Kievenergo's Electricity Becomes More Valuable.

According to the National Energy Regulation Commission (NERC), the average tariff at which Kievenergo (KIEN: BUY) sold electricity to the Wholesale Electricity Market (WEM) increased from 19.2 USD/MWh (tariff acted in Jan 2005 – Feb 2006) to 38.4 USD/MWh in March. This increase in KIEN’s electricity value is explained by the fact that the company started selling electricity on the competitive market. Concorde Capital: Before March 2006 the company sold electricity to WEM at a pre-determined tariff, and then bought electricity back from WEM at the same tariff to supply its customers (Kyiv city). Now KIEN sells all the electricity it produces in accordance with the rules pertaining to the capacity tender market, which implies a two times higher purchase price for electricity it produces (please refer to our KIEN update of March 7 for more details). This change in KIEN’s business model is expected to boost the company’s profits in 2006.