Fingrid Group's financial review report 2009
Operating environment
Power system operation
Electricity consumption in Finland in 2009 totalled 81.1 terawatt hours (87.2 terawatt hours in 2008), which was 7.0 per cent below that in 2008. The economic recession decreased the need for electricity by industries in particular. A total of 62.8 terawatt hours (65.4 terawatt hours) of electricity was transmitted in Fingrid’s grid, representing 77 per cent of the electricity consumption in Finland.
A total of 2.7 terawatt hours (3.7 terawatt hours in 2008) of electricity was imported from Sweden to Finland, and 4.1 terawatt hours (4.2 terawatt hours) was exported from Finland to Sweden in 2009.
Electricity transmissions on the Estlink connection between Finland and Estonia consisted of imports from the Baltic countries to Finland with the exception of short export periods in the summer. The volume of electricity imports to Finland on the Estlink connection was 1.8 terawatt hours (2.3 terawatt hours), and 0.1 terawatt hours of electricity was exported from Finland.
Electricity imports from Russia to Finland totalled 11.7 terawatt hours (10.9 terawatt hours) in 2009.
Power system operation |
2009 |
2008 |
Electricity consumption in Finland TWh |
81.1 |
87.2 |
Fingrid's transmission volume TWh |
62.8 |
65.4 |
Fingrid's loss energy volume TWh |
1.0 |
1.0 |
Electricity transmissions Finland-Sweden |
||
exports to Sweden TWh |
4.1 |
4.2 |
imports from Sweden TWh |
2.7 |
3.7 |
Electricity transmissions Finland-Estonia |
||
exports to Estonia TWh |
0.1 |
|
imports from Estonia TWh |
1.8 |
2.3 |
Electricity transmissions Finland-Russia |
||
imports from Russia TWh |
11.7 |
10.9 |
Promotion of electricity market
Congestions in the transmission grid in Southern Scandinavia complicated the access of Norwegian hydropower to the Nordic electricity market. The area prices of electricity often became segregated, although the price differences were not usually very great. There was a uniform spot price in the Nordic electricity market for only 25 per cent of the time. However, between Finland and Sweden there was a uniform price for 95 per cent of the time.
The price level in the spot market in 2009 was below that in 2008. The average system price was 35 euros per megawatt hour (45 €/MWh in 2008). The average area price for Finland was close to this, i.e. 37 €/MWh (51 €/MWh).
Electricity market |
2009 |
2008 |
Nord Pool system price, average €/MWh |
35.02 |
44.74 |
Area price Finland, average €/MWh |
36.98 |
51.02 |
Congestion income in the Nordic countries million € |
79.5 |
244.1 |
Congestion income between Finland and Sweden million € |
1.1 |
1.3 |
Congestion hours between Finland and Sweden % |
4.6 |
2.5 |
Fingrid´s share of the congestion income in the Nordic countries million € |
4.9 |
23.2 |
Adequacy of transmission system
Eight major substations and approx. 270 kilometres of new transmission lines were completed for Fingrid in 2009. The autumn was the busiest period in terms of commissioning of new transmission facilities in Fingrid’s history. Fingrid also brought to conclusion a project which had lasted for several years, replacement of aluminium towers on 400 kilovolt lines.
In the spring, Fingrid launched the planning of a sizeable capital investment project together with the Estonian transmission system operator Elering. A transmission link of 650 megawatts is being planned between Finland and Estonia. The costs of the project are approx. 300 million euros. The 140-kilometre long link based on direct current technology is due to be ready in an expedited schedule in 2014 or even at the end of 2013. The completion time is influenced above all by the opening of the electricity market in the Baltic countries and by the potential investment subsidy granted by the European Union.
In February, the transmission system operators in the area of the Baltic Sea completed a shared transmission grid plan, which examined the linking of the Baltic countries to the electricity market in the Nordic countries and Continental Europe. The results were utilised in the market integration plan for the Baltic region, launched by the EU. The plan suggests that in addition to the EstLink 2 transmission connection between Finland and Estonia, connections from the Baltic countries to Sweden and Poland should also be constructed.
Fingrid’s gross capital expenditure in 2009 was 136 million euros (88 million euros in 2008).
Financial result
Revenue of the Fingrid Group in 2009 was 359 million euros (382 million euros in 2008). Other operating income was 2 million euros (3 million euros). Grid revenue decreased slightly despite the 4.5 per cent tariff increase carried out at the beginning of the financial year. This was due to a reduction in industrial electricity consumption in Finland.
