Annual and Sustainability Report 2016.

Committed to the future: Committed to the future: visionary for 125 years. OVERVIEW.

KEY FIGURES. 227,495 1,189 4,827 GWH SITES1 AND GRIDS. Income statement 2015 2016 CUSTOMERS EMPLOYEES POWER EUROPE Total operating income CHF million 813.4 859 PRODUCTION Earnings before interest and taxes (EBIT) CHF million 67.8 68.2 24,930 commercial and business customers 225 women Hydropower: 49 % Net result CHF million 68.3 68.5 202,565 residential customers 964 men Nuclear power: 42 % Employees Number 1,202 1,189 Wind/solar: 7 % Other: 2 %

Electricity Wind power 2015 2016 Hydropower Total power production GWh 5,473 4,827 3,820 GWH Power production from renewable energies GWh 3,129 2,729 Nuclear power Electricity sales supply Switzerland GWh 3,859 3,820 ELECTRICITY SALES Waste incineration Sales of green power GWh 382 380 357 GWh SUPPLIED TO SWITZERLAND Addition of new renewable energies MW 45 0.6 Electricity supply Biomass subsidy systems Electricity consumption in the City of Zurich GWh 2,904 2,958 and PPAs 3,028 GWh Customers Number 225,944 227,495 Purchase trading Photovoltaic and solar energy naturemade star-certified naturemade basic-certified Heat contracting Heating and cooling From renewable energies Energy contracting 2015 2016 Heating and cooling sales GWh 289 318 Electricity supply Fiber-optic telecom network Switzerland Other Earnings from energy services CHF million 49.8 52.4 Distribution

Distribution 2015 2016 Overhead lines km 412 413 3,463 GWh Cable km 4,963 5,168 217 GWh Supply trading SWITZERLAND Substations Number 30 30 46,931 191 ,800 Pumped storage Transformer stations Number 881 882 LIGHTS BROADBAND Telecom CONNECTIONS 2015 2016 6,067 LED lights 48,200 buildings to be connected Buildings with broadband connections Number 22,600 27,200 40,864 conventional and special lights in the city of Zurich Available broadband connections Number 176,000 191,800 318 GWH

Development grants HEATING AND 2015 2016 COOLING SALES ewz.effizienzbonus in the supply areas CHF million 15.5 15.2 Power conservation fund CHF million 6.5 3.9 350 naturemade star fund CHF million 2.8 2.4

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0 ¹ Power production from the company’s own plants, 2012 2013 2014 2015 2016 procurement rights, partner plants and third-party plants

2 3 3 TABLE OF ORGANIZATION. FOREWORD CONTENTS. BY THE CEO.

Committed to the future: ewz is a leading company with pioneering Every day at ewz we strive to be better: OVERVIEW. STAKEHOLDERS Even more committed, more sustainable, 2–3 AND SOCIETY. energy and communications solutions. The Zurich Municipal Electricity more visionary, and simpler – for our cus- 32–33 Service accepts responsibility for a sustainable energy future and offers tomers and for other stakeholders. We are Organization 4 constantly strengthening our position as Foreword by the CEO 5 its customers innovative products and business ideas. As part of this, the market leader with pioneering energy Modern communications infrastructure 34 and communications solutions by regard- for Zurich sustainability and innovation are among the cornerstones of ewz’s ing the challenges facing the energy indus- 125 YEARS AND Focus on customers 35 operations so that we can provide the best solutions to ensure energy try as opportunities. In 2016, we once again Stakeholder engagement 36 managed to hold our ground in a difficult THE FUTURE. Social commitment 37 supply for the future. 6–7 environment, and I am very proud of that fact. We set very high targets for ourselves SUSTAINABILITY and achieved many of them, though we also THE OPPORTUNITIES IN EVERYDAY The operations. The organization. had to overcome a few setbacks. We were, OF THE FUTURE. Alongside reliable power production and ewz is a service department of the city of unfortunately, unable to convince elected OPERATIONS. distribution, ewz’s operations include spe- Zurich, which means that it is a dependent officials of the need to change ewz’s legal 8–9 38–39 cialized energy efficiency consultations institution under public law. Dependent re- form. Several major power failures preoccu- and innovative energy, telecom, and grid fers to the fact that it operates on its own be- pied us – and also the media. This will spur What will the future 10 Environmental management 40 services, plus public lighting and public half yet does not possess its own legal per- us on to make further improvements. How- of energy look like? Opportunity and risk management 42 clocks throughout the city of Zurich. ewz is sonality. All transactions conducted by ewz ever, if we look at the overall picture, we can Perspectives 12 Sustainable procurement 43 addressing issues that will be important in are subject to the usual responsibilities as see the excellent work that ewz does every the future: safe and environmentally friendly defined in the municipal code. The Manage- day for the city of Zurich and for our custom- MILESTONE ATTRACTIVE power supply, and efficient use of energy. To ment Board of ewz consists of the CEO and ers throughout Switzerland. This is also evi- INDEX. this end, the municipal company is investing division managers. denced by the award from the Swiss Fed- WORKING heavily in the expansion and promotion of eral Office of Energy for the best supplier of renewable energies and is eager to mas- energy in Switzerland. The top ranking is a Department statement 14 Marcel Frei, ENVIRONMENT. sively increase the production of electricity reward for our consistent and sustainable CEO Events in 2016 15 from wind as well as solar power over the actions and our important pioneering role in Sustainability Management 16 44–45 coming years. The principle of sustainabil- Swiss energy policy. We report on this and many other successes over the past year in this Talent search and development 46 ity and the goal of the 2000-watt society are Annual and Sustainability Report. And, because we are now in an anniversary year, we also CONTRIBUTION TO Occupational health and safety 48 enshrined in the municipal code of the city look back even further. Back to where it all began. ewz was founded 125 years ago, shortly Health promotion 49 of Zurich. There will therefore be no new in- before the official opening of the Letten hydropower plant, which is where the current Man- ENERGY TRANSITION. vestments by ewz in nuclear power plants. agement Board photograph was taken. This excursion reminded us, the members of the 20–21 ewz will strive for a phased, early withdrawal Management Board, of the development of electricity from being a rare luxury good to the FINANCIAL from nuclear energy, but the sale of invest- lifeblood of today’s modern world. However, ewz is not just indulging in the past. We are also Renewable energies 22 REPORT 2016. ments is a difficult proposition. striding with commitment into the future with innovative, digital, and sustainable products Security of the power supply 24 and services. Green power 25 50–51 Annual and management report 2016 52 INNOVATIONS. Income statement 2016 54 Balance sheet 2016 55 26–27 Cash flow statement 2016 56 Notes 57 Developing innovative products 28 Performance and energy data 59 and services More than electricity 29 Energy solutions 30 GRI G4 Content Index. 60–61 ABOUT THIS REPORT. 62

Imprint 63

4 5 125 YEARS AND THE FUTURE. WE ARE ALL “THE POSSIBILITY MAKERS”.

2017 is a special year. In this Annual and Sustainability Report, ewz looks back not only on last year, but also on 125 years of history and takes a glance at the future through the The following pages are all about what we will make possible together eyes of young people. At the start of ewz’s history, the focus was on the economic de- tomorrow and the day after, what is already possible today, and what velopment of the city of Zurich. Later, ewz had to pay increasing attention to environ- ewz made possible in the past. Working hand in hand with customers, mental conditions and, in the last decade, the energy transition has gained promi- nence. These days, as an energy service provider, ewz is the possibility maker, juggling stakeholders and employees. Together we are moving in the direction global developments, such as climate change, and the increased need for energy. of a sustainable energy future for society as a whole. The future will be shaped by new customer needs and advancing digitalization.

ewz adopts a visionary and sustainable forward-thinking approach for its stakehol- This Annual and Sustainability Report is also our way of thanking all ders at all times. This has always been the common denominator in its operations, and it will continue to be so. This enables ewz to create new possibilities for and with the possibility makers who have made history with ewz and will shape its stakeholders and customers in response to changing conditions. This report will the future with ewz. focus on all those things that ewz made possible in 2016. After all, we can only achieve sustainability by working together. COLLECTIVE ENERGY The energy transition is about far more than the phase-out of nuclear power and the Together we are: The Possibility Makers. TRANSITION. shift away from fossil fuels. The expansion of renewable energies and the promotion of energy efficiency and energy services are therefore just a few aspects of ewz’s long-term vision. Switzerland, with the 2050 Energy Strategy and a huge range of activities, is mo- ewz.ch/dieMöglichmacher ving toward a sustainable energy future. ewz is making a significant contribution to this, with dedication and foresight, by taking steps such as promoting an effective internal cul- ture of innovation, expanding the fiber-optic network, and demonstrating huge commit- ment to environmental improvement measures. To make this possible, and to go the extra mile, ewz engages in continuous dialogue with all stakeholders and integrates their needs into the development of products and services. As we continue the journey to becoming a 2000-watt society, the focus of all ewz’s activities is on customer satisfaction.

WORKING YESTERDAY FOR ewz has been a possibility maker for the last 125 years. On pages 14 and 15 we address the THE DAY AFTER TOMORROW. key milestones in our history – from bringing light to the city of Zurich for the first time in the 19th century to raising public awareness with a Power Conservation Day back in the 1960s, all the way through to introducing 100% renewable energy for all residential customers from 2015 onwards.

THE FUTURE IS In the future, new customer needs will have an even greater influence on ewz’s operations. ALREADY HERE. This is reason enough to start looking ahead in this Sustainability Report. Pupils from the secondary school in Männedorf held a workshop addressing the issue of how we will live in the future. An insight into the workshop and some visions from it can be found on pages 7 to 11.

6 7 THE OPPORTUNITIES OF THE FUTURE. What will everyday life be like tomorrow? We are in a dynamic environment. ewz wonders what the customers of tomorrow will need. We wanted to know from pupils how they imagine their future. How will they live and move around in the future? What is important to them? ewz held a creative workshop with a lower secondary school class and gained a lot of valuable ideas about how everyday life will look in the future. “In the future, the fridge will tell us which products are still fresh and then give us tasty meal suggestions for dinner.”

Paula and Ayanna, pupils at the secondary school in Männedorf and Possibility Makers, together with their classmates WHAT WILL THE FUTURE OF ENERGY LOOK LIKE? Smart home: A combination of energy, convenience, and security.

