Reliable Operator
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REPORT 2016 Reliable operator Caruna is Finland’s largest electricity distribution company. Electricity networks are an integral part of a society’s infrastructure, and therefore the reliability of electricity distribution is vital to the entire society. We aim to deliver added value to all our stakeholders and, at the same time, ensure our operations are financially, socially and environmentally sustainable. + During 2016, we continued to improve + We raised distribution prices to finance our our electricity network by increasing the network improvement projects and reached underground cabling of the networks a solution on a gradual introduction of price to protect them from adverse weather increases with the Consumer Ombudsman. conditions. + We were involved in planning the electricity + We have worked hard to improve the network of the future with the smart grid customer experience. working group organised by the Ministry of Economic Affairs and Employment. + Caruna’s net sales in 2016 were EUR 384 + The Board of Caruna appointed Tomi Yli-Kyyny million. as the new CEO. 2016 AT CARUNA – Report REPORT 2016 Caruna in brief Caruna is Finland’s largest electricity distribution company. Caruna’s share of the Finnish electricity distribution market is 21 per cent. We provide power to 665,000 private and corporate customers in South, Southwest and West Finland, the city of Joensuu and North Finland. Our electricity network is roughly 82,000 kilometres long and would stretch twice around the earth. We endeavour to meet our customer’s expectations and, first and We endeavour foremost, to secure an undisturbed supply of electricity. We continuously to meet our improve and develop our electricity networks. We are set to invest EUR customer’s 200 million into improving the reliability of our electricity distribution expectations and, every year for the next decade. Our vision is to be the best electricity first and foremost, distributor. to secure an undisturbed supply We have 270 of our own members of staff and we directly employ 2,000 of electricity. more in our projects around Finland. Our head offices are in Espoo, Finland. Caruna is owned by Finnish employment pension companies Keva (12.5%) and Elo (7.5%), as well as international infrastructure investors First State Investments (40%) and Borealis Infrastructure (40%). Our operations are tightly regulated. In Finland, the Finnish Energy Authority is in charge of monitoring the power supply trade. 2016 AT CARUNA – Report REPORT 2016 CORPORATE STRUCTURE Caruna Networks Oy is the parent company of Caruna Networks Group (“Caruna”). The parent company of Caruna Networks Oy is Suomi Power BV, with its domicile in The Netherlands. In addition to Caruna Networks Oy, Caruna Group includes Caruna Networks Sähkönsiirto Oy, Caruna Networks Espoo Oy, Caruna Oy and Caruna Espoo Oy. Caruna Networks Oy owns Caruna Networks Sähkönsiirto Oy and Caruna Networks Espoo Oy, which, in turn, own Caruna Oy and Caruna Espoo Oy. Of the Group companies, Caruna Oy and Caruna Espoo Oy conduct regional and distribution network activities in their own electricity networks under a network licence granted by the Energy Authority. Caruna Oy is responsible for the distribution of electricity in Southwest Finland, Satakunta region, South Ostrobothnia, Ostrobothnia, North Ostrobothnia and Lapland. Caruna Espoo Oy operates in Espoo, Kauniainen, Kirkkonummi and Joensuu. Caruna Oy and Caruna Espoo Oy are separate companies with separate pricing policies, because factors such as local network conditions affect the price of electricity distribution. The majority of Caruna Oy’s network is situated in rural areas and Caruna Espoo Oy’s in urban areas. Caruna Networks Oy, Caruna Networks Espoo Oy and Caruna Networks Sähkönsiirto Oy provide support services for the entire Caruna Group. 2016 AT CARUNA – Report REPORT 2016 Financial key figures 2016 AT CARUNA – Report REPORT 2016 From Caruna’s CEO 2016 was full of events for Caruna. We continued our network improvement projects, increased our customer numbers and reviewed our customer service and procurement practices, among other things. Uninterrupted electricity supply is the key expectation of our customers. It is up to us to ensure that daily life runs smoothly for the 1.5 million people living in our network area in Finland, also promoting the general safety and security of supply in the entire society at the same time. In addition to a reliable supply, our customers expect reasonable pricing It is up to us to and good-quality customer service from us. The price increases we ensure that daily implemented in early 2016 led to extensive public debate on the pricing life runs smoothly of electricity distribution. After talking with the Consumer Ombudsman, for the 1.5 million we changed the timing of the increases so that they are implemented people living in our gradually over two years, as they are considered reasonable by the network area in authorities over this period of time. These price increases are necessary Finland. as they enable us to keep up with