IES Envisions Integrated Power Firm

Viktor Vekselberg's energy holding, Integrated Energy Systems, which is emerging as a key player in the liberalized power sector, plans to evolve into a fully vertically integrated company, its chief executive said Thursday.

"We plan vertical integration ... in terms of fuel supply, grids ... all the way down to the end consumer," Mikhail Slobodin said at a news conference.

The state has been seeking to break up the vertically integrated state monopoly Unified Energy System since 2003 to create a free market where dozens of firms work independently in production, distribution and sale of power.

Several large holding companies have, however, reconsolidated the assets split off from UES, threatening to undermine the reforms in many parts of the country.

IES has been active in acquiring grid assets as well as the supply companies that deal with individual consumers.

Slobodin said IES had already gained control of 75 percent of the grids branching out from its power generators, which include two large regional utilities, TGK-5 and TGK-9, with a combined capacity of 5.9 gigawatts.

"In 1 1/2 years we will have control of all the grids surrounding our installations. ... This is only a matter of time," Slobodin said.

IES has been in talks with Gazprom to jointly bid for another large power producer, TGK-7, which is due to be sold next month.