125 years of ewz, Convergence of energy, telecommuni- The future is renewable. 125 years of innovation. cations, and mobility as a driver. Innovative areas such as energy from In its 125 years of corporate history, ewz has As in the past, ewz is constantly preparing renewable resources, electromobility, and “In the future, come up with innovative solutions for cus- for the future in new ways. Innovation was intelligent forms of living and working are houses will be- tomers, implemented spectacular infra- and is one of the most important and strong- becoming increasingly important and are structure projects, and decisively helped est drivers in this. Mr. Duell was convinced extremely relevant to ewz as well. ewz has come power sta- shape the energy environment in Switzer- back in 1899 that further innovation was im- already evolved from an electricity provider tions – they will land. One thing in particular is decisive in possible. As we know today, he was wrong. into an energy and communications service the course of history – learning. Few fore- Similarly, any forecast of ewz’s growth would provider, yet it is still only at the start of an generate electri- also have been much too pessimistic. In re- ongoing transformation. This is being driven city and store it cent decades, ewz was primarily affected by by technological developments, whether in innovations in the energy sector. This situ- the internet of things, energy transition in directly on site. “There’s nothing new. Anything you could ation has changed markedly in the last few energy production, electrification of mobil- Enough for all the invent has already been discovered.” appliances at Charles H. Duell, Commissioner of the US Patent and Trademark Office, 1899 home and the elec- “I think that “What the world of tomorrow will be like tric car.” in the future most is greatly dependent on the power of saw that the current transformation in the homes will be Luca and Nicola energy industry would be so rapid. The imagination in those who are learning to fact that electricity generation from nuclear managed and con- read today.” power is seen very differently today is just Smart home – or how young people trolled by smart- Astrid Lindgren, children’s author, 1958 one of many factors that have played a role. picture the future. In dealing with new risks and opportunities, phone. Robots will This is why ewz has collaborated with a class ewz is continuing to be agile and flexible so take over the at Männedorf (Zurich) secondary school to it can anticipate changes and respond rap- ity, or robotics which makes extensive auto- design the future. How will we live at home idly to them. housework.” mation possible. It is also being influenced in the future? How will we play and eat, work Jara by political changes, such as Switzerland’s and relax? In a creative workshop, the boys relationship with the EU, the promotion of and girls shared their vision of the future – renewable energies, or the global climate with Lego, clay, wood, and cardboard. What years. The convergence of energy, informa- agreement. Social change is also having a emerged are designs of the future that we tion technologies, and mobility is creating major influence on the future, and will play could never have improved on. Full of details, an environment which is very different in a decisive role in shaping ewz. Several of creativity, and optimism – unprejudiced, its complexity and innovative capacity from these developments are still difficult to fore- pragmatic, and with a touch of humor and the past century. Digitalization is speeding see, which is why looking at the future re- healthy skepticism about technological de- up transformation in every industry. There quires not only knowledge and imagination velopment. Not all the children’s ideas will are important drivers from society and pol- but also sometimes fantasy, quantum irra- become real – houses today are very rarely itics, research and development, and also tionality, and creative naivety. Something, in completely energy-neutral and robotics is customers. fact, which children still have naturally. developing very fast, but still is not entirely integrated into everyday life – but we all know that Thomas Watson wasn’t 100 % ac- curate in his future predictions either. What we at ewz can learn from children is the courage to try new things, question exist- ing things, and find creative solutions to the challenges of tomorrow.

10 12 “Good timing is no “Thanks to reliable internal accident with us – PERSPECTIVES. services, our employees can deliver particularly with low “We’re operating today’s “Taking on the seemingly IMPOSSIBLE, MARKET PRICES PEAK PERFORMANCE.” questioning what already exists, dreaming POWER GRID it is often the difference safely and cost-effectively, up what doesn’t –this is how ewz continues Arno Stark between winning and while at the same time to develop.” losing.” equipping ourselves for Stéphanie Engels the renewable future.” Cédric Aubert Benedikt Loepfe

“We achieve long-term “ewz is making an important contribution growth by meeting “ewz’s voice needs to be heard to the CUSTOMER NEEDS not just in the city of Zurich – ENERGY TRANSITION “Secure, reliable, and ecofriendly by investing in renewable energies with simple, digital, and we offer ourEXPERTISE and developing sustainable energy and sustainable solutions.” POWER PRODUCTION actively throughout Switzerland communications solutions.” at attractive prices is what motivates Corinne Pellerin to authorities and politicians.” us every day.” Marcel Frei Harry Graf Martin Roth “Successfully boosting “With our new division we are and cutting meeting needs for complex EFFICIENCY costs – the expertise of our ENERGY SOLUTIONS finance and controlling even better – simply, and from departments is essential here.” a single source.” Hanspeter Rahm Christoph Deiss

Environment representative: Martin Roth Occupational Safety and Health Management representative: Benedikt Loepfe Process and Quality Management representative: Arno Stark Risk Management and Internal Control System representative: Hanspeter Rahm Equal Opportunities representative: Regula Bel Kadhi Data Protection representative: The Executive Board (as at April 2017) Arno Stark

Christoph Deiss Marcel Frei Benedikt Loepfe Corinne Pellerin Arno Stark Martin Roth Cédric Aubert Stéphanie Engels Harry Graf Hanspeter Rahm

CEO Energy Solutions a.i. Telecom Distribution Grid Sales and Marketing Services Power Generation Energy Economics Corporate and Media & Public Finance and Project business with Construction and Planning, construction, Development, main- Support and service Power production Management of Business Affairs Controlling energy contracting operation of the urban operation, and main- tenance, marketing, functions for procure- from own hydropower, power production and Development Competence center Support and service and facility manage- fiber-optic network tenance of grids and and sales of products ment, property, wind and solar plants guarantees of origin, Internal corporate for media relations, provider for all finan- ment, energy con- and provision of inno- installations in Zurich, and services, support human resources, and investments in electricity and services relating public affairs, issue cial and business sultations, grid ser- vative communications central Grisons, and and competent advice legal affairs, project domestic and foreign certificate trading, to business develop- management, and matters and proces- vices, and business solutions for com- Bregaglia. Operation to customers, and effi- management and IT. power plants. use of power plants, ment, innovation, crisis communication. ses and also res- development. panies and municipal and maintenance of cient billing. balance group, strategy, and sustain- ponsible for financial organizations. public lighting and research, and risk ability. Strategic and management clocks in the city of management. cross-divisional reporting. Zurich. projects.

12 13 MILE- STONES. 125 years 1888 1900 60s 80s since since of – – + + ewz 1900 1910 70s 90s 2000 2015

As a pioneer, ewz is proud of its history and of the employees who have made it possible. It all began with bringing light into the city of Zurich, and to this day our commitment translates into ongoing innovation, energy services, and state-of-the-art telecommunications solutions. Travel through time with ewz. MILE- STONES.

1888 1900 60s 80s since since Electricity flows into Zurich: – – + + The Letten hydro- power plant provides 1900 1910 70s 90s 2000 2015 light for the first time, followed soon after by an electri- fied tramway. As a pioneer, ewz is proud of its history and of the employees who have made it possible. It all began with bringing light into the city of Zurich, and to this day our commitment translates into ongoing innovation, energy services, and state-of-the-art telecommunications solutions. Travel through time with ewz. MILE- STONES.

1900 60s 80s since since Previously unimaginable: – + + A 140 km power cable 1910 70s 90s 2000 2015 brings electricity from Grisons to Zurich. Hydropower plants are expanded in Bregaglia, As a pioneer, ewz is proud of its in central Grisons and along the Limmat River. history and of the employees who have made it possible. It all began with bringing light into the city of Zurich, and to this day our commitment translates into ongoing innovation, energy services, and state-of-the-art telecommunications solutions. Travel through time with ewz. MILE- STONES.

60s 80s since since Electricity usage in everyday + + life skyrockets, prompting 70s 90s 2000 2015 further expansion of ewz’s infrastructure of power plants and distribution grids. As a pioneer, ewz is proud of its Rising demand leads to a move into nuclear power history and of the employees through investments. With the “Power Conservation who have made it possible. It all Day”, ewz acts early to raise awareness of a sustainable began with bringing light into the approach to electricity. city of Zurich, and to this day our commitment translates into ongoing innovation, energy services, and state-of-the-art telecommunications solutions. Travel through time with ewz. MILE- STONES.

80s since since Sustainability and renewable + energy are ewz priorities: 90s 2000 2015 Free energy efficiency consul- tations expand the portfolio, as does the first solar power As a pioneer, ewz is proud of its exchange in Switzerland. history and of the employees who have made it possible. It all began with bringing light into the city of Zurich, and to this day our commitment translates into ongoing innovation, energy services, and state-of-the-art telecommunications solutions. Travel through time with ewz. MILE- STONES.

since since For the very first time, customers can choose their electricity 2000 2015 product and its quality. ewz begins the process of opening up the en- As a pioneer, ewz is proud of its tire city of Zurich with fiber optics history and of the employees by 2019. The proportion of wind farms increases, and ewz gains ex- who have made it possible. It all perience in solar thermal energy, began with bringing light into the geothermal energy, and fuel cells. Innovative energy services com- city of Zurich, and to this day plement the portfolio, and the first our commitment translates into smart street lighting is installed. ongoing innovation, energy River courses are renaturated around power plants. services, and state-of-the-art telecommunications solutions. Travel through time with ewz. MILE- STONES.

since The energy 2015

As a pioneer, ewz is proud of its mix for history and of the employees all residential who have made it possible. It all began with bringing light into the customers city of Zurich, and to this day our commitment translates into is 100 % ongoing innovation, energy renewable. services, and state-of-the-art telecommunications solutions. Travel through time with ewz. DEPARTMENT STATEMENT. EVENTS IN 2016.

ewz stays on the ball. January 18 July 1-3 September 15 The city of Zurich has committed to the Quick and personal exchange with custom- ewz was represented at Züri Fäscht with ewz launched ewz.meinsolar in Grisons as 2000-watt society in a public referendum, ers: AXA Winterthur, ewz, and SBB launched a stand at the Utoquai and provided a free well. With this service ewz coordinates the and it aims to withdraw from nuclear power the messenger solution “Smoope”. public WiFi network around the Bellevue entire implementation of a photovoltaic sys- by no later than 2034. These have been area. tem on the customer’s own roof, from plan- ewz’s declared goals for quite some time April 26 ning and installation to commissioning. now, and the company is eager to stay ahead The results of the power conservation pilot July 18 of its competition in terms of energy effi- project are now available. Thanks to the lay- Founding of smart grid solutions AG, in September 22 ciency and renewable energy. According to people who completed a training course which ewz holds a 40% stake. The goal is ewz and Equinix launched ewz.cloud ac- the latest benchmarking study by the Swiss followed by energy efficiency consul- to develop and distribute a power quality cess. This new offering gives Zurich com- Federal Office of Energy, ewz is very close to tations, average electricity consumption fell measuring device that records the condition panies private access to their cloud. ewz its goal of becoming the ideal supplier of en- by 4.3 %. Pages 38, 39 of the power grid at various locations in real delivers a quick and secure point-to-point ergy as defined by the federal government’s time. Page 24 connection via the fiber-optic network. 2050 Energy Strategy and is therefore at the May 12 top of the rankings. ewz’s efforts also help The study commissioned for the repair and August 27 October 26 the city of Zurich to top national and inter- optimization of the ewz site in Herdern was ewz formally opened the renovated Albigna The City Parliament decided not to sup- national comparisons of sustainability time decided. The most impressive proposal plant cableway. The cableway is essential port the proposal for a change of legal form. and again. was submitted by Meili & Peter Architekten for operation of the Bregaglia power plants ewz wanted to use further credit facilities to In the meantime, however, other energy AG together with the general planner Häm- and makes a valuable contribution to tour- guarantee the leeway required to ensure its providers have also realized that they need merle + Partner GmbH from Zurich. ism in the valley. Page 22 continued existence in the marketplace. to rely more on renewable energy and en- Pages 5, 16, 53 ergy services. The majority of these are not June 1 August 31 municipal administrative departments and The renaturation of the Rothenbrunnen Due to joint cost controlling for the ewz grids October 26 therefore have better conditions in the mar- stream was a success: A huge variety of in Zurich and Grisons, Grisons households The City Council applied to the City Parlia- ketplace than ewz, especially in terms of plants and animals colonized the area in will pay an average of 18 % less for their elec- ment for a loan of 9.4 million Swiss francs quick decision-making and confidentiality. increasing numbers. ewz’s naturemade tricity in 2017. with which ewz could acquire a stake in a Andres Türler, The City Council was eager to compensate Member of the City Council and head of the Utility star fund put CHF 140,000 toward this company that will supply heating, cooling for this disadvantage by converting ewz into Operations Department of the city of Zurich renaturation. Pages 20, 21 September 1 and fresh air to a new sports and leisure a public-sector institution, but did not manage to achieve majority support in Parliament. With its sustainable concept, ewz won the center in Lausanne. However, so that ewz can continue along the path already chosen, the City Council will ap- June 5 tender to supply heating and cooling for the ply to the City Parliament for a credit facility of 200 million Swiss francs for the production 70.4 % of voters said yes to a proposal re- new “Les Jardins du Couchant” complex in November 7 of energy from renewable sources. It also wishes to change the regulations concerning the quiring ewz to sell all its investments in nu- Nyon. Geothermal and solar energy will be ewz is ranked first in the latest federal handover of ewz’s profits. clear energy by 2034 and to stop procuring the main energy sources used. benchmarking study on energy efficiency The years of huge revenues are long gone for the energy industry, including for ewz. Elec- nuclear power. Pages 4, 6, 16, 22, 52 and renewable energies. Pages 5, 16, 25 tricity prices are below the cost of production, and may not have bottomed out yet. This is September 9 all the more reason why ewz must set its priorities in areas where it is already strong: in its June 20 ewz became the new owner and operator December 11 sustainable products and services and its proximity to customers. However, ewz must also With the new “solar.mobil-Pass” customers of the Splügen district heating project with ewz enabled the first energy-neutral Zurich be creative and provide new services. In the area of solar energy, for example, the City Par- of Zurich Public Transport (VBZ) can travel wood-chip heating. Following the comple- New Year’s Eve Run. liament has approved a credit facility for this of 10 million Swiss francs. The approximately anywhere on the Züri Line with solar power tion of the renovation work, ewz formally 1,200 employees of ewz are responsible for the company’s success. I am constantly aware of for a year. opened the plant with customers. December 21 their huge dedication, their expertise and their inventiveness. That fills me with confidence. The City Council applied for a credit facility June 21 September 14 of 200 million Swiss francs for investments The construction of ewz’s urban fiber-optic The City Council applied for the “New Busi- in renewable energies. Pages 16, 22 network progressed on schedule. It is now ness Solar” credit facility. This should set the available to 180,000 homes and business platform for ewz to add innovative projects premises. Page 34 to its existing activities. Page 22

14 15 SUSTAINABILITY MANAGEMENT.

