A grid for the future
By the turn of the year 2016/2017, we had almost reached the half-way point in our ambitious plan to strengthen the transmission grid throughout Norway. The last five years, from 2011 to 2016, we have built new and upgraded grid for more than NOK 30 billion. This includes about 850 kilometres of new power line, upgrades of more than 340 kilometres of existing power line, several new and upgraded substations in addition to the cable projects and new ICT solutions.
In 2016, we completed the largest individual power line project in Norway so far: the construction of the 420 kV power line between Ørskog at Sunnmøre county and Sogndal. It comprises 300 kilometres of new power lines and six new substations. In another major project, between Ofoten in Nordland county and Balsfjord in Troms county, two out of three sections of the 420 kV power line were completed in 2016. This strengthens security of supply in our northernmost counties.
Statnett has also started construction of several new projects in 2016 of which the largest are the interconnectors to Germany and the UK, the first construction stage of the new power lines between Namsos and Surna, and between Balsfjord and Skaidi. The work to take over the remaining parts of the transmission grid is also progressing. In 2016, Statnett reached an agreement with BKK to acquire the transmission grid in the Bergen area.
During the next five years we will invest another NOK 40-50 billion in grid development and complete the main phase of the ongoing development plan. In addition to construction, we also work together with the rest of the industry with both development of the market solutions and digitisation of the power system to make it more intelligent and secure.
Enhanced focus of security
In 2016, Statnett increased its efforts to fulfil our zero vision for accidents and lost-time injuries. An extensive internal programme, "SIKKER", aims to increase employee awareness about safe behaviour and enhance the safety culture, both internally and with our suppliers. The HSE focus was further emphasized after two fatal accidents in April and May, where two of our suppliers' employees lost their lives in two of Statnett's construction projects. The Group management adopted a new HSE action plan with areas of improvement, which we are implementing in our organization as well as in cooperation with our suppliers.
Lower tariffs in 2016
The Statnett Groups' underlying profit after tax amounted to NOK 1 398 million in 2016, about the same level as in 2015. Higher permitted revenue in 2016 due to an increase asset base was offset by regulative changes related to accrual for pensions within the permitted revenue and a positive non-recurring effect of the transition from a defined benefit to a defined contribution pension scheme in 2015.
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, referred to as higher or lower revenue, will level out over time through adjustment of tariffs, ensuring that Statnett's recorded accumulated revenue corresponds with the regulated permitted revenue. Recorded profit after tax for the Group amounted to NOK 645 million in 2016, compared with NOK 1 103 million in 2015. Tariff- and congestion revenues have been lower than the permitted revenue and Statnett's accumulated higher revenue was in 2016 reduced by NOK 1 003 million.
A good year in operation
The year 2016 progressed without major operational challenges, mostly thanks to fairly stable weather and good operations planning. Under the extreme weather Tor in January, which hit Central and Northern Norway, the transmission grid was affected with only brief outages in a few areas near the coast.
Statnett is eager to maintain its position as one of the most cost-efficient TSOs in Europe. In 2013, we established a goal of increasing efficiency by 15 per cent by the end of 2018. The results so far are good and the program has contributed to lower cost growth than indicated by the increase in activity. Statnett expects to reach the goal in 2018.
In addition to the Board of Directors' report for 2016, annual accounts and notes, the annual report also contains Statnett's report on corporate social responsibility and a new report regarding the cost development in Statnett.