Annual Report 2013 | Suomeksi |

Electricity Solutions and Distribution

The division is responsible for Fortum's electricity sales and distribution activities and consists of two business areas: Distribution and Electricity Sales.

Distribution

Fortum owns and operates distribution and regional networks and distributes electricity to a total of 1.6 million customers in Sweden, Finland and Norway.

EUR million 2013 2012 2011   Change
13/12
Sales 1,075 1,070 973 0%
- distribution network transmission 896 877 809 2%
- regional network transmission 129 125 96 3%
- other sales 50 68 68 -26%
Operating profit 348 331 478 5%
Comparable operating profit 331 320 295 3%
Comparable EBITDA 550 529 482 4%
Net assets (at period-end) 3,770 3,889 3,589 -3%
Return on net assets, % 9.2 9.1 13.7 1%
Comparable return on net assets, % 8.8 8.8 8.6 0%
Capital expenditure and gross investments in shares 260 324 289 -20%
Number of employees 852 870 898 -2%

In 2013, the volume of distribution and regional network transmissions totalled 26.1 TWh (2012: 26.6) and 16.3 TWh (2012: 17.3), respectively.

The Distribution business area's comparable operating profit was EUR 331 million (2012: 320). The increased profits are mainly attributable to an increased amount of relocation of cables and parts of the network.

Operating profit in 2013 totalled EUR 348 million (2012: 331) and was affected by sales gains totalling EUR 17 million (2012: 5).

In January 2013, Fortum announced that it had decided to assess the strategic position of its electricity distribution business; the assessment was concluded in December. The assessment has no impact on Fortum's electricity distribution customers and excludes the company's electricity retail business. 

The Finnish government submitted a Government Bill for the renewal of electricity market legislation in the spring of 2013, and the new Electricity Market act came into force on 1 September 2013. The new legislation includes implementation of the 3rd electricity market directive and functional demands on electricity grids. This includes that the maximum length of outages should be limited to six hours for urban areas and 36 hours for rural areas after a 15-year transition period. Also, gradual increases in customer compensation for long outages have been included; 150% of the annual grid fee after 8 days of outage and 200% of the annual grid fee for outages longer than 12 days. The maximum amount would be increased from 700 euros to 2,000 euros by 2015.

Both in Finland and Sweden, legal processes are under way concerning the appeals filed regarding the network income regulatory period 2012-2015, which came into force as of

1 January 2012. In Finland, the appeal of the national grid company Fingrid is being processed in the Supreme Administrative Court; in Sweden the Administrative Court ruled in favour of the network companies, in December. The Energy Market Inspectorate decided, however, to appeal the decision, and the process continues.

At the end of 2013, a total of almost 620,000 smart meters with hourly measurement capabilities had been installed for network customers in Finland over the course of three years in Fortum’s electricity distribution areas (434,000 at year-end 2012). The new meters are part of the smart electricity network of the future, enabling more efficient energy use through, for example, hourly measurement of electricity consumption and real-time billing, and supporting the transition towards a more sustainable energy system. The new legislation on hourly meter reading in Finland became effective as of 1 January 2014.

Volume of distributed electricity in distribution network
TWh 2013 2012 2011   Change
13/12
Sweden 14.1 14.4 14.2 -2%
Finland 9.5 9.8 9.5 -3%
Norway 2.5 2.4 2.3 4%
Estonia - - 0.1 N/A
Total 26.1 26.6 26.1 -2%
Number of electricity distribution customers by area
Thousands 2013 2012 2011 Change
13/12
Sweden 903 898 893 1%
Finland 642 633 627 1%
Norway 103 102 101 1%
Estonia - - 24 N/A
Total 1,648 1,633 1,645 1%

Electricity sales

The Electricity Sales business area is responsible for retail sales of electricity as well as smart electricity solutions and services to a total of 1.2 million private customers. In addition, standardised products are offered for large corporate customers (Sales Trading). Electricity Sales buys its electricity from the Nordic power exchange.

EUR million 2013 2012 2011   Change
13/12
Sales 744 722 900 3%
- power sales 723 697 879 4%
- other sales 21 25 21 -16%
Operating profit 56 39 3 44%
Comparable operating profit 48 39 27 23%
Comparable EBITDA 50 40 29 25%
Net assets (at period-end) 39 51 11 -24%
Return on net assets, % 148.9 152.3 4.2 -2%
Comparable return on net assets, % 137.9 203.1 33.5 -32%
Capital expenditure and gross investments in shares 1 1 5 0%
Number of employees 496 509 519 -3%

In 2013, the business area's electricity sales volume to retail customers totalled 12.1 TWh (2012: 12.1) and Sales Trading 1.5 TWh (2012: 2.1) (reported until 2012 in the Other segment). 

Electricity Sales' comparable operating profit in 2013 totalled EUR 48 million (2012: 39). The increase was mainly due to favourable wholesale market conditions, an increased customer base and Sales Trading. 

The operating profit totalled EUR 56 million (2012: 39) and was affected by an IFRS accounting treatment (IAS 39) of derivatives.

Volume of distributed electricity
by area, TWh
Number of electricity distribution
customers by area, thousands
ESD Division's power sales, TWh
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