Major trends. Priorities of sustainability. The UN Sustainable Development Goals. Consumption is rising worldwide, for exam- Energy supply is in a particularly challenging With its sustainability management, ewz also accepts responsibility on the international ple, for food and electricity. According to situation: Fluctuating power generation, stage. The member states of the United Nations (UN) have agreed on goals for global sus- one study1, the global population in 2050 consequences of the changing regulatory tainable development. These goals place responsibility on both rich countries and the poor- would need a total of three planet Earths to environment, and a skills shortage are a est nations. For the first time, it is not only countries but also companies that are involved. meet global demand. Forecasts indicate few of the issues currently facing ewz. But The ewz sustainability policy makes an effective contribution toward five of these “Sustain- that resources will become scarcer in the fu- this is opening up new opportunities. ewz is able Development Goals”: ture. In the same period, the concentration developing new and innovative products of greenhouse gases and of carbon dioxide and services together with its stakeholders in the atmosphere is set to double. Scientists and demonstrating its commitment to its Promote gender equality believe that this will lead to higher global staff as an employer. The main sustainability see “Diversity” page 47 temperatures and increasingly extreme priorities which ewz is addressing are pre- weather phenomena. sented in the following materiality matrix (GRI G4-19). These sustainability priorities form the bedrock for sustainability in the cor- Produce reliable, safe and sustainable energy porate strategy. They are reviewed annually see “Renewable energies” page 22 by external and internal stakeholders.

¹ “2052: A global forecast for the next forty years”, Professor Jorgen Randers, University of Cambridge) Create an innovative and resilient infrastructure see “Security of the power supply” page 24 “Modern communications infrastructure for Zurich” page 34

Promote sustainable cities and communities see “Biodiversity” page 23 and “Energy Solutions” pages 30, 31

Combat climate change and its impacts see “Green power” page 25

ewz materiality matrix. ewz’s sustainability priorities: 1 3 http://www.un.org/sustainabledevelopment/ (only available in English)

Increasing 1 Security of supply 2 2 Investment in renewable energies 3 Innovation 5 Sustainability management. 4 4 Sustainable products and services ewz’s strategic goals include these material sustainability issues and therefore guarantee 5 Customers’ energy efficiency that ewz as a company is not only competitive but also makes a long-term contribution 6 Environmental management to society and to the city of Zurich as an owner. Sustainability management ensures that 6 7 Stakeholder engagement 8 the sustainability strategy integrated into the corporate strategy in 2016 is implemented and 8 Customers has direct access to the Management Board. In 2016, the Sustainability Board was inte- 7 9 Occupational health and safety grated into the Management Board to simplify the situation further. The latter discusses the 13 10 Talent search and development of employees set sustainability priorities once per quarter and derives any recommended actions. 14 11 Modern communications infrastructure 11 10 ewz is also focusing on the development of 12 the following topics within the company: 9 12 Opportunity and risk management 15 13 Sustainable procurement 16 14 Corporate governance 15 Diversity management 16 Social commitment Relevance from the perspective ewz the stakeholders of from Relevance Relevance from the perspective of ewz Increasing

16 17 CONTRIBUTION TO ENERGY TRANSITION. ewz is committed to the production of green power and the renaturation of waterways, which has a positive effect on bio- diversity: For every kilowatt-hour of green hydropower sold, one cent goes to ewz’s naturemade star fund for environmen- tal improvements. In 2016, around 140,000 Swiss francs went toward renaturation of the Rothenbrunnen stream in Grisons. Customers who purchase green power are contributing directly to environmental improvements. This is how wonder- ful the energy transition can be. “We enjoy being in the great outdoors and want to contribute to its conservation so that our chil- dren can delight in its diversity in the future as well. That is why we are committed to eco-friendly power supply. We have been buying green power since 2010.”

Sabine Hasler, Member of the Management Board of Woniya Nature Academy and a Possibility Maker, together with her family RENEWABLE ENERGIES.

Production strategy. Biodiversity in the field of hydropower plants.

SOLAR POWER One of ewz’s overarching long-term goals is Goal review for 2016 4.6 MILLION SWISS FRANCS Around half of the electricity produced by ewz comes from hydropower plants. For this rea- EXPERTISE INCREASED. to distance the production portfolio from nu- and outlook for 2017. FOR ENVIRONMENTAL son, the provisions of the Swiss Water Conservation Act are hugely important to ewz. The clear power and switch entirely to the pro- In 2016, ewz again assumed responsibility statutory rehabilitation of the catchments, which ensures appropriate residual water flow, is duction of renewable energies. Since 2015, for managing Maggia Kraftwerke AG, in COMPENSATION MEASURES. an important task at present which has already been implemented for all ewz plants – with customers with basic supply have been re- which ewz has a 10 % stake. The trading the exception of those in central Grisons. At the round table, ewz devised a viable solution ceiving 100 % renewable energy and even team at ewz is optimizing use of the complex with the communes, the fisheries and environmental organizations, and the canton. ewz business customers are consciously turning hydropower plants and selling electricity received the cantonal decree required as a basis for implementation shortly before the end their back on grey electricity or nuclear power and green certificates of origin on the whole- of 2016. Once the agreed measures have been implemented, which is expected to happen and are procuring 72 % green power. sale markets. In the year under review, ewz by 2019, all plants will satisfy the legal requirements. ewz will sell off its nuclear power invest- invested mainly in the greater Zurich area Since the law was revised in 2011, the federal government has also imposed increased en- ments and procurement rights by 2034 pro- and in smaller photovoltaic systems in order vironmental requirements on hydropower plants. These concern fish mobility, fluctuations vided that the plants are not decommis- to meet the demand for the investment in water discharge, and the bed-load balance: When ewz rehabilitates the bed load at the sioned before then. The resulting drop in model ewz.solarzüri. Wettingen power plant in the middle of 2017, gravel and sand banks below the power plant quantity will mainly be replaced by electric- On the whole, production from renewable will expand and contract constantly with the ebb and flow of the river, invigorating the ity from hydropower, wind power, and solar energies fell slightly by 11 % to 2561 GWh. ecosystem. energy. To this end, ewz reviewed and up- Production from hydropower was deter- ewz demonstrates special commitment to renaturation, both along and in the vicinity of dated its own production strategy in 2016. mined in 2016 by a hydrologically average waterways. That helps power plants produce renewable electricity. ewz promotes biodiver- Under the new strategy, ewz expects to sub- first six months replaced by extremely sity there with funding from the naturemade star fund for certain projects. One cent for every ewz is actively stantially build up renewable energies when dry weather from September. Electricity pro- kilowatt-hour sold of green power generated exclusively by naturemade star-certified power helping to shape electricity market prices rise again in the duction from hydropower was reduced by plants goes into the fund. medium to long term. 12 %. In July 2016, ewz commissioned the In 2016, around 4.6 million Swiss francs flowed into the fund for environmental compen- the innovative ewz is pursuing a cost-effective production completely overhauled Albigna cableway, sation measures. Of this, 2.4 million Swiss francs were spent on renaturation and projects solar market and, strategy: Instead of accumulating power in which will secure future access to the dam promoting biodiversity. the short term, the focus is on strategic po- and, with this, operation of the Bregaglia thanks to the sitioning by, for example, securing sites for power plants. credit facility wind power plants. Thanks to this produc- In 2017, ewz will continue to invest in secur- tion strategy, ewz will be able to respond to ing and optimizing production from its own “NEW BUSINESS market developments more quickly. hydropower plants as well as partner plants. SOLAR”, it is ewz produces significantly more electricity It is also planning to invest in new renewable from its own plants and from long-term con- energies, particularly wind farms and, to a enabling promi- tracts than customers consume. This ena- smaller extent, photovoltaic systems as well. sing pilot projects, bles it to supply a sufficient amount of elec- tricity at stable prices. The surplus is sold to new products, the power exchange. and investments.

Power production from renewable energies1. Investment in environmental improvement measures in GWh by ewz’s naturemade star fund. in CHF million Key data of ewz’s naturemade star fund. 3000 2400 3.0 2016 1800 2.5 Power generation from naturemade star- in GWh 457 1200 2.0 certified hydropower plants 600 1.5 Sales from naturemade star hydro in GWh 457 products and product components 0 1.0 2012 2013 2014 2015 2016 Cash inflows in CHF million 4.6 0.5 Cash outflows in environmental in CHF million 2.4 0.0 ¹ Production from the company’s own and partner plants. 2012 2013 2014 2015 2016 improvement measures

22 23 SECURITY OF THE POWER GREEN POWER. SUPPLY.

