The profit increase in the first three quarters is mainly due to a one-off reduction in personnel costs caused by a move from a defined benefit pension plan to a defined contribution pension plan. Costs related to system services have also been reduced. The effect is somewhat offset by lower interest rates which reduces the growth in permitted revenue.
The underlying profit or loss is based on the regulated permitted revenue, whereas the recorded profit or loss will depend on stipulated tariffs and congestion revenues. The difference (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 338 million in the third quarter of 2015 (NOK 224 million), and NOK 945 million for the first three quarters of 2015 (NOK 723 million).
The Group's operating revenues in the third quarter of 2015 totaled NOK 1 525 million, compared to NOK 1 361 million for the same period in 2014. The Group`s operating revenues for the first three quarters of 2015 totaled NOK 4 399 million (NOK 4 137 million). The increase in the third quarter was mainly due to higher congestion revenues in the Nordic region and on the NorNed-interconnector. This results from very low prices in Southern Norway, causing major price differences between the connected price areas.
The Group's operating costs totaled NOK 1 001 million in the third quarter of 2015 (NOK 991 million). In the first three quarters of 2015, the operating costs totaled NOK 2 865 million (NOK 2 959 million). The decrease in the first three quarters of 2015 is mainly due to a one-off reduction in personnel costs caused by a move from a defined benefit pension plan to a defined contribution pension plan. Costs related to system services and transmission losses are reduced, somewhat offset by higher depreciation.
The Statnett Group invested NOK 4 065 million in the first three quarters of 2015, compared to NOK 4 301 million for the same period in 2014. The expected investment level for 2015 is NOK 6.2 billion.
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 4 470 million for the first three quarters of 2014 to NOK 4 615 million for the first three quarters of 2015. In the first three quarters of 2015, Statnett's lower revenue amounted to NOK 321 million (lower revenue of NOK 493 million). The lower revenue for the first three quarters of 2015 is due to revenues from grid operations being lower than permitted revenue. Accumulated higher revenue including interest was NOK 1 508 million at the end of the first three quarters of 2015. The reduction is in line with the plans to reduce accumulated higher revenue over several years.
Statnett will invest considerably in new capacity in the main grid during the next decade. Extensive construction activity is ongoing. The historically high investment level is driven by the Norwegian society’s need for a stronger grid which will ensure a reliable power supply, facilitate renewable energy projects and industrial and commercial development throughout the country. An updated Grid Development Plan (Statnett's 2015 Grid Development Plan) was published in October. The plan comprises grid projects amounting to about NOK 40-55 billion over the coming five years.
Together with its German and British partners, Statnett has commenced the construction phase for the interconnectors to Germany (NordLink) and the UK (NSN Link). Both projects have high priority and are important for the development and integration of the Northern European power systems. The projects will help ensure security of supply in Norway, Germany and the UK, and balance variations in German and British renewable power production throughout the day. The added power exchange capacity will create value for the Norwegian power system and enhance security of supply. It will also support the increase of renewable energy generation throughout the region and help meet the EU's climate- and energy targets.
Statnett is focusing on maintaining its position as one of the most cost-efficient TSOs in Europe. In 2013, the enterprise established an objective to increase efficiency by 15 per cent-by the end of 2018. The project demonstrates good progress so far.
Changed financial reporting
From 2016, Statnett will conduct external financial reporting twice a year, instead of quarterly. The decision was made based on an assessment of the nature of the enterprise, which changes very little from one quarter to the next, and that the need for financial information to the market will be satisfactorily provided. The change is part of Statnett's efficiency improvement programme.
Statnett Q3 2015
Chief Financial Officer
Mobile: +47 901 65 299