Real sales of electrical power not to start before January 2003

The real sector for selling electrical power will begin to operate notearlier than in the middle of January 2003, a representative of theAdministrator of the Wholesale Trading System for Electrical Power Market(ATS) told RBC. The Russian government is to make a respective decision onstarting trade on the free electrical power market, following thepresentation of preliminary (imitating) trade, whose start is scheduled forSeptember 9, 2002, by the ATS Supervisory Board. The ATS official pointed out that after the middle of January 2003, theFederal Wholesale Electrical Power Market (FOREM) would consist of threesectors: the sector for deals at regulated rates, a sector for deals atfree rates, and a balancing sector for deals on excessive electrical power,exceeding the forecasted volume of generation. Direct contracts betweensuppliers and buyers can be made in the free trade sector. The official underlined that after the opening of the free market, allparticipants of the FOREM will be obliged to participate in the balancingsector, whereas participation in the free market sector will be voluntary.Each buyer is entitled to buy not more than 30% of the necessary electricalpower in the free market sector, and the other 70% it can buy in theregulated sector. Each supplier is entitled to sell not more than 15% ofits capacity. In order to participate in the free market sector, a participant shouldhave equipment to communicate with the ATS, hourly metering of electricalpower and a contract with the ATS. It is expected that most electricalpower will be sold within the framework of bilateral long-term andmedium-term agreements between buyers and sellers. The price set at theauction for price applications conducted by the ATS will be a referencepoint for prices used for bilateral contracts. .