FEWER POWER FAILURES Security of supply is a major asset, and it is Goal review for 2016 SALE OF GREEN POWER While work progresses to expand renewa- tion, while on the other the demand trends CAUSED BY THIRD PARTIES. becoming more and more important as and outlook for 2017. ON A PAR WITH PREVIOUS ble energies in Switzerland and Europe, are changing more quickly than the portfo- society becomes increasingly digitalized. The situation regarding security of supply electricity products are also experiencing a lio of our own facilities. ewz therefore However, there is no 100% availability in was tense throughout Switzerland during YEAR. shift toward renewable energies. ewz has optimizes production through short-term power supply. By comparison with the rest the 2015/2016 winter season, but ewz made long been a specialist in “green power” procurement from the market, trade in of Switzerland, ewz achieves very good a major contribution to securing national made entirely from renewable energies. physical electricity, and certificates of ori- scores for security of supply. supply with its flexible portfolio of produc- This is why ewz supplies electricity prod- gin, which ensure the ecological quality of A secure power supply means that the num- tion facilities. ucts from various sources, such as certi- the products. ber and duration of interruptions or voltage Over the last five years, the duration of inter- fied and uncertified Swiss hydropower pro- fluctuations must be kept as low as possible. ruptions per customer in the city of Zurich duction as well as domestic and foreign Goal review for 2016 That is why ewz constantly maintains and amounted to 9.7 minutes per year on aver- shares in solar, wind and biomass plants. and outlook for 2017. modernizes its distribution grids. This en- age. The goal of keeping this duration under Even ecologically top-quality naturemade At 380 GWh, sales of ecologically top-qual- sures the availability and long service life of ten minutes was therefore achieved. star-certified electricity products from ity naturemade star-certified electricity the facilities. ewz is also adapting its net- The most unusual interruptions were the 100% solar power, for example, are availa- products to end customers were on a par work to meet future challenges: Numerous two successive power outages in Zurich on ble. The green power products are secured with the previous year. ewz aims to in- small and private solar power systems are September 4 and 5, 2016. The media cov- by our own facilities and long-term power crease sales of these electricity products producing more and more electricity. This ered them extensively in their reports as purchase contracts. Nevertheless, the by 2.5 % per year until 2020. Since 2014, will lead to increased fluctuations in the net- they affected densely populated urban dis- portfolio of production facilities does not sales have grown by 3 % a year on aver- work as dictated by the intensity of the sun. tricts. A defective insulator in a high-voltage entirely match the demand for electricity age. ewz is therefore successfully fol- For this reason, ewz is working on a flexible cable led to short circuits. products. On the one hand, the weather lowing its set course into the future. network with intelligent battery storage fa- As a rule, damage caused by third parties, causes fluctuations in annual produc- cilities. This will make it possible to match such as construction companies, is the main production and consumption accurately. cause of power outages. Since early 2016, ewz has been tightening up its procedures and it reserves the right to initiate official proceedings. Various actions are having an impact: In 2016, power failures caused by third parties fell by 30 %. The GridBox system launched by partner According to the company “smart grid solutions AG” in 2016 Quality of the electricity procured latest bench- is increasing security of supply. It enables by business customers. grid operators to monitor the grid continu- marking study by ously and independently in real time, which in % the Swiss Federal means, for example, that photovoltaic sys- Green power tems can be managed actively. This system, Green power or nuclear power Office of Energy, which has been co-developed by ewz, will 27.8 % ewz is very close be commercialized further in 2017. to its goal of be- coming the ideal supplier of energy as defined by 72.2 % the 2050 Energy Strategy. With 87 % of targets Causes of power interruptions: Third-party damage. met, ewz occupies Number of interruptions Sales of naturemade star electricity products. FIRST PLACE 60 in GWh and is playing a 50 400 leading role in the 40 320 30 240 production of re- 20 160 newable energies. 10 80 0 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016

24 25 INNOVATIONS. How can regular inspections of high-voltage lines and masts be automated and at the same time made more efficient and safer? The answer to this is the LINDA drone. It can hover in position and take photos from any perspective. A laser scanner and ultraviolet camera also identify and document damage not visible to the eye. “Our joint pilot project shows that bringing together expertise makes innovative solutions possible. Lucerne University of Applied Sciences and Arts, Aeroscout, and ewz are working closely together on researching and testing the everyday viability of drone inspection using automated flight planning.”

Prof. Dr. Christoph Eck, Project Director, Lucerne University of Applied Sciences and Arts, Managing Director of Aeroscout, and a Possibility Maker DEVELOPING INNOVATIVE MORE THAN ELECTRICITY. PRODUCTS AND SERVICES. Selection of products and services for businesses.

INNOVATIONS ACCELERATED. Parts of the core business of energy pro- five “gates” – from the project idea through viders face huge competition these days – to integration into the operational business, namely power production and electricity as the graphic below shows. Thanks to this sales. New business models, innovative standardized process, ideas receive the at- Individual consultation, products, and services help cushion the fall tention and support required from manage- electricity purchasing and billing Own production Development in revenues. They form the bedrock for fu- ment right from the outset. The resulting of solar power grants ture business fields. projects are able to access financial and hu- The Management Board is responsible for man resources more quickly and more eas- the strategic focus of innovation priorities. ily. This helps accelerate the innovation pro- Based on this, ewz’s Innovation Manage- cess and to detect both potential and risks ment team actively promotes a compa- early. ny-wide culture of innovation with a view to confronting new challenges with greater in- Outlook for 2017. Soak up some sun ventiveness. The process begins with plenty In 2017, at least ten projects are set to pass of ideas from employees. These are col- through “Gate 1”, and thereby officially be for yourself and Raising of Fast-charging station lected in vessels such as “ideewz” – an in- launched and processed further as a project sta
awareness recharge your mo- house ideas portal. The concepts are then proposal (see graphic below). bile using solar expanded upon at innovation workshops energy at the same and considered together with experts as well as potential customers. To become a time – this was finished product, every idea passes through possible in 2016 at four locations in Zurich that ran the INNOVATION Planning and Operation of heating Battery Operation of ‚nancing of and refrigeration plants storage system transformer stations PROJECT plants “Sunbench”.

Site networking

ewz.zürinet

Energy contracting Power supply Redundant power connection

WZ IDEA STRATEGIC MARKET LAUNCH PHASEOPERATIONAL PHASE PHASE BUSINESS Heating & Fiber-optic Power IDEE cooling energy network production supply

GATE 0 GATE 1 GATE 2 GATE 3 GATE 4 Project idea Project proposal Business case and Project approval Project conclusion and prioritization by handover to the line Management Board

28 29 ENERGY SOLUTIONS.

1,875 ENERGY EFFICIENCY Energy systems are becoming increasingly Since March 2016, ewz has been a distribu- SALES OF HEATING AND In Energy Services, ewz specializes in the Project business therefore includes the sup- CONSULTATIONS BOOST complex. This is posing huge challenges for tion partner to energo, an association with a COOLING INCREASED BY 10 %. supply of heating and cooling from renew- ply of heating, cooling and electricity to cus- customers. Not only do they want to pro- specialized program for engineering ser- able energies or alternative concepts. The tomers with increased requirements. Indi- CUSTOMERS’ ENERGY duce their own electricity, heating and cool- vices and consultations in relation to energy energy sources include waste heat from data vidual plants or complex energy systems EFFICIENCY. ing in increasing numbers, they are also efficiency in buildings. This means that ewz centers and geothermal energy. ewz plans, can be operated or optimized. eager to increase the efficiency of their con- can offer in-depth operation optimization. finances, operates, and maintains power For customers with even higher demands sumption installations. The newly created The Swiss Federal Office of Energy esti- supply plants belonging to companies, hos- on power supply, such as hospitals, ewz real- “Energy Solutions” division deals with pre- mates that the energy requirements of build- pitals, communes, and cooperatives. izes transformer stations or redundant con- cisely these changing customer needs – ings can be reduced throughout Switzer- nections as part of its grid services. In the with a focus on business customers, energy land by 23 %. ewz will make an active city of Zurich, ewz operates a reserve grid providers, cities, and area developers. Start- contribution to this. which also provides electricity when the ing with a personal, comprehensive energy ewz also monitors operating indicators, and HEATING power fails in the traditional grid. efficiency consultation, ewz follows this up in so doing exposes any inefficiency in the by offering a complete package of cleverly operation of plant parts. For example, the NETWORKS enable Goal review for 2016 networked and modular energy solutions. performance curves of photovoltaic sys- the procurement and outlook for 2017. Thanks to these individual projects, custom- tems need to track so-called global radia- of heating and hot Sales of thermal energy increased in 2016 by ers are achieving cost-effective and ener- tion. And the seasonal performance factor 10% to 318 GWh. The goal of an annual 10% gy-efficient targets throughout Switzerland. of heat pumps should correlate with the water from local increase was therefore achieved thanks to We know from experience that even just a number of heating degree days in order to resources in a man- the acquisition of new projects. Around 2/3 of site visit and on-site consultation with one of be efficient. energy sold is heat. In its Energy Services the 19 qualified ewz employees brings an More and more customers are recognizing ner that is up to plants, ewz saves a total of 44,721 metric energy cost saving of 10 % to 15 % if the sug- the potential in the field of energy efficiency. tons of CO₂-eq each year. 100 % CO2-neutral. gestions are implemented. One area where An increasing number of companies are Energy sales will increase further in 2017 there is potential for savings is the optimiza- concluding target agreements with the fed- Since 2016, ewz and beyond. Alongside the acquisition of tion of building technology. This can be real- eral government or the canton. ewz advises has also been oper- new plants within Energy Services, heating ized following an in-depth analysis of the op- and supports them as they set targets to im- networks that are currently under construc- eration. Simple optimizations include a prove efficiency. ating biomass tion will be completed. ventilation system that only runs during district heating working hours or a lighting system that is ¹ CO 2-eq is a unit of measurement for green- house gas emissions. Gases, such as sulphur converted to LED and equipped with light systems in Schiers hexafluoride (SF6) or methane, are standardized sensor technology. and Bergün. to the greenhouse gas potential of CO2. This allows the total emissions of greenhouse gases to be calculated.

A concrete example: In 2016, the school in Kollbrunn in the Canton of Zurich started using energy from groundwater, saving 100 metric tons of CO₂-eq per year. ewz cur- rently has 33 energy networks.

Those who know more can save better.

With targeted company consultations, CO2 savings by customers. ewz promotes sustainable action in t CO2-eq CO2-eq savings through energy contracting and reveals ways of optimizing operation. Sales of environmentally friendly heating and cooling. Annual additional CO2-eq savings AWARENESS-RAISING PROGRAMS in GWh through energy contracting for energy, water, and other environmental 400 40000 320 32000 issues heighten awareness of sustainability. 240 24000 160 16000 80 8000 0 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016

30 31 STAKEHOLDERS AND SOCIETY. Promising ideas with great development potential emerge in discussions with customers. This is what happened during the energy efficiency consultation at the workshop for the disabled run by the St. Jakob Foundation in Zurich: Energy savings of 16 % were achieved here within three years. After ten years, this is set to rise to 22 %. Most of these savings were made possible simply through efficiency gains from optimizing opera- tions. Such successes inspire ewz over and over again to search for optimal solutions with stakeholders. “We were very surprised that we were able to im- prove the energy efficiency of our plants dramati- cally without any major expense. This means that we can put the foundation money entrusted to us to even better use for our 500 employees and to develop new areas of activity. We are also relying on the expertise of ewz’s energy professionals for our new business center.”

Karl Sigrist, CFO and Deputy Director of the St. Jakob Foundation’s workshop for the disabled and a Possibility Maker MODERN COMMUNICATIONS FOCUS ON CUSTOMERS. INFRASTRUCTURE FOR ZURICH.

