Russia's RAO UES has signed an agreement with the Kamchatka Region Administration on cooperation in developing the region's electricity sector and reducing its dependence on external fuel supplies.

The agreement was signed by the Kamchatka Region governor Mikhail Mashkovtsev, UES chairman Anatoly Chubais, and OAO Far Eastern Energy Management Company director general Victor Myasnik.

The parties agreed to join forces to implement investment programs for energy facilities construction and modernization designed to improve the reliability of power to customers in the Kamchatka region, reduce the reliance on fuel brought over from the mainland, and increase the efficiency of electricity production and consumption.

In order to achieve these objectives, there are plans to increase the share of renewable energy sources, in particular exploiting the region’s geothermal and hydro power resources. In addition, the parties will take steps to facilitate the development of Kamchatka’s natural gas fields.

Under the agreement, the Kamchatka Region Administration will set electricity and heat tariffs taking into account the investment component, including the cost of services and borrowing costs.

For their part, in Q1 2007, UES and Far Eastern’s OAO Kamchatskenergo will submit for Kamchatka Region Administration approval a reconstruction and development program for the region’s electricity sector.