Revenue from the sales of balance power decreased on the previous year to 92 (105) million euros. Correspondingly, the purchases of balance power also decreased to 85 (95) million euros. Cross-border transmission income exceeded the level of 2008 by approx. 2 million euros because of a growth of just under 1 TWh in electricity imports from Russia. Revenue from the power reserve operations grew on account of an elevated power reserve compensation. Fingrid’s share of the Nordic congestion income decreased by 18 million euros as there were less Nordic transmission capacity restrictions and because of a changed division of congestion income as agreed by the Nordic TSOs. Fingrid’s portion of the European inter-TSO compensations grew by 4 million euros. Depreciation, loss energy, maintenance management and reserve costs rose from the previous year. Net income from the feed-in tariff for peat remained at about the same level as in the previous year. The corresponding changes during the last quarter of the financial year are shown in the table below (in million euros).
Revenue and other operating income |
1-12/09 |
1-12/08 |
10-12/09 |
10-12/08 |
Grid service revenue |
188 |
189 |
57 |
53 |
Sales of balance power |
92 |
105 |
26 |
28 |
Cross-border transmission |
24 |
22 |
6 |
6 |
ITC income |
28 |
23 |
6 |
7 |
Power reserve |
13 |
11 |
4 |
3 |
Feed-in tariff for peat |
3 |
0,4 |
3 |
0,1 |
Congestion income |
5 |
23 |
1 |
2 |
Other revenue |
5 |
9 |
0,5 |
2 |
Other operating income |
2 |
3 |
1 |
1 |
Revenue and other income total |
361 |
385 |
105 |
103 |
Costs |
1-12/09 |
1-12/08 |
10-12/09 |
10-12/08 |
Depreciation |
65 |
59 |
16 |
15 |
Purchase of balance power |
85 |
95 |
25 |
27 |
ITC charges |
16 |
15 |
4 |
4 |
Power reserve |
13 |
10 |
3 |
3 |
Feed-in tariff for peat |
3 |
0,1 |
3 |
0,0 |
Purchase of loss energy |
52 |
50 |
15 |
13 |
Reserves |
21 |
20 |
5 |
5 |
Maintenance management |
18 |
15 |
6 |
6 |
Personnel |
20 |
20 |
6 |
6 |
Other costs |
19 |
19 |
5 |
6 |
Costs total |
312 |
302 |
89 |
84 |
Operating profit excluding the change in the fair value of electricity derivatives was 49 (83) million euros during the financial year. In the last quarter, operating profit excluding the change in the fair value of electricity derivatives was 16 (19) million euros.
The IFRS operating profit of the Group was 51 (68) million euros. Of the change in the fair value of electricity derivatives, +2 (-14) million euros were recognised in the income statement and a total of 16 (-44) million euros in equity and to reduce the tax receivables.
The Group’s profit for the year was 25 (28) million euros. The company’s Board of Directors will propose to the Annual General Meeting of Shareholders that 2,022.29 euros of dividend per share to be paid, totalling 6,724,119.67 euros.
The return on investment was 3.9 (5.8) per cent and the return on equity 5.7 (6.6) per cent. The equity ratio was 27.2 (26.7) per cent at the end of the review period.
The cash flow from the operations of the Group deducted by capital expenditure and dividends was -74 (22) million euros.
The Fingrid Group and Fingrid Oyj employed 260 persons, including temporary employees, at the end of 2009. The corresponding figure a year before was 249 persons.The increase in the number of personnel was due to more numerous capital investment projects.
There have been no material events or changes in Fingrid’s business or financial situation after the closing of the financial year.
The revival of electricity consumption in Finland is crucially influenced by the recovery of exports by the energy-intensive industries in Finland and consequently by the increased utilisation rates of industrial capacity. This is reflected directly in Fingrid’s grid revenue. It continues to be difficult to anticipate the developments in the money and capital markets.
Fingrid is making capital investments totalling 1,600 million euros in the transmission grid and reserve power in the next 10 years. The investments on an annual level are about 100 - 200 million euros. The investment programme aims at retaining high system security and promoting the functioning of the electricity market, and this takes into account the policy decisions made in in the climate and energy strategy of Finland. The extensive capital investments have a negative impact on cash flow and will require additional borrowing. This is why Fingrid will have to raise its transmission tariffs in the coming years.
These financial statements have been audited.
The financial statements and annual review are appended to this stock exchange release, and a separate corporate governance statement of Fingrid Oyj has also been provided.
Additional information:
CEO Jukka Ruusunen, +358 30 395 5140 or +358 40 593 8428
CFO Tom Pippingsköld, +358 30 395 5157 or +358 40 519 5041
CEO Jukka Ruusunen, +358 30 395 5140 or +358 40 593 8428
CFO Tom Pippingsköld, +358 30 395 5157 or +358 40 519 5041