80 % OF ALL PRIVATE HOUSE- ewz is enabling the communications infra- at major events, and a Lora network for link- OUTSTANDING GRADES ewz’s customers are among the company’s Goal review for 2016 HOLDS AND BUSINESSES structure of the future. Our information and ing various sensors. FOR THE CUSTOMER SERVICE most important stakeholders. It is their and outlook for 2017. communication society is also increasingly needs that govern what ewz offers. The number of contacts made with custom- ARE CONNECTED TO THE becoming a mobile society. Ever greater vol- Goal review for 2016 CENTER. Over the last ten years, ewz has expanded ers in person and on the telephone in the FIBER-OPTIC NETWORK. umes of data are transferred digitally, which and outlook for 2017. its customer base and extended its busi- Customer Service Center rose to around is why ewz is continually expanding the in- The city of Zurich has set itself the goal of ness activities. This is not only due to the 127,000 in 2016. This figure is rising because frastructure for the city of Zurich: Communi- offering the fiber-optic network to everyone gradual liberalization of the electricity mar- the urban population is growing. The ques- cations companies are able to make their by 2019. ewz will realize broadband con- kets, it also has to do with rapidly changing tions asked by callers mainly revolved around services available to the general population nections in collaboration with Swisscom. technologies. moves and statements. based on ewz’s fiber-optic network. Thanks to the growth of the city, more pri- These days, there is nothing unusual about In the interests of continuous improvement, But back to the future: The goal is to make vate households and businesses will be con- electricity customers who produce elec- ewz conducted a customer survey in 2016. It the city smarter and more intelligent. To nected up to the fiber-optic network by 2019 tricity themselves and also want to operate was based on the “Net Promotors” concept. achieve this, an increasing number of sen- than expected when planning began. For their cooling systems more efficiently at the This distinguishes between satisfied, pas- ewz supports sors will gather information on things such this reason, the city of Zurich will assume same time. To enable ewz to meet the indi- sive and dissatisfied customers. Over a pe- the transition to a as parking lot occupancy. What this means 260,000 connections. With completed con- vidual needs of its customers even better riod of three months, ewz surveyed the call- in practice is that vacant parking spaces will nections currently standing at 80 %, ewz is and also to be a technology leader, ewz now ers in the Customer Service Center about “SMART CITY”, be found more quickly and can be managed well on the way to achieving comprehensive distinguishes the more standardized prod- their satisfaction and the quality of the ser- which targets better. network coverage. uct business from the very individual project vice. We were pleased to learn that our The large number of sensors will not be at- Since 2016, ewz has been realizing connec- business. The new “Energy Solutions” divi- customer advisors were rated as outstand- maximum quality tached directly to the fiber-optic network but tions that could not be achieved as part of sion offers complex energy solutions with ing for friendliness, expertise, clarity and of life for the popu- connected to the network via wireless tech- the ordinary expansion for reasons such as the focus on energy supply and distribution speed. A small number of dissatisfied people nology from critical spots. ewz will test this the erection of a new building. from a single source. This approach is allow- voiced their displeasure with overarching lation with mini- technology with two pilot projects: a public ing ewz to strengthen the project business issues, such as the absence of full market mal consumption WLAN at Bellevueplatz, particularly for use and focus more heavily on active market de- liberalization. velopment. The product business is being Customer surveys will continue in 2017 in or- of resources. professionalized and more heavily digitized. der to press ahead with further development In a pilot project, Attention is being paid to residential cus- of ewz’s products and services. ewz will con- ewz.zürinet. tomers, commercial and business custom- tinually switch the customer segments and ewz tests the Provision already exists, ewz.zürinet is available ers with a focus on electricity and electro- contact points involved in the surveys with a measurement of Provision in the next 12 months mobility, and supplementary offers and new view to making targeted improvements and parking lot Provision by 2019 services. Innovative, digital-based forms of developing purposeful measures. dialogue and services will also enable a occupancy in the more personal and more direct exchange public arena. with ewz. A mini sensor sends readings over long dis- tances – with little

radiation. Customer structure in Switzerland – electricity. 2015 2016 Number Number Residential customers 200,935 202,565 Commercial customers 22,897 22,682 Business customers 2,112 2,248 Private households and businesses connected. Total customers 225,944 227,495 Number of connections in Switzerland

300 000 250 000 Customer service center – key figures. 200 000 150 000 2015 2016 100 000 Number Number 50 000 Customer inquiries 123,717 126,721 0 2012 2013 2014 2015 2016 2019 Invoices 1,637,724 1,616,420

34 35 STAKEHOLDER ENGAGEMENT. SOCIAL COMMITMENT.

PERSONAL EXCHANGE FOR To meet the needs of stakeholders, ewz consults various stakeholder groups openly on a FUTURE PROSPECTS As a company, ewz benefits in many ways young people who have reached the end of BETTER UNDERSTANDING OF regular basis. This close interaction allows future trends to be identified early. It makes a FOR NEW GENERATIONS. from the society in which it operates: from compulsory education and are extremely significant contribution to innovation and business development at ewz – and influences the committed staff, satisfied customers, colla- likely to struggle to find a job. ewz offers STAKEHOLDERS. strategic focus. borative business partners, and from the these young people a six-month internship Customers, employees, the voting public of the city of Zurich, and the local population at the sympathetic population at the production so they can gain work experience and sites in Zurich and Grisons are among the main stakeholder groups. They all shape ewz’s sites in Switzerland and Europe. For this rea- thereby increase their chances of success business activity. With regard to the reconcessioning of hydropower plants, in particular, son, it is a given for ewz to assume responsi- on the labor market. round-table talks are held throughout the process and monitoring committees are formed bility and to allow society to share in the that involve fisheries and environmental organizations, the canton, and the communes. And company’s successes. during operation of the hydropower plants, ewz maintains close contact with interested With diverse social commitment, ewz con- stakeholders. In doing so, ewz strives to realize viable solutions for all parties involved. tributes to sustainable development and ewz also supports the local economy with its business activities through regional procure- to improving the quality of life in Zurich and ment and bolsters future prospects as an attractive employer. Grisons. ewz supports partners who uphold the company values of “sustainable”, “com- Goal review for 2016 Among the points highlighted by stakehold- mitted”, “visionary”, and “simple”. To ensure and outlook for 2017. ers this year was the fact that ewz’s ability to that these commitments achieve a long- In 2016, ewz organized the second Stake- innovate is extremely relevant. They also lasting positive effect, they are periodically holder Forum. A total of 17 customers, busi- spoke out in favor of greater collaboration examined for their relevance to ewz and ness partners, suppliers, people involved in between ewz and firms, startups, and part- to society. education and research, and representa- ners within and outside the industry. And As an urban company with deep roots in tives of environmental associations and they expressed a wish for increased trans- Zurich and Grisons, ewz also helps young public authorities exchanged thoughts on parency, especially with the expansion plan people make their way into the world of key sustainability issues and trends. The for renewable energies. work. An example of this support is a project goal is to strengthen the relationship with In 2017, ewz will continue to ensure that run by the city of Zurich which identifies Within the frame- stakeholders, to get to know their needs bet- stakeholders’ needs reach the company ter and to understand their concerns. ewz is through direct exchange. This constructive work of corporate interested in knowing what demands will dialogue will be maintained and intensified. volunteering, ewz be placed on the company both now and in the future. supported the charitable organi- zation “ROCK YOUR LIFE!”. Staff from Human Resources and apprentices at ewz provided young people from a migrant back- ground with con- Face-to-face dialog helps when it crete tips on enter- comes to devising VIABLE SOLUTIONS. ing professional This is the case with ewz’s Letten life and practiced hydropower plant, where district orga- job interviews nizations, fisheries, and environmental with them. associations as well as cantonal and municipal offices monitor the environ- mental impact assessment.

36 37 SUSTAINABILITY IN EVERYDAY OPERATIONS. Ten residents from the Friesenberg housing estate were trained as power conservation pilots by ewz as part of a pilot project. They then enthusiastically carried out a total of 198 consultations. The goal of the project was to reduce energy consumption in the apartments of the Foundation for Large Families through these layperson energy efficiency consultations. By the end of the project, savings of 4.4 % had been achieved. A responsible, conscious approach to handling resources also plays a central role in ewz’s every- day operations – from energy efficiency through to sustainable procurement. “The power conservation pilots were immediately excited to be taking part in the pilot project, among them Sacdia Muhiadin. They are proud of their personal contribution to the 2000-watt society. This also makes them a role model for their children.”

Sylvia Keller, Director of the municipal Foundation for Large Families and a Possibility Maker, together with Sacdia Muhiadin, Power Conservation Pilot and Possibility Maker ENVIRONMENTAL MANAGEMENT. Responsible handling of resources. Energy efficiency at ewz.

HALVING THE A variety of different resources are used to ewz endeavors to close material life cycle EFFICIENCY AT HEADQUAR- ewz supports the transition into a 2,000-watt Over the longer term, ewz is planning to get VOLUME OF WASTE provide electricity, heating and communi- loops, to protect existing resources and to TERS INCREASED BY 19 %. society by building and operating efficient its office buildings, power plants and substa- cation services – to name just ewz’s main use them efficiently. In specific terms, ewz infrastructures. These are geared toward tions certified as sustainably run buildings.

OVER 10 YEARS. products. Some are natural resources, such has more than halved its volume of waste in CO2-neutral and low-loss production and At the headquarters in Zurich Oerlikon, en- as thermal energy from groundwater and fos- the past decade and increased its share of distribution of electricity, heating and cool- ergy efficiency following the renewal of sil fuels that are used in heating networks. recycling material. ing. As a company, ewz is also committed to parts of the building automation has already To improve the environmental impact of our Over the last five years, ewz has observed designing and operating all its own plants been increased over the past few years. ewz own actions, ewz executes a broad environ- only a downward trend in the volume of and real estate as efficiently as possible. is therefore a total of 19 % ahead of its goal mental program. This focuses on improving waste. This is related to the amount of reno- For large facilities that are owned by ewz to become 1 % more efficient with its own efficiency in relation to resources and en- vation work done on substations, for exam- and used for heating and cooling systems, buildings every year until 2020. ergy demands (see next page). Special at- ple, which generate large quantities of re- ewz enters into a cantonal target agreement Efficiency gains are not only confined to tention is also devoted to reducing emis- usable materials and waste. A new disposal to increase efficiency. To provide a further ecological values but also include economic sions that can emanate from hazardous management approach is set to increase the boost to efficiency within the company, a considerations. ewz increased the propor- 2016In 2016, ersetzte ewz re ewz- substances, legacy issues, noise, and elec- level of recycling of reusable materials found certified energy management system will be tion of electric vehicles in the fleet of pas- placed all plastic tromagnetic waves. Increasing biodiversity in waste. The current percentage of recy- set up by 2019. The focus here lies on ewz’s senger cars and trucks slightly to 15 %. In ad- alle Plastikbecher in water and land ecosystems is also a prior- cled materials in the total weight is 47 %. own properties at the sites in Zurich and dition, the total number of vehicles in the durchcups with Trinkbecher drinking ity (see page 23). To address the themes of Grisons. A systematic measurement con- fleet will be reduced gradually. auscups Biokunststoff made from the program in a targeted manner, ewz oper- cept was created in 2016. ates an environmental management system undbioplastics Maiskarton, and that is certified according to ISO 14001 and diecornstarch 100% KOM that- are audited regularly by external bodies. POSTIERBAR100 % COMPOS- sind. TABLESo kann. This jede und enables every Proportion of electric vehicles jeder Mitarbeiten- in the car and delivery van fleet1. singlede zur employeeNachhaltig - in % to contribute to Electric vehicles keit von ewz bei- Other vehicles ewz’stragen. sustainability efforts. 15.2 % Smart LED street lights make ENERGY SAVINGS of up to 90 % 84.8 % possible because they only shine 1 Including motorcycles brightly when someone is on the road. ewz 10 years of recycling and disposal of reusable materials and waste. expanded the test in t Energy efficiency at headquarters. Recycled materials in % series to include Disposed waste Current energy efficiency at headquarters dimmed lighting Landfill waste Target energy efficiency at headquarters in 2016 and will 6000 150 5000 125 use the results 4000 100 to develop the 3000 75 2000 50 street lighting of 1000 25 the future. 0 0 2001 … 2014 2015 2016 2012 2013 2014 2015 2016

40 41 OPPORTUNITY AND SUSTAINABLE PROCUREMENT. RISK MANAGEMENT.

