Fingrid group's interim report 1 January - 30 June 2010
Review of operations
Power system operation
From April to June, 19.5 terawatt hours of electricity (17.6 TWh in the corresponding period in 2009) was consumed in Finland. A total of 15.6 TWh of electricity was transmitted in Fingrid’s grid during the same period, representing 80 per cent of the electricity consumption in Finland. Between January and June, the electricity consumption in Finland totalled 44.6 TWh (41.1 TWh), up by 8.4 per cent on the corresponding period in 2009.
Until mid-May, a clear majority of the electricity transmissions between Finland and Sweden consisted of exports from Finland. Between April and June, 0.2 TWh of electricity was imported from Sweden to Finland (0.6 TWh), and 1.6 TWh (0.9 TWh) was exported from Finland to Sweden. Between January and June, 0.6 TWh of electricity was imported from Sweden to Finland (1.0 TWh), and 3.6 TWh (2.4 TWh) was exported from Finland to Sweden.
Electricity transmissions between Finland and Estonia were dominated by imports to Finland in the early part of the year. From mid-May, the transmissions at night time and during weekends were mostly exports to Estonia. Between April and June, 0.5 TWh (0.3 TWh) of electricity was imported to Finland from Estonia. A total of 1.2 TWh (0.9 TWh) of electricity was imported to Finland from Estonia from January to June.
The full cross-border transmission capacity from Russia was in use during the review period. Maintenance work at the North West Power Plant in Russia restricted the import capacity to Finland in April. Between April and June, electricity imports to Finland from Russia were 2.9 TWh (3 TWh), and between January and June the imports from Russia were 6.0 TWh (6.1 TWh).
There were slightly more disturbances in the transmission grid in the early part of the year than in the previous years. However, there were no serious disturbances during the review period.
Power system operation |
1-6/10 |
1-6/09 |
4-6/10 |
4-6/09 |
Electricity consumption in Finland TWh |
44.6 |
41.1 |
19.5 |
17.6 |
Fingrid's transmission volume TWh |
35.5 |
31.7 |
15.6 |
14.2 |
Fingrid's loss energy volume TWh |
0.6 |
0.5 |
0.2 |
0.2 |
Electricity transmissions Finland-Sweden |
||||
exports to Sweden TWh |
3.6 |
2.4 |
1.6 |
0.9 |
imports from Sweden TWh |
0.6 |
1.0 |
0.2 |
0.6 |
Electricity transmissions Finland-Estonia |
||||
exports to Estonia TWh |
0 |
0 |
0 |
0.1 |
imports from Estonia TWh |
1.2 |
0.9 |
0.5 |
0.3 |
Electricity transmissions Finland-Russia |
||||
imports from Russia TWh |
6.0 |
6.1 |
2.9 |
3 |
Promotion of electricity market
The average price (system price) in Nord Pool’s spot market between April and June 2010 was 44.87 euros per megawatt hour (34.03 €/MWh during the corresponding period in 2009), and the area price for Finland was 41.71 €/MWh (34.32 €/MWh). Between January and June, the average price in Nord Pool’s spot market was 52.33 €/MWh (36.13 €/MWh), and the area price for Finland was 56.74 €/MWh (36.21 €/MWh).
In the first half of 2010, congestions in the transmission grid on the border between Finland and Sweden restricted electricity trade for 10.2 per cent of the time (5.9 per cent). It was necessary to restrict the transmissions in the early part of the year, because the transmission capacity was not sufficient to cover the extensive demand for exports from Finland to Sweden.
The congestion income on the border between Finland and Sweden, resulting from the transmission congestions, totalled 5.7 million euros (0.8 million euros) between January and June. The Nordic congestion income between January and June totalled 104.9 million euros (18.2 million euros). Most of the Nordic congestion income was created on the borders between the bidding areas of Southern Norway and Denmark.
Fingrid’s counter trade costs between January and June were approx. 0.1 million euros (0.1 million euros).
The Estonian wholesale market for electricity was integrated with the Nordic electricity exchange at the beginning of April, and trading started off actively. Fingrid and its Estonian counterpart Elering rented approx. 250 megawatts of transmission capacity from the owners of the present Estlink connection for use by Nord Pool Spot. The total capacity of the link is 350 MW.
