1. 1 Georgian National Energy And Water Supply Regulation Comission Power Losses Nugzar Beridze June 27-July 3, 2008

2. 2 According to Law of Georgia on Electric Energy and Natural Gas Commission by, its decision, approves volumes and calculation methods of allowable normal power losses Commission by, its decision, approves volumes and calculation methods of allowable normal power losses. Legal base

3. 3 Method for identification of normal losses defines principles for calculation of normal power losses volumes It takes into consideration: Tecnical losses in transmission and distribution networks; _ Technical Losses are unevoidable power losses caused by the physical processes in wires and devices associated with transmission of power through electric networks.

4. 4 For the purpose of ensuring work of substations consumption of power for personal use - Consumption of power for personal use for the purpose of ensuring work substations means the volume of power (number), which is necessary for ensuring smooth functioning of substations and creating proper working conditions of the servicing staff. Losses due to instrumental discrepancies of measurements. - Losses of power due to standard instrumental measurement discrepancies means a part of non-accounted for power, not reflected on the meter on sites due to influence of standard technical parameters on results of accounting (negative systemic component of the discrepancy of the accounting system). Standard instrumental discrepancy of the accounting devices, in acceptable limits depends on burden of the relevant electric circuit.

5. 5 Factual losses of power – difference between the power received to the network and that distributed to consumers, determined between data of the accounting system on received and transmitted power. Commercial losses – losses caused by different reasons (including) stealing the power, which is determined incompliance between the data of the control meter and actually paid amount.

6. 6 Losses caused by transmission of power shall be deducted from total losses of the power network of the company. LOsses caused by transmission of power through the licensed holder of the network shall not be reflected in the distribution tariff. Losses Caused by Transmission of Power

7. 7 Pursuant to legal requirements losses shall be calculated by the owner of the power network or any competent person upon order of the owner. Technical losses shall be calculated by the certified software. Values received by means of calculating the power losses shall be submitted to the commission for the purpose of approval of normative losses. The plan aimed at reduction of losses in the next year shall be submitted to the commission. Calculation of Normative Losses

8. 8 Accuracy of submitted calculations shall be reviewed and verified by the commission. If necessary, calculations may be transferred to an independetn expert for evaluation. In the end of each year, the license holders shall present the commission with the actual losses values as well as a structural analysis. In case of substantiated request of the license holder, losses may be corrected. Approval of Normative Losses

9. 9 “On Approval of Rules and Procedures for Methodology on Establishment of Electricity Tariffs” The cost of energy and power fully reflects the losses of the transmission and distribution networks. Allowable volume of normative loss of power for each level of voltage for distribution and transmission shall be considered in the tariff. For the purpose of calculating the retail tariff, the cost of energy purchased by the distribution company, cost of power and distribution tariff are consolidated. The following is calculated with consideration of allowable losses. Resolution of the National Regulations Commision of July 1, 1998, # 3: Resolution of the National Regulations Commision of July 1, 1998, # 3:

10. 10 The sub-law in force: Resolution of the Commission of May 11,2006, # 17: “On Approval of Normative Losses in the Electricity Network of the Georgian Energy System”

11. 11 E Normative losses of electricity during transmission and distribution after putting the produced or imported electricity in the network: Total losses – 13,2% on transmission - 4,41% (500-220-110-35 kv) on distribution - 110-35 kv - 2,8% - 10 (6)-0,4 kv - 5,99%

12. 12 Noramtive losses in networks of license holders out of the tiatl volume of electricity: a) JSC “Energo-Pro Georgia” network – 14,61% {110-35-10(6)-0,4 kv} b) JSC “Telasi” network – 12,4 %. {110-35-10(6)-0,4 kv} g) JSC “Kakheti Energy Distribution” network – 10,5 %. {10 (6) -0,4 kv}

13. 13 By decision of January 21, 2000, # 2/2: In the transmission network - (500-35 kv): 10,56 %; Distribution networks 110-35-10(6)-0,4 kv: Distribution networks - 13,0 % By decision # 63 of July 12, 2002: In the transmission network 500-35 kv – 9,96% In the distribution network: 13,0% Dynamics of Determining Normative Losses in Normative Acts of the Commission

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15. 15 JSC Telasi -NNormal losses – 12,4%; - actual losses – 26%. JSC Energo-Pro Georgia -NNormal losses – 14, 61 %; - - actual losses – 18%. JSC Kakhetis Energodistribucia -NNormal losses – 10,5 %; - - actual losses – 25,7%. Power losses in distribution utilities; networks Power losses in distribution utilities; networks (2007 w.)

16. 16 Losses in Georgian State Electicity System Ltd. electricity network (%), 2007 average annual – 1.94%

17. 17 Losses in JSC Telasi electricity network (%), 2007 average annual – 26% Losses in JSC Telasi electricity network (%), 2007 average annual – 26%

18. 18 Losses in JSC Energo-Pro Georgia electricity network (%), 2007 average annual – 18% Losses in JSC Energo-Pro Georgia electricity network (%), 2007 average annual – 18%

19. 19 Losses in JSC Kakhetis Energodistribucia electricity network (%), 2007 average annual – 25.7% Losses in JSC Kakhetis Energodistribucia electricity network (%), 2007 average annual – 25.7%

20. 20 Thank You For Attention