ewz’s sustainable development is managed The societal risks include regulatory risks ewz makes sure that some 95 % of products and services procured come from Swiss com- using strategic goals. As with opportunity which could negatively impact the market panies or companies with Swiss subsidiaries. The main product groups procured by ewz and risk management, these are based on situation and ewz’s ability to act. So that it include machinery and technical appliances as well as full sanitary, heating and ventilation economic, environmental, societal and so- can respond as early as possible, ewz is a systems for operating our own buildings and facilities. Our partner suppliers range in size cial criteria. For all opportunities and risks, member of numerous associations and from small or medium-sized companies through to an international corporation that supplies the impact on the company’s reputation is takes part in federal government consulta- transformers. ewz has over 1,900 active suppliers. The order volume awarded every year also estimated. tions. At city level, credit facilities provide a varies between 250 million Swiss francs and 350 million Swiss francs, depending on the size The economic risks include financial factors minimum degree of flexibility for the expan- of current projects. such as low electricity market prices which sion of renewable energies. As a service de- lie below the cost of own power production. partment of the city, ewz is financially stable Goal review for 2016 case of non-compliance with the code The resulting cash outflow restricts the and therefore an attractive partner. As a supplier, and outlook for 2017. of conduct. In extreme cases, a supplier can scope for investment and the low electricity Changes in society have brought a steady ewz acts so sus- In 2015, potential improvements were iden- be excluded from contracts with the city of market prices lead to high necessary impair- stream of new requirements for employees tified during a review of the procurement Zurich for five years. ment losses for the existing power produc- or occupation profiles that are difficult to tainably that the practice. These were developed in 2016 us- ewz is eager to prevent any potential damage tion portfolio. In addition, federal estimates find in the labor market. By offering flexible procurement plat- ing appropriate measures. Among them was to its reputation from misdeeds by suppliers. only provide a rough estimate of the costs of working time models as well as training the new office for sustainable procurement, To this end, the company has subscribed disposing of radioactive waste from nuclear options and career opportunities, ewz in- form ecovadis.com which gathers a lot of know-how centrally to an industry solution – a database is cur- power plants. ewz places high demands on creases the appeal of a job and promotes awarded ewz the and passes it on. In 2016, this office revised rently being created which will allow sus- the cost effectiveness of any new invest- the development of its employees. the existing criteria catalogues, which in- tainability information to be retrieved about ment and realizes cost-cutting potential on Risk management is generally based on the GOLD MEDAL clude the social and environmental aspects suppliers. The goal is to identify optimization an ongoing basis. ONR 49000 and ISO 31000 standards and for compliance of individual product groups. Another activ- opportunities in the supply chain and to find The environmental and operational risks in- meets the requirements of the city of Zurich ity it is undertaking is training in this area. possible solutions. clude production downtime. To minimize in full. with strict sus- For example, in 2016, the environmental del- this, ewz performs careful preventive main- tainability guide- egates from the divisions were trained to be- tenance and plans optimized renewal lines in 2016. come experts in sustainable procurement. It investments. is their task to advise and support the people involved in procurement. For example, they should promote compliance with sustaina- ble criteria in calls for project tenders where environmental and social criteria can make up to 40 % of the decision-making basis. In early 2016, the city of Zurich introduced a new code of conduct for contractual part- ners. ewz also applies this code of conduct with industries that run particular, sustained risks, such as the textile industry. This code contains precise requirements and stand- ards for ecology and occupational safety for partner companies and their products or services. It also presents measures in the

42 43 ATTRACTIVE WORKING ENVIRONMENT. In October 2016, the ewz women’s network «frauen@ewz» was founded. This network offers female employees a platform for interdisciplinary and informal exchange. It is also having a positive impact on collaboration with their male colleagues. ewz is resolutely committed to equal opportunities, profes- sional interdisciplinary exchange, training opportunities, a transparent payroll system, and flexible working time models. “The fact that we actively get together and discuss things outside our daily work routine increases awareness and opens up new perspectives in our day-to-day working rela- tionships. So, I am particularly pleased that the ewz women’s network was founded. Even the very first event was a great success.”

Caroline Schnell, IT Solution Engineer, Member of the Board of frauen@ewz and a Possibility Maker together with colleagues TALENT SEARCH AND DEVELOPMENT. Targeted HR management with foresight. Diversity.

VISIONY CAREER The energy markets are changing con- Goal review for 2016 PERCENTAGE OF WOMEN Staff diversity offers ewz a competitive edge: a heterogeneous workforce is more flexible, MODELS INTRODUCED. stantly and becoming more competitive as and outlook for 2017. HAS RISEN AGAIN. more agile and more imaginative than mono-cultural companies. A company with a diverse new products and services are launched. To drive forward this change in the corpo- setup understands a diverse clientele better. ewz is fully aware that working life, leisure time, ewz and its staff need to be able to keep up rate culture, ewz has developed corre- and family activities are more interwoven in this digital age, so it creates attractive working with this rate of change. The challenge for sponding principles of behavior and leader- conditions that suit every personality. Human Resources is to retain the right ship that govern teamwork at ewz. They are know-how and to expand it. This is achieved based on the corporate values that were in- Goal review for 2016 “frauen@ewz” network, which was founded by recruiting qualified tradespeople and en- troduced in 2015: “committed”, “visionary”, and outlook for 2017. in 2016. This aims to allow women at ewz gineering professionals as well as new tal- “simple” and “sustainable”. These principles These days, ewz’s employees come from to network better internally, to enable dis- ents from the “Millennial” generation, who of behavior and leadership were discussed 30 different countries. To enable all of them cussions of issues that are specific to It is employees were born in the 1980s through to the early and reflected on in workshops involving all to lead their own lifestyle, ewz offers pro- women, and to encourage mutual support. 2000s. This generation’s understanding of employees in 2016. For example, internal gressive employment models, such as flexi- The first such event, in October 2016, proved who make every- digital technologies, social media, and per- and external cooperation as well as per- ble working hours, job sharing and home to be very popular: 1/3 of female employees thing at ewz possi- sonal fulfillment at work differs from that of sonal initiative are not only increasingly en- office, and is committed to a non-discrimina- took part. prior generations. couraged but also demanded. The benefit of tory working environment. Since 2015, ewz In January 2017, the Zurich municipal author- ble. Alongside the ewz equips itself for the future and adapts its this can be seen in the improved interdisci- has been advertising vacancies with a work- ities and ewz will be introducing the annual TALENT SEARCH corporate culture, style of leadership and plinary development of innovative products load of 80 % to 100 % as a rule, and the visual working hours scheme. Under this scheme, it is a declared working conditions specifically to suit future and services. language of the job advertisements points to the working hours within a year can be per- demands. As a result, ewz attracts talented The change of culture is also becoming visi- the diversity of the company. Both are un- formed flexibly and without a monthly upper goal to develop individuals who become committed and re- ble with very specific measures aimed doubtedly a reason for the increase in part- limit – i.e. exactly when more or less work is employees and main with the company so they can realize at more individual support: At the start of the time employees by 2 percentage points. necessary. The hours worked can be offset our visionary plans. 125th anniversary year in 2017, ewz will 16 % of employees worked at ewz in 2016 over several months. Block times will also to offer attractive be introducing two new career models for with a workload of less than 100 %. be abolished. However, line managers must opportunities to specialists and project leaders alongside To increase the proportion of female execu- still ensure the availability of the team and the traditional managerial career path. At tives, special attention is being given to pro- must define these times. them. In addition the same time, employees will have access moting women within succession planning. to the annual to adequate exchange and information plat- Proportion of women The percentage of women within ewz as a forms depending on the model and level. in management positions. whole is 19 %. ewz will strive to raise the total target-setting By adopting this approach, ewz will encour- in % percentage of women to 25 % by 2025. ewz discussions, the age staff to actively explore strategic mat- Proportion of women will also look to achieve the same proportion ters and objectives. This will reinforce the of women in senior positions. For both indi- senior manage- shared focus. 15 % cators ewz is on the home straight. ment also conduc- A further measure to support women is the ted company-wide succession and talent rounds in 2016 for the first time.

Employment level. in % Employees with a workload Proportion of women across Employment level: women. Employment level: men. Employees. of less than 100 % in % in % Number Employees with a workload the entire company. in % Part-time Part-time Employees in Zurich of 100 % Proportion of women Full-time Full-time Employees in central Grisons and the Bregaglia Valley 16 % 19 % 48 % 9 % 1200 1000 800 600 400 200 0 2016 84 % 52 % 91 %

46 47 OCCUPATIONAL HEALTH HEALTH PROMOTION. AND SAFETY.

FURTHER INCREASE IN Over recent years, there has been a general Goal review for 2016 IMPROVED COMMUNICATION Staff workloads are on the increase. This is Besides preventive offerings, ewz also pro- OCCUPATIONAL SAFETY. increase in awareness of occupational and outlook for 2017. ON THE SUBJECT OF because market liberalization in the energy vides support to sick and injured employees: health and safety. ewz adopts numerous The most common accidents that occur in sector is not only producing new techno- Case Management, as it is called, makes the measures to avoid accidents and hazards the substations, grid bases and administra- HEALTH PROMOTION. logical developments, but also generating return to work easier. Specially trained con- that may put the health of its employees at tive buildings in Zurich and Grisons are not greater economic pressure. These changes tacts provide the employees concerned risk. It does so partly to make its employees electrical accidents, but trips and falls: 22 % are adding to the mental and physical strain with advice and guidance in relation to med- feel safer and happier – and therefore be of occupational accidents in 2016 were on employees. ical, legal, and professional matters. more productive – and partly for economic attributable to trips and falls. In 2016, the oc- The goal of occupational health promotion In addition, employees can obtain support reasons. cupational accident rate was 36 accidents at ewz is to actively promote the health and from an external and neutral advisory ser- The management system for occupational for every 1,000 full-time equivalents (FTEs), well-being of employees. Among other vice to help them deal with specific life health and safety at ewz is certified accord- which we are pleased to note was signifi- things, it offers access to a range of physical challenges, such as personal problems, ing to OHSAS 18001. This demonstrates the cantly lower than the target of 44, and 41 % activities, such as free admission to the pub- conflicts at work, health problems, or finan- ewz provided spe- high significance attached to this issue at below the long-standing industry average. lic swimming pool. In addition, employees cial issues. ewz. The management includes 23 safety However, we are also pleased to note that benefit from the long-standing partnership cific ADVANCED- officers who are based in every division and in 2016 fewer employees had accidents between ewz and the Academic Sports Goal review for 2016 HAZARDS TRAIN- at every site. They pursue an annual objec- during their leisure pursuits, as here too Association Zurich (ASVZ), which enables and outlook for 2017. tive, receive regular training and also net- the amount, at 137 accidents for every 1,000 free participation in well over 100 different In 2016, ewz increased in-house awareness ING for electrical work. They regularly exchange experiences FTEs, was just slightly above the long- sports activities. And employees in Grisons of occupational health management. The accidents because with external experts and other safety of- standing industry average and below ewz’s can take fitness classes at reduced prices if re-design of the website and more intensive ficers, which is hugely important. target of no more than 133 accidents for they wish. personal contact meant that more employ- ewz takes the every 1,000 FTEs. Data show that accidents Supplementary course offerings during ees were reached than the year before. risks to its staff are nearly four times as likely during leisure lunchtime are varied and offer targeted To make potential activities even more at- seriously and is time than during work. relaxation in addition to movement. Along- tractive, individual employees were heavily The further development of occupational side yoga, employees can take advantage involved in the planning phase. eager to keep on health and safety requires a lot of time and of massages, talks on health and free flu vac- The diverse range of company health pro- minimizing them. attention. Therefore, the measures in re- cinations in the fall. All these measures motion offers will be continued in 2017. For lation to the issues of tripping and serve to improve health and performance one thing, the yoga course, which was electrical hazards will also be contin- capability. hugely popular in 2016, will be introduced ued in 2017. more widely so that yoga can be attended during lunchtime once every two weeks.