The market has primarily utilised the full transmission capacity made available to Elspot trading. Elering and Fingrid also decided to launch intraday trading between Estonia and Finland as of 3 May 2010.
Electricity market |
1-6/10 |
1-6/09 |
4-6/10 |
4-6/09 |
NordPool system price, average €/MWh |
52.33 |
36.13 |
44.87 |
34.03 |
Area price Finland, average €/MWh |
56.74 |
36.21 |
41.71 |
34.32 |
Congestion income in the Nordic countries million € |
104.9 |
18.2 |
18.1 |
8.6 |
Congestion income between Finland and Sweden million € |
5.7 |
0.5 |
0.8 |
0.07 |
Congestion hours between Finland and Sweden % |
10.2 |
5.9 |
6.7 |
0.8 |
Fingrid's share of the congestion income in the Nordic countries million € |
6.6 |
1.3 |
0.9 |
0.6 |
Capital expenditure and grid maintenance
The Group’s gross capital expenditure between April and June was 40.4 million euros (37.2 million euros during the corresponding period in 2009). Gross capital expenditure between January and June totalled 63.7 million euros (53.5 million euros).
Fingrid’s Board of Directors made a capital investment decision in May concerning the construction of the second direct current transmission link, EstLink 2, between Estonia and Finland. The capacity of the planned transmission link is 650 megawatts and the costs of the project total approx. 320 million euros. The submarine cable will be built in co-operation with the Estonian transmission system operator Elering. The execution of the project still requires that the positive trend continues in the Estonian electricity market opened in April.
The environmental impact assessment programme concerning the transmission line project between Forssa and Lieto was completed in May. The project covers the replacement of the existing 110 kilovolt transmission lines with 400 and 110 kilovolt lines. The contact authority, the Centre for Economic Development, Transport and the Environment in South-Western Finland, will announce the public display of the assessment programme. In the second stage of the environmental impact assessment procedure, the results of the assessment work are compiled into an assessment report, which is expected to be ready towards the end of 2010.
In June, Fingrid was awarded the PAS 55 certificate as the first enterprise in the Nordic countries. As a company specialised in the safety and risk management of companies, Lloyd's Register reviewed Fingrid’s asset management operations in the spring. According to Lloyd's Register, Fingrid's performance exceeds the requirements determined in the specification.
Financial result
The Group’s revenue between April and June was 87 million euros (68 million euros). The sales of balance power were 31 million euros (19 million euros) and purchases of balance power 26 million euros (15 million euros). The IFRS profit/loss before taxes was 5 million euros (-3 million euros) between April and June.
The Group’s revenue was 233 million euros (184 million euros) between January and June. The other operating income was 2.1 million euros (0.9 million euros).
Grid revenue grew from the previous year as a result of increased electricity consumption in the early part of 2010 and the 4.5 per cent raise in the grid tariff at the beginning of the year, to 112 million euros (98 million euros). Cross-border transmission income remained at the same level as in the previous year. Due to the high Nordic congestion income in the early part of the year, Fingrid’s congestion income grew by approx. 5 million euros on the previous year. The sales of balance power were 79 million euros (48 million euros) and purchases 70 million euros (43 million euros).
The record-high transmission losses in the Finnish grid in the early part of 2010 together with the high area price of electricity for Finland raised Fingrid’s loss energy costs by 9 million euros on the previous year. Both the maintenance management costs of the grid and the costs of the power system reserves were approx. 1 million euros higher than in 2009. Moreover, higher capital investments raised the amount of depreciation. Fingrid’s portion of the European inter-TSO compensations decreased slightly. The costs of the peak load reserve system and of the feed-in tariff for peat remained at the same level as in 2009.