the requirements and expectations facing the sector. Under our ten-year network improvement programme, we renew network sections at the end of their service life and install cables underground where they are protected from adverse weather conditions. We are committed to meeting the targets defined in the Electricity Market Act by 2028 by ensuring that we will be able to restore the power to our customers within six hours in urban areas and within 36 hours in rural areas. We invest roughly EUR 200 million into our network every year. The improvement of occupational safety is one of our key goals, and we have been successful in this area. The Zero Accident Forum run by the Finnish Institute of Occupational Health assigned Caruna the highest possible category in occupational safety for the second year running. We also achieved our best result so far in the injury frequency of contractors. These are very good results, but we will still continue to pay special attention to safety. Each accident at work involving injury will be investigated and, if necessary, work practices changed to improve safety. In accordance with the new network construction procurement strategy, key materials are acquired by Caruna instead of contractors, starting from the beginning of 2016. We extended our material recycling agreement with Kuusakoski. All materials dismantled from networks are reused. 2016 AT CARUNA – Report REPORT 2016 Successful operations require employees who possess the necessary expertise and feel satisfied and happy at work, as well as good working relationships with stakeholders. During 2016, we focused our efforts on strengthening the customer-oriented approach and expertise of our personnel, along with improving their well-being and work rotation. We engaged in active dialogue with the authorities, municipalities, organisations and land-owners. These relationships will continue to be important for us in the future, too. The energy sector is facing a great deal of change. Both the production and consumption of energy are undergoing transition. The electrification of traffic bears a great impact on the production and distribution of electrical power and likewise on the balance between supply and demand. Small-scale production of energy is important for many, considering people’s own sense of responsibility and ecological factors. A smart electricity network enables a more efficient utilisation of energy and supports the move towards more ecological ways of producing energy. We contribute to our country meeting the national targets for reducing carbon dioxide emissions by designing and constructing our network so that it is suitable for decentralised production of renewable energy. We forge ahead with our network improvement projects in 2017. We are We forge ahead also going to continue making the customer experience better by, for with our network instance, introducing new data systems that enable us to communicate improvement with customers more efficiently. We streamline our own operations and projects in 2017. reinforce our financial efficiency. We are also going to continue making Caruna wants to be a reliable partner and take an active role in the the customer development of future energy systems. Our actions are designed to serve experience better. both our customers and all stakeholders. We share positive energy. In Espoo, March 2017 Jyrki Tammivuori Acting CEO 2016 AT CARUNA – Report REPORT 2016 Main events during 2016 JANUARY-MARCH + We were one of the main partners of the 2016 World Junior Ice Hockey Championships held in Helsinki at the end of 2015 and beginning of 2016. We launched a three-year long sponsorship with the Finnish Ice Hockey Association, with the particular aim of supporting exercise and sport activities for children and the youth. + We told our customers we would increase our prices from 1 March 2016. These increases provoked extensive public debate. In talks with the Consumer Ombudsman, we came up with a solution of introducing the increases gradually over time, and temporarily reduced the basic electricity distribution charges for a year. + We entered into a major three-year framework agreement with Empower, Telog and Voimatel, for the development and renovation of electricity distribution networks in South and North Ostrobothnia, Ostrobothnia and Lapland. + We refinanced our operations in accordance with our long-term plan. Funds obtained from international capital markets allowed us to guarantee the realisation of our network improvement projects. + We published our financial statement data and our first corporate responsibility report at the end of March. APRIL-JUNE + We continued our efforts to secure our network improvement investments and financed our operations by bonds offered to international institutional investors. + The Zero Accident Forum run by the Finnish Institute of Occupational Health assigned Caruna the highest possible category in occupational safety. + A total of 20 people started working at Caruna for the summer. JULY-SEPTEMBER + The storm Rauli in August was the most significant adverse weather event of the year to impact our network.