Non-occupational accident rate. Number of non-occupational accidents per 1,000 FTEs 1 ewz 2 Average for Swiss suppliers of energy 2005–2014 3 Target: < 133 non-occupational accidents per 1,000 FTEs

Seriousness of occupational accidents. Number of occupational accidents per 1,000 FTEs 1 ewz Through various activities as part of 2 Average for Swiss suppliers of energy 2005–2014 Seriousness of occupational accidents. the “Water Campaign” in 2016, ewz emplo- 3 Target: < 44 occupational accidents per 1,000 FTEs Days of absence per occupational accident yees were made aware that drinking 8 175 7 sufficient quantities can boost ENERGY 2 150 1 6 AND PERFORMANCE CAPABILITY. From 125 3 5 the start on World Water Day through 100 4 75 3 to the handing-out of a Sigg water bottle, 2 50 3 2 all employees were involved. 25 1 1 0 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016

48 49 FINANCIAL REPORT 2016. With its energy contracting services, ewz plans, finances, builds and operates eco-friendly power supply plants on behalf of property owners. The Aargauerstrasse power center supplies several relatively large commercial and residential properties in Altstetten with heating and cooling in a reliable and energy-efficient manner. ewz’s energy contracting services are prime examples of how to reconcile ecology and economy successfully. “With the expansion of the ewz power center, our newest buildings, ‘Westlink’, ‘Tower’ and ‘Cube’, can also be supplied with eco-friendly heating and cooling energy. The amazing thing for us is that we save 56,000 liters of heating oil or 130 metric tons of CO2 per year and have a reliable energy supply at a cost that can be budgeted for precisely.”

Felix Ammann, Project Manager at SBB Real Estate and a Possibility Maker ANNUAL AND MANAGEMENT REPORT 2016.

Economic environment. Cash flow statement. On June 5, 2016, voters in the city of Zurich approved a new article in the municipal code aimed at phasing out nuclear power. As a conse- Cash flow from business activities decreased by 48.3 million Swiss francs year on year. The liability caused by the change of method in quence, ewz may keep its investments in the nuclear power partner plants of AKEB (Aktiengesellschaft für Kernenergie-Beteiligungen Lu- the valuation of the decommissioning and disposal fund, in the amount of some 40 million Swiss francs, was settled with Kernkraftwerk zern) and in Kernkraftwerk Gösgen-Däniken AG until 2034 at the latest. In addition, the City Council was authorized to sell both investments Gösgen-Däniken AG in 2016. All financial activities are transacted via the city of Zurich. ewz has a current account with the city accounts early. The National Council and Council of States adopted the first package of measures for the 2050 Energy Strategy on September 30, department for this purpose. The balance of the current account decreased by 23.3 million Swiss francs compared with the previous year. 2016. This includes measures intended to increase energy efficiency and expand renewable energies. A referendum against this resolu- tion has been successfully called, so the Swiss people will make a definitive decision on the 2050 Energy Strategy in early summer 2017. Performance of a risk assessment. On October 26, 2016, the City Parliament resolved not to approve the change of legal form proposed by the City Council, which would have As a dependent institution under public law, ewz is part of the city of Zurich risk assessment. The ewz Management Board has defined its converted ewz into an independent public-sector institution. ewz is therefore continuing to operate as a dependent institution under public own risk management principles and risk policy based on those of the city of Zurich. The systematically recorded, analyzed, and prioritized law, as before. The European energy industry is in turmoil and is posing new challenges to the current business model of traditional energy risks were summarized in a risk report for the attention of the city of Zurich. Specific measures for dealing with the identified risks were as- suppliers. Electricity prices on the European markets fell further again in the year under review, and for most energy production technol- sessed and then discussed and adopted by the Management Board on October 4, 2016. ogies, now lie below the generation costs. The reasons for this are the reduced demand for electricity due to the state of the economy, an

oversupply of CO2 certificates, and the subsidies for renewable energies, which have somewhat distorted competition. In response to the Extraordinary events. change in market conditions, many companies in the industry are diversifying with service offerings in a variety of areas. No extraordinary events requiring inclusion in the annual financial statements occurred in the year under review.

Income statement. Outlook. Total revenues for ewz in the year under review were around 859 million Swiss francs, some 45.6 million Swiss francs or 5.6 % above the New credit facilities for energy contracting and renewable energies as well as a new regulation for handing over profits should give ewz previous year. The amount of energy sold rose compared with the previous year, which, together with the tariff adjustment for grid usage, the leeway required to continue to operate successfully despite the decision not to grant the change of legal form. The City Council will led to this growth in revenues. Operating expenses were reduced in total by 2.5 million Swiss francs. Energy procurement costs remained present corresponding proposals to the City Parliament and/or the commune in 2017 for debate. The energy market environment will re- stable despite the higher total amount, while costs for the upstream grids and system services increased by 6.2 million Swiss francs year main extremely challenging over the coming years. There is no sign of a recovery in market prices, which will continue to have a negative on year. Earnings before interest, taxes, depreciation and amortization improved by 48.2 million Swiss francs or 30.9 % compared with the impact on margins. Cost and optimization pressure will continue to grow. Energy, grid and telecommunications services will continue to previous year. The cost-cutting and optimization measures introduced had the desired effect and, together with the tariff adjustments, be expanded over the coming years which should partially offset the dwindling revenues and margins in the energy sector in the medium led to an improvement in cost coverage, which had a significant positive impact on operating income. Depreciation and amortization rose term. Secure, long-term supply and stable, plannable income are the objectives for the forthcoming years for the grids operated by ewz by 77 million Swiss francs compared with the previous year. The main reason for this were the balance sheet adjustments implemented in the city of Zurich and central Grisons. based on impairment tests. The previous lump-sum provisions for market risk and US leasing were dissolved in favor of impairment losses. In addition, a provision was formed for ewz’s power production portfolio. The power production portfolio that includes the recognized ewz Accounting principles. power plants, the investments in partner plants, and valuation of the existing sales contracts, is regarded as an economic unit, so there are Elektrizitätswerk der Stadt Zürich (ewz) is a service department of the Utility Operations Department of the city of Zurich. The company no individual value corrections for non-current power production assets. Instead, a corresponding provision has been formed for ewz’s manages its own accounts and its own accounting entity within the accounts of the city of Zurich. The closing of accounts and the budget entire power production portfolio based on the comprehensive impairment test. ewz is exempt from taxes in the Canton of Zurich and at are approved by the City Parliament together with the accounts of the city of Zurich on a yearly basis. The accounting principles are based federal level as a service department of the city of Zurich. The tax expenses shown are for intercantonal operating facilities primarily lo- on the cantonal decrees of the Communal Act (LS 131.1), the Ordinance on the Communal Budget (LS 133.1) and the circular letter of the cated in the canton of Grisons. The net result rose by CHF 0.2 million to CHF 68.5 million. The payment to the city treasury (city of Zurich Department of Justice and Home Affairs concerning the communal budget. ewz depreciates non-current assets based on the Ordinance income) amounts to CHF 60 million. of the Department of Justice and Home Affairs concerning depreciation according to economic aspects. The numbers used in the finan- cial report are taken without change from the ewz accounting entity of the city of Zurich and are presented in a way that is typical of the Balance sheet. industry and market. Current assets fell by 5.6 million Swiss francs and amounted to some 23.1 % of the balance sheet total. Non-current assets declined by 64 million Swiss francs due to the value corrections implemented. ewz invested around 107.8 million Swiss francs in plants and investments in the 2016 fiscal year. In addition to investing in network facilities and conventional energy production plants, ewz also spent significant amounts on expanding the fiber-optic network in the city of Zurich, on renewable energies, and on equipment in the energy services business area. Short-term liabilities were down by 42.2 million Swiss francs. The payment, deferred in 2015, for the decommissioning and disposal fund for the nuclear power partner plants was settled in 2016. Long-term liabilities include ewz’s provisions. The value corrections implemented in non-current assets meant that provisions were reduced by 35.9 million Swiss francs in total.

52 53 INCOME STATEMENT 2016. BALANCE SHEET 2016.

Notes Dec. 31, 2015 Dec. 31, 2016 Assets (from page 57) in CHF in CHF Notes Dec. 31, 2015 Dec. 31, 2016 Net revenues from goods and services 1) 783,013,694 823,416,599 (from page 57) in CHF in CHF Capitalized own services 25,455,702 24,126,452 Cash and cash equivalents 5,316,116 6,045,163 Other operating revenue 4,924,817 11,498,102 Current account with the city accounts department 324,196,480 300,908,800 Total operating income (overall performance) 813,394,213 859,041,153 Trade accounts receivable 117,149,208 117,820,884 Energy procurement 2) – 302,638,272 – 302,283,729 Inventories 12,890,579 11,316,901 Costs of upstream grids, system services and surcharges 3) – 82,090,907 – 88,326,556 Prepaid expenses and deferred charges 18,196,430 36,072,720 Material and third-party services – 63,532,096 – 53,551,003 Current assets 477,748,813 472,164,468 Personnel – 150,580,560 – 150,192,225 Financial assets 6) 391,813,977 390,980,946 Levies 4) – 26,335,988 – 24,906,496 Property, plant and equipment 7) 1,246,495,826 1,183,354,529 Other operating expenses – 32,340,866 – 35,709,562 Non-current assets 1,638,309,803 1,574,335,475 Total operating expenses – 657,518,689 – 654,969,571 Total assets 2,116,058,616 2,046,499,943 Earnings before interest, taxes, depreciation and 155,875,524 204,071,582 amortization (EBITDA) Equity and liabilities Notes Dec. 31, 2015 Dec. 31, 2016 Total depreciation and amortization – 94,717,792 – 171,761,224 (from page 57) in CHF in CHF Total changes in provisions 5) 6,656,810 35,928,320 Trade accounts payable 68,681,071 63,150,285 Earnings before interest and taxes (EBIT) 67,814,542 68,238,678 Other liabilities – 5,360,516 Down payments and installments from customers 22,518,466 21,686,553 Customer bonus 414,849 – Accrued expenses and deferred income 102,027,032 60,869,906 Financial result 9,923,276 8,228,045 Short-term liabilities 193,226,569 151,067,260 Earnings before taxes (EBT) 78,152,667 76,466,723 Provisions 5) 728,246,087 692,317,767 Long-term liabilities 728,246,087 692,317,767 Special reserve 1,134,585,960 1,143,114,916 Taxes – 9,820,724 – 7,937,767 Net profit 60,000,000 60,000,000 Net result 68,331,943 68,528,956 Equity capital 1,194,585,960 1,203,114,916 Total equity and liabilities 2,116,058,616 2,046,499,943 Withdrawal/contribution to special reserve – 8,331,943 – 8,528,956 Annual profit 60,000,000 60,000,000

54 55 CASH FLOW STATEMENT 2016. NOTES.