Revenueand other operating income |
1-6/10 |
1-6/09 |
4-6/10 |
4-6/09 |
Grid service revenue |
111.6 |
98.5 |
36.8 |
32.4 |
Sales of balance power |
79.1 |
48.1 |
30.8 |
18.6 |
Cross-border transmission |
12.3 |
12.5 |
6.0 |
6.2 |
Nordic congestion income |
6.6 |
1.3 |
0.9 |
0.6 |
Peak load reserve |
8.1 |
6.4 |
3.5 |
3.1 |
ITC income |
9.6 |
14.1 |
6.9 |
6.3 |
Feed-in tariff for peat |
0.4 |
0.2 |
0.3 |
0.1 |
Other revenue |
5.0 |
2.5 |
2.4 |
1.0 |
Other operating income |
2.1 |
0.9 |
1.5 |
0.5 |
Revenue and other income total |
234.8 |
184.6 |
89.0 |
68.7 |
Costs |
1-6/10 |
1-6/09 |
4-6/10 |
4-6/09 |
Purchase of balance power |
70.0 |
43.3 |
25.9 |
15.4 |
Purchase of loss energy |
34.7 |
25.3 |
12.0 |
10.3 |
Depreciation |
33.3 |
32.4 |
16.7 |
17.1 |
Reserves |
10.8 |
9.8 |
5.7 |
5.0 |
Peak load reserve |
6.5 |
6.8 |
3.1 |
3.1 |
Personnel |
10.0 |
10.2 |
5.2 |
5.2 |
Maintenance management |
9.1 |
7.7 |
5.4 |
4.5 |
ITC charges |
4.4 |
8.5 |
2.3 |
4.2 |
Feed-in tariff for peat |
0.4 |
0.1 |
0.2 |
0.0 |
Other costs |
11.1 |
9.6 |
6.6 |
5.3 |
Costs total |
190.4 |
153.6 |
83.1 |
70.0 |
The operating profit between January and June was 47 million euros (34 million euros), which contains 2 million euros (3 million euros) of positive change in the fair value of electricity derivatives. The profit before taxes was 40 million euros (26 million euros), and the total comprehensive income was 36 million euros (23 million euros). The equity ratio was 28.2 per cent (27.5 per cent) at the end of the review period.
The Group’s income flow is characterised by seasonal fluctuations, which is why the financial result for the entire year cannot be directly estimated on the basis of the six-month result.
Financing
The financial position of the Group continued to be satisfactory. The company managed its long-term funding by issuing private placements totaling 86 million euros. The net financial costs of the Group between April and June were 1 million euros (3 million euros). The net financial costs of the Group also decreased between January and June to 7 million euros (9 million euros). Financial assets recognised at fair value in the income statement, and cash and cash equivalents amounted to 202 million euros (207 million euros) at 30 June 2010. The interest-bearing liabilities, including derivative liabilities, totalled 1030 million euros (953 million euros), of which 720 million euros (609 million euros) were long-term and 309 million euros (345 million euros) were short-term.
The counterparty risk involved in the derivative contracts relating to financing was 47 million euros (16 million euros). The counterparty risk primarily results from the company's long-term currency swaps, where the strengthening of the foreign currency with respect to the euro has raised the market value of currency swaps concluded with counterparties.
The company has an undrawn revolving credit facility of 250 million euros.
Personnel
The total personnel of the Fingrid Group averaged 260 (249) during the review period.
Auditing
The consolidated figures in this Interim Report are unaudited.
Outlook for the remaining part of the year
The Commission of the European Union made a decision on 8 July 2010 concerning a subsidy of 100 million euros for the EstLink 2 transmission link between Finland and Estonia. The capacity of the new link costing a total of approx. 320 million euros is 650 megawatts, and it is due to be commissioned in early 2014. The subsidy is part of a broader recovery package of the EU, aiming to stimulate economic activity in the Union and also support the EU’s strategic energy policy objectives.
The international rating agency Fitch Ratings downgraded Fingrid Oyj’s long-term Issuer Default Rating (IDR) to ‘A+’. Fitch Ratings issued Fingrid Oyj’s senior unsecured debt the rating ‘AA-’. Fingrid Oyj’s short-term IDR was downgraded to ‘F1’. The agency rated Fingrid Oyj’s outlook to be negative.
The profit of the Fingrid Group for the entire year without the change in the fair value of derivatives is expected to improve from 2009.
Appendices: Tables for the interim report 1 January - 30 June 2010
Board of Directors
Further information:
Jukka Ruusunen, President & CEO, +358 (0)30 395 5140 or
+358 (0)40 593 8428
Tom Pippingsköld, CFO, +358 (0)30 395 5157 or
+358 (0)40 519 5041
Jukka Ruusunen, President & CEO, +358 (0)30 395 5140 or
+358 (0)40 593 8428
Tom Pippingsköld, CFO, +358 (0)30 395 5157 or
+358 (0)40 519 5041