To carry out the Programme for innovation development the Statement on innovation activities was confirmed by order of the General Director of Kubanenergo on 1 August 2011.

In the accounting year the Company carried out the first stage of this Programme, identifying new innovative processes and setting the priorities for innovative processes being implemented and for planned innovative processes.

In 2011 the following actions set out in the Programme for innovative development were completed:

• a system was drawn up for managing innovation aimed at developing and implementing new technologies and innovation products and services;
• priority areas were defined for scientific research, design and experimental and technological works, a plan for these works was drawn up and the works were begun;
• collaboration with leading institutions of higher education, scientific and design organisations, small and medium sized businesses on questions regarding the scientific research, design and experimental and technological works;
• a range of actions was undertaken in creating systems for managing network assets (a method of organising work in setting up and facilitating the function of a system for managing production assets, a proposal was drawn up on improving the algorithm for calculating the power equipment condition index);
• on 1 August 2011 an organisational structure of the Company was implemented which makes it possible to exclude intermediate management links and as a result optimise expenditure on personnel;
• a range of actions was carried out aimed at developing within the Company of an integrated system of management (updated regulations for all identified processes of the integrated management system were approved and brought into action; internal audits, monitoring processes and analysis of achievement of performance indicators were carried out in all branches and executive bodies at the Company);
• an integrated system for managing risk and internal control was set up (statements on the control environment and the risks of several business processes were introduced);
• a range of actions was carried out improving the environmental friendliness of production (a Programme to carry out the environmental policy of Kubanenergo for 2011–2013 was approved; introduction of new environmental protection technologies, materials, equipment and work methods was organised; environmental monitoring was carried with assessment of reduced environmental risks in implementing environmental protection technologies);
• Target Programmes were carried out for modernisation, renovation and technical refitting of equipment and networks to the volumes of the investment and repair programmes at Kubanenergo.

The volume of financing for scientific research, design and experimental and technological projects in 2011 totalled 16.09 million rubles including VAT.

Taking into account the need to resolve problematic questions in the start up of the first innovation cycle the Company’s execution of the Programme for innovation development in 2011 was assessed on a good level.

The Programme for innovation development at Kubanenergo contains the following subjects of scientific research, design and experimental and technological works:

• development and introduction of laser high voltage current metering;
• development and aggreement of special technical conditions on sheathed conductors for construction of 110 kilovolt power lines in heavily built up areas (Olympic facilities);
• investigation and development was carried out of methodological recommendations for using transmitters for monitoring 220 kilovolt power line wire temperatures;
• investigation was carried out for development of the Schedule for Long Term Development of 35 kilovolt and Higher Electricity Networks at Kubanenergo for 2012–2017 with Prospects to 2022;
• ultraviolet cameras were introduced for diagnosis of the condition of suspended insulation at substations and 35–110kilovolt power lines В;
• monitoring of insulation on power transformers in field conditions on the basis of using partial discharge monitoring systems;
• development and introduction of adaptive highly sensitive protection of short range and long range reserve of transformers at tapping and transmission substations;
• development of a software system for targetted recommendations and inexpensive methods of reducing process losses on 6–10 kilovolt networks;
• development of the Standard on meeting the needs of technical policy. System of conditional units of businesses in the electricity network of territorial network organisations, resources for dispatch management.

In 2012 the Programme for innovation develop plans the following work:

• drawing up a system for managing intellectual property at the Company;
• developing and introducing a corrected edition of the Statement on technical policy of the Company;
• introducing a system for managing assets in view of the realisation of such work as data collection on equipment and consumers, calculating indices of condition and the consequences of equipment breakdown, drawing up proposals on correcting the production programme;
• developing an integrated system for managing risk and internal control;
• developing an integrated management system;
• realising work begun in 2011, including those carried out on a regular basis.