Breaking Down the Power Plan

Anatoly Chubais, the overseer of Russia's privatization process in the 1990s, took over as chief executive at the country's electricity monopoly in 1998, when the company was in danger of bankruptcy.

It was saddled with enterprises and regional governments that were regularly in arrears on their payments and a lack of investment on the part of the government.

The result was frequent -- and oftentimes lengthy -- cutoffs of electricity and heating for many customers.

The current changes began in 2003, when President Vladimir Putin signed off on a wide-reaching plan to privatize the power-generation sector and create a competitive market in the electricity sector.

The reform was planned in two stages.

The first stage saw UES subsidiaries and regional assets divided into three groups: generation, distribution and sales.

The second involved the creation of 20 major companies -- 14 TGKs, or territorial generating companies, which mainly provide heating, and six OGKs, which are wholesale thermal generating companies that focus on generating electricity. All 20 companies were to be sold to private investors, Russian and foreign.

A federal company uniting all of the country's hydro generating plants, another tying together interregional distribution networks and a third for coordinating activities on the federal grid service will all remain in the hands of the state.

The goal of the auction process is to raise as much as 1 trillion rubles ($42.6 billion). So far, through the sale of the state's stakes in OGKs and TGKs and additional share emissions, UES has raised almost 797 billion rubles ($34 billion).

The plan will also calls for the deregulation of electricity prices, with rates for industry allowed to float by 2011 and those for private consumers to be set by the market by 2014.

By 2011, 30,000 megawatts of generation capacity and 70,000 kilometers of electric lines are to be introduced by the purchasers of the new companies in accordance with the conditions of the auction, at an estimated cost of 3.4 trillion rubles ($145 billion).