or 0.0000697011975287 of an ordinary share without taking into account the stock split);
• 8.8957356428711100 ordinary shares in OAO "TGC-14";
• 38.3393707421631000 ordinary shares in OAO "Sochinskaya TPP", taking into account the stock split (or 0.0038339370742163 of an ordinary share without taking into account the stock split).

If a minority shareholder of RAO "UES of Russia" votes against or does not take part in the voting on the Company's reorganization, it will receive the following amounts of shares for each ordinary shares in RAO "UES of Russia" held:

• 1 ordinary share in OAO "IDC Holding";
• 1 ordinary share in OAO "RAO Energy Systems of the East";
• 22.7734299924221000 of ordinary shares in OAO "UES FGC";
• 4.5042344361292300 ordinary shares in OAO "HydroWGC";
• 0.3111680046437920 of an ordinary share in OAO "WGC-1";
• 0.1619852376387550 of an ordinary share in OAO "WGC-2";
• 0.1330715330825430 of an ordinary share in OAO "WGC-3";
• 0.3323079947927110 of an ordinary share in OAO "WGC-4";
• 0.1887825895738680 of an ordinary share in OAO "WGC-6";
• 12.3666215254615000 ordinary shares in OAO "WGC-1";
• 4.1993453445427100 ordinary shares in OAO "TGC-2";
• 0.1086748829074820 of an ordinary share in OAO "Mosenergo";
• 5.1317297710541400 ordinary shares in OAO "TGC-4";
• 4.9572012870321500 ordinary shares in OAO "TGC-6";
• 0.1081647353636870 of an ordinary share in OAO "Volzhskaya TGC";
• 5.5835923367304100 ordinary shares in OAO "Southern Generation Company TGC-8"
• 21.7795875431269000 ordinary shares in OAO "TGC-9";
• 0.4757893988635290 ordinary shares in OAO "TGC-10", taking into account the stock split (or 0.0028662011917720 without taking into account the stock split);
• 2.0009952110475800 ordinary shares in OAO "TGC-11";
• 0.2261270538413420 of an ordinary share in OAO "Kuzbassenergo", taking into account the stock split (or 0.0022612705384134 without taking into account the stock split);
• 0.5573974390126760 ordinary shares in OAO "Yeniseyskaya TGC" taking into account the stock split (or 0.0000246178535029 without taking into account the stock split);
• 3.1418960451389000 ordinary shares in OAO "TGC-14";
• 41.8643489213398000 ordinary shares in OAO "Sochinskaya TPP", taking into account the stock split (or 0.0041864348921340 of an ordinary share without taking into account the stock split);
• 1.0489944190557900 ordinary shares in OAO "Centerenergoholding";
• 0.9662481705706150 of an ordinary share in OAO "Sibenergoholding";
• 3.5168944927650000 ordinary shares in OAO "Intergeneratsiya".

and for each preferred share in RAO "UES of Russia" held:

• 1 preferred share in OAO "IDC Holding";
• 1 preferred share in OAO "RAO Energy Systems of the East";
• 20.8559071870602000 ordinary shares in OAO "UES FGC";
• 4.1249778966071600 ordinary shares in OAO "HydroWGC";
• 0.2849676586527860 of an ordinary share in OAO "WGC-1";
• 0.1483460806295720 of an ordinary share in OAO "WGC-2";
• 0.1218669099969930 of an ordinary share in OAO "WGC-3";
• 0.3043276616311660 of an ordinary share in OAO "WGC-4";
• 0.1728870955317470 of an ordinary share in OAO "WGC-6";
• 11.3253519930176000 ordinary shares in OAO "TGC-1";
• 3.8457604665322100 ordinary shares in OAO "TGC-2";
• 0.0995244577666725 of an ordinary share in OAO "Mosenergo";
• 4.6996381243313700 ordinary shares in OAO "TGC-4";
• 4.5398049386640400 ordinary shares in OAO "TGC-6";
• 0.0990572646460649 of an ordinary share in OAO "Volzhskaya TGC";
• 5.1134538619777100 ordinary shares in OAO "Southern Generation Company TGC-8";
• 19.9457462719956000 ordinary shares in OAO "TGC-9";
• 0.4357279314792190 of an ordinary share in OAO "TGC-10", taking into account the stock split (or 0.0026248670514248 of an ordinary share without taking into account the stock split);
• 1.8325114142773800 shares in OAO "TGC-11";
• 0.2070871559079020 of an ordinary share in OAO "Kuzbassenergo", taking into account the stock split (or 0.0020708715590790 of an ordinary share without taking into account the stock split);
• 0.5104645746478100 of an ordinary share in OAO "Yeniseyskaya TGC" taking into account the stock split (or 0.0000225450302380 of an ordinary share without taking into account the stock split);
• 2.8773483981382100 ordinary shares in OAO "TGC-14";
• 38.3393707421631000 ordinary shares in OAO "Sochinskaya TPP", taking into account the stock split (or 0.0038339370742163 of an ordinary share without taking into account the stock split).
• 1.0489944190557900 preferred shares in OAO "Centerenergoholding";
• 0.9662481705706150 preferred shares in OAO "Sibenergoholding";
• 3.5168944927650000 preferred shares in OAO "Intergeneratsiya".

The shareholders of RAO "UES of Russia" of record as of 23 August 2007 who did not take part in the vote or voted against the Company's reorganization will be entitled, within 45 days after the meeting, to tender their shares for repurchase by RAO "UES of Russia". The share repurchase price has been fixed by the Board of Directors at RUB32.15 per ordinary share and RUB29.44 per preferred share of RAO "UES of Russia".

The final reorganization and assets distribution of RAO "UES of Russia" is planned for 1 July 2008. To participate in the final distribution of its assets, a shareholder would have to own shares of RAO "UES of Russia" as at the record date (expected in June 2008). The record date will be fixed by a separate decision of the RAO UES Board. Advance notice of the record date will be circulated to the shareholders and stock market participants. RAO UES shares will continue to trade on stock exchanges until the record date and closure of books in June 2008.

OAO RAO "UES of Russia" emphasized that one of its key goals is to deliver value to its shareholders and will ensure timely, open and expressly inform the investment community on the essence of and the timeframe for all processes relating to the Company's reform.

All EGM materials, including the ratios for the redistribution of shares in the companies of the intended (post-reform) sector structure, the ratios for the conversion of intermediate companies' shares into shares of the companies comprising the ultimate sector structure, and the spin-off balance sheet will be posted on the RAO "UES of Russia" corporate website.