Statnett SF - Annual Report 2017
On 12 April 2018, the Board of Directors of Statnett approved the Group's Annual Report for 2017. The Annual Report is enclosed and available on www.statnett.no.
The Statnett Group's underlying profit after tax amounted to NOK 1 304 million in 2017 (NOK 1 398 million in 2016). The reduction in the underlying result is primarily attributable to increased depreciation, amortisation and impairments and higher operating expenses due to increased asset base and increased Group activities, partially offset by higher permitted revenue.
The underlying result is based on the regulated permitted revenue, whereas the recorded result will depend on stipulated tariffs and congestion revenue. The difference, referred to as higher or lower revenue, will level out over time through adjustment of tariffs, ensuring that Statnett's accumulated revenue corresponds with the regulated permitted revenue. The recorded profit after tax for the Group was NOK 813 million in 2017 (NOK 645 million). The increase in recorded profit was due to higher operating revenue following change in tariff rates, somewhat offset by a slight increase in depreciation and operating expenses. Results from Statnett's efficiency-improvement programme have contributed to a lower cost increase than the increased activity normally would imply.
The Group's operating revenues for 2017 amounted to NOK 7 401 million, compared to NOK 6 678 million in 2016. The increase is mainly due to increased tariff revenue, somewhat offset by lower congestion revenue. Tariff income from fixed tariff components increased as a result of a change in the tariff rate for retail customers, derived from an increased permitted revenue. Congestion revenues were lower within Norway and towards Sweden due to increased capacity in the grid. This was somewhat offset by higher congestion revenues towards the Netherlands due to consistently high capacity offered at the NordNed interconnector and higher power prices in the Netherlands.
The Group's operating costs totaled NOK 6 089 million in 2017 (NOK 5 526 million). The increase is mainly due to depreciation and other operating costs. The increased depreciation charges is primarily attributable to an increased asset base and a change in estimated residual values for back-up power plants. Other operating costs increased as a result of higher activity and staffing levels.
The Statnett Group has major investment projects under planning and construction. The Statnett Group invested NOK 9 235 million in 2017, compared to NOK 7 695 million in 2016.
Statnett's higher/lower revenue
Statnett's operating revenues mainly derive from grid operations regulated by the Norwegian Water Resources and Energy Directorate (NVE), which stipulates a cap (permitted revenue) for Statnett's revenues. Permitted revenue increased from NOK
7 445 million in 2016 to NOK 7 749 million in 2017. In 2017, revenue from grid operations were lower than the permitted revenue, resulting in a lower revenue of NOK 646 million (NOK 999 million) for the period. At the end of 2017, the accumulated lower revenue, including interest, amounted to NOK 303 million. The reduction is in accordance with the plans to reduce accumulated higher revenue over a period of time.
The power grid will be a key part of the climate solutions of the future. Increased construction of renewable power and use of electricity in new areas will increase society's dependence on a secure power supply. Simultaneously, increased power exchange and more variable renewable power production increases the need for balancing in the Nordic synchronous area. This will necessitate efficient and automated system and market solutions together with stronger Nordic collaboration. Statnett's goal is to develop an efficient, smart and safe power system. To realize this goal, it will be crucial to find an optimal balance between grid measures, digitalisation and market solutions, as well as stronger Nordic collaboration and technology development.
Statnett is currently in a phase of historically high investments. By the end of 2021, Statnett will have completed large parts of the planned expansion of the transmission grid, primarily through a number of megaprojects and newbuilds. After 2021, the scope of investment will be scaled back and primarily involve renewal and reinvestment projects.
Statnett is focusing on maintaining its position as one of the most cost-efficient TSOs in Europe. In 2013, the Group established an objective to increase efficiency by 15 per cent by the end of 2018. The efficiency programme has produced the expected results and in 2018, Statnett will establish new efficiency targets for the coming years, which will include even more benchmarking to other companies. The primary goal for the new efficiency improvement effort is to provide the basis for the transmission tariff for consumers to level off following the culmination of the current investment phase.
Chief Financial Officer
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This information is provided by RNS