Dec. 31, 2015 Dec. 31, 2016 1) Net revenues from goods and services in CHF in CHF Dec. 31, 2015 Dec. 31, 2016 Annual profit 60,000,000 60,000,000 in CHF in CHF Depreciation and amortization 94,717,792 171,761,224 Net revenues from sale of energy 375,998,451 380,142,140 Change in provisions and reserves 1,658,568 – 27,399,364 Net revenues from grid usage 240,574,068 263,693,804 Change in inventories – 1,635,176 1,573,678 Net revenues from goods and services sold to communities 40,473,718 41,336,427 Change in accounts receivable – 3,122,251 – 671,676 Net revenues from surcharge for transmission grid 32,129,328 38,248,196 Change in prepaid expenses and deferred charges 2,807,647 – 17,876,290 Net revenues from telecom 18,961,925 21,435,817 Change in liabilities 302,319 – 170,270 Net revenues from energy services 46,483,968 49,462,310 Change in down payments and installments from customers 2,950,416 – 831,913 Net revenues from operating supplies and services 28,392,236 29,097,905 Change in accrued expenses and deferred income 35,870,845 – 41,157,126 Total 783,013,694 823,416,599 Cash flow from business activities 193,550,160 145,228,263 Investments in property, plant and equipment – 130,134,624 – 106,646,896 2) Energy procurement Investments in financial assets – 9,030,222 – 1,240,000 Dec. 31, 2015 Dec. 31, 2016 Divestment of property, plant and equipment and financial assets – – in CHF in CHF Cash flow from investment activities – 139,164,846 – 107,886,896 Energy procurement from partner plants – 177,446,938 – 140,621,975 Repayment of financial assets 78,614,051 100,000 Energy procurement from the market – 115,081,667 – 151,069,976 Change in liabilities due to city's accounts – 68,541,176 23,287,680 Fuels, energy for energy service facilities – 10,109,667 – 10,591,778 Profit transfer to the city of Zurich – 65,284,755 – 60,000,000 Total – 302,638,272 – 302,283,729 Cash flow from financial activities – 55,211,880 – 36,612,320 Net change in cash and cash equivalents at end of accounting period – 826,566 729,047 3) Costs of upstream grids, system services and surcharges Cash and cash equivalents at beginning of accounting period 6,142,682 5,316,116 Dec. 31, 2015 Dec. 31, 2016 Cash and cash equivalents at end of accounting period 5,316,116 6,045,163 in CHF in CHF Costs of upstream grids – 30,955,762 – 33,469,117 Costs of system services – 18,902,868 – 16,519,643 Costs of surcharges for transmission grid (feed-in remuneration at cost) – 32,232,277 – 38,337,796 Total – 82,090,907 – 88,326,556

4) Levies Dec. 31, 2015 Dec. 31, 2016 in CHF in CHF Hydropower plant taxes – 10,363,061 – 9,209,334 Water rates – 10,725,170 – 10,558,106 Concession fees and services – 4,449,659 – 4,429,882 Other levies – 798,098 – 709,174 Total – 26,335,988 – 24,906,496

5) Provisions Dec. 31, 2015 Dec. 31, 2016 in CHF in CHF Provisions for market risks 254,904,837 – Provisions for US leasing 123,906,265 – Provisions for power production portfolio – 339,871,333 Provisions for investments and subsidiaries 32,393,448 32,503,162 Provision for naturemade star fund 7,668,841 9,797,144 Provision for alternative risk insurance 309,372,696 310,146,128 Total 728,246,087 692,317,767

56 57 NOTES. PERFORMANCE AND ENERGY DATA.

6) Financial assets ewz share Share capital ewz share of Carrying amount in % of company share capital in CHF Installed power plant capacity Investments 2016 ewz (Deutschland) GmbH D-Constance 100.0 EUR 84,938,412 EUR 84,938,412 99,522,778 Hydropower MW 931.0 ewzert AG Zurich 100.0 CHF 300,000 CHF 300,000 300,000 Nuclear power plants MW 295.8 Energie Naturelle Mollendruz SA La Praz 86.2 CHF 6,300,000 CHF 5,430,000 5,430,000 Wind power plants MW 126.5 AG Kraftwerk Wägital Siebnen 50.0 CHF 15,000,000 CHF 7,500,000 7,500,000 Photovoltaic and solar energy MW 3.0 smart grid solutions AG Zurich 41.2 CHF 1,700,000 CHF 700,000 700,000 Fuel cells MW 0.2 Eoliennes de Provence SA Provence 40.0 CHF 6,000,000 CHF 2,400,000 2,400,000 Total capacity from the company’s own and partner plants MW 1,356.5 Energiepark Sisslerfeld AG Eiken 40.0 CHF 100,000 CHF 40,000 40,000 AKEB Aktiengesellschaft Lucerne 20.5 CHF 90,000,000 CHF 18,450,000 18,450,000 für Kernenergie-Beteiligungen Kraftwerke Hinterrhein AG Thusis 19.5 CHF 100,000,000 CHF 19,500,000 19,500,000 Electricity generation Blenio Kraftwerke AG Blenio 17.0 CHF 60,000,000 CHF 10,200,000 10,200,000 2015 2016 Kraftwerke Oberhasli AG Innertkirchen 16.6 CHF 120,000,000 CHF 20,000,000 20,000,000 Hydropower GWh 2,750.8 2,363.8 Kernkraftwerk Gösgen-Däniken AG Däniken 15.0 CHF 350,000,000 CHF 43,500,000 43,500,000 Nuclear power plants GWh 2,248.0 2,034.2 Etrans AG Laufenburg 12.9 CHF 7,500,000 CHF 963,000 963,000 Wind power plants GWh 338.5 326.7 Maggia Kraftwerke AG Locarno 10.0 CHF 100,000,000 CHF 10,000,000 10,000,000 Waste incineration plants GWh 94.4 61.7 Swissgrid AG Laufenburg 8.8 CHF 316,327,063 CHF 27,789,722 52,847,958 Biomass GWh 16.5 15.6 Total investments 291,353,736 Photovoltaic and solar energy GWh 22.7 23.3 Nominal value Carrying amount Fuel cells GWh 1.3 1.1 in CHF Gas/diesel GWh 0.8 0.9 Loans Total electricity generation1 GWh 5,473.4 4,827.2 ewz (Deutschland) GmbH D-Constance EUR 15,800,000 16,937,600 Swissgrid AG Laufenburg CHF 82,209,610 82,209,610 Energiepark Sisslerfeld AG Eiken CHF 480,000 480,000 Electricity purchases Total loans 99,627,210 2015 2016 Total financial assets 390,980,946 Purchases from own plants GWh 1,401.4 1,305.5 Purchases from partner plants GWh 3,239.0 2,932.8 Purchases from third parties GWh 340.1 232.2 7) Property, plant and equipment Trading GWh 1,793.9 3,028.3 Status as of Status as Total electricity purchases GWh 6,774.4 7,499.0 Jan. 1, 2016¹ Additions Disposals Reclassification of Dec. 31, 2016 in CHF in CHF in CHF in CHF in CHF Acquisition values Electricity supply Power plants 662,484,482 1,017,698 – 1,603,689 665,105,869 2015 2016 Energy distribution facilities¹ 2,377,914,420 604,363 – 5,575,923 76,456,697 2,449,399,557 Electricity supply Switzerland GWh 3,858.5 3,819.5 Public lighting¹ 71,956,363 – – 917,688 5,435,103 76,473,778 Trading GWh 2,745.1 3,462.7 Transmission facilities 2,489,009 – – – 2,489,009 Pumped storage GWh 170.7 216.7 Energy and grid services 237,253,582 8,597,406 – 175,175 6,699,640 252,375,453 Total electricity supply GWh 6,774.4 7,499.0 Telecom systems 143,643,943 9,780,828 – 64,529 – 3,591,391 149,768,851 General facilities, properties, grounds1 258,107,399 7,083,905 – 1,685,273 12,264,255 275,770,286 Facilities under construction 180,156,936 79,562,696 – – 98,867,993 160,851,639 Subsidy systems and PPAs Total 3,934,006,134 106,646,896 – 8,418,588 – 4,032,234,442 2015 2016 Status as of Depreciation and Status as of Purchases to feed into subsidy systems and PPAs GWh 492.8 356.6 Jan. 1, 2016¹ amortization Disposals Reclassification Dec. 31, 2016 in CHF in CHF in CHF in CHF in CHF Subsidy system and PPA supply GWh 492.8 356.6 Cumulative depreciation ¹ Production from the company’s own plants, procurement rights, partner plants and third-party plants. Power plants – 463,565,401 – 10,092,761 – – – 473,658,162 Energy distribution facilities1 – 1,892,272,071 – 21,765,874 5,575,923 – – 1,908,462,022 Public lighting1 – 38,800,834 – 1,721,087 917,688 – – 39,604,233 Transmission facilities – 731,868 – 125,347 – – – 857,215 Energy and grid services – 83,496,047 – 28,550,060 175,175 – – 111,870,932 Telecom systems – 32,454,831 – 102,333,772 64,529 – – 134,724,074 General facilities, properties, grounds1 – 176,189,256 – 5,199,292 1,685,273 – – 179,703,275 Facilities under construction – – – – – Total 2,687,510,308 – 169,788,193 8,418,588 – 2,848,879,913 Total property, plant and equipment 1,246,495,826 1,183,354,529

¹ Acquisition values and cumulative depreciation were adjusted to historically reconstructed values as of January 1, 2016.

58 59 GRI G4 CONTENT INDEX1.

General standard disclosures Specific standard disclosures Document Page External audits Material topics Management approach and indicators Document Page External audits Strategy and analysis Security of supply GRI aspect: access ASR 2016 16, 17, 24 – G4-1 Sustainability statement by most senior decision-maker. ASR 20162 5, 12, 13, 14 – GRI indicator: EU29 GRI Report 2016 8 G4-2 Opportunities and risks ASR 2016 42, 52, 53 – Investment in renewable energies GRI aspect: – ASR 2016 16, 17, 22, 23 – GRI indicator: – GRI Report 2016 8 Organizational profile Innovation GRI aspect: – ASR 2016 16, 17, 28 – G4-3 Name of the organization ASR 2016 4 – GRI indicator: – GRI Report 2016 8 G4-4 Primary brands, products and services ASR 2016 2, 3, 29 – Sustainable products and services GRI aspect: Products and services ASR 2016 16, 17, 25, 31 – G4-5 Headquarters GRI Report 20163 1 – GRI indicator: – GRI Report 2016 8 G4-6 Countries where the organization operates ASR 2016 3 – Customers’ energy efficiency GRI aspect: Products and services ASR 2016 16, 17, 30 – G4-7 Ownership and legal form ASR 2016 4 – GRI indicator: EN27 GRI Report 2016 8 G4-8 Markets ASR 2016 3 – Environmental management GRI aspect: Energy ASR 2016 16, 17, 23, 40, 41 – GRI indicator: – GRI Report 2016 8 G4-9 Scale of the organization ASR 2016 2, 3 – Stakeholder engagement GRI aspect: Local communities ASR 2016 16, 17, 36, 37 – G4-10 Total number of employees GRI Report 2016 1 – GRI indicator: SO1 G4-11 Collective bargaining agreements GRI Report 2016 2 – Customers GRI aspect: Labeling of products ASR 2016 16, 17, 35 – G4-12 Supply chain ASR 2016 43 – and services G4-13 Changes in the organization GRI Report 2016 2 – GRI indicator: PR5 G4-14 Precautionary principle ASR 2016 5, 6–11, 16, 17 – Occupational health and safety GRI aspect: Occupational health and safety ASR 2016 48, 49 – GRI indicator: LA6 GRI Report 2016 9 G4-15 Endorsed charters, principles GRI Report 2016 2 – G4-16 Memberships GRI Report 2016 2 – Talent search and development GRI aspect: – ASR 2016 46, 47 – EU1 Installed generating capacity – electricity ASR 2016 59 – of employees GRI indicator: GRI Report 2016 9 EU2 Power production ASR 2016 59 – Modern communications infrastructure GRI aspect: – ASR 2016 34 – EU3 Customer structure ASR 2016 35 – GRI indicator: – GRI Report 2016 9 EU4 Length of transmission and distributor grid ASR 2016 2 – EU5 CO₂ emission rights GRI Report 2016 2 – ¹ In compliance with the Guidelines in accordance with the “Core option” of the Global Reporting Initiative (GRI). Identified material aspects and boundaries ² ASR 2016: ewz Annual and Sustainability Report 2016, ewz.ch/nachhaltig. ³ GRI Report 2016: includes additional information in accordance with the GRI Guidelines, ewz.ch/nachhaltig. G4-17 Consolidated companies ASR 2016 62 – G4-18 Defining the report content and aspect boundaries ASR 2016 62 – G4-19 Material aspects ASR 2016 16 – G4-20 Aspect boundaries within the organization ASR 2016 61 – Stakeholder processes. G4-21 Aspect boundaries outside the organization ASR 2016 61 – A female business customer, a fisherman, a female resident and a male supplier are all typical stakeholders of ewz (GRI G4-24). Every G4-22 Restatements of information ASR 2016 61 – stakeholder group is affected by the desirable or undesirable consequences of the sustainability themes to a greater or lesser extent (GRI G4-23 Changes in scope and aspect boundaries ASR 2016 61 – G4-21). Depending on the level of impact, the stakeholders are involved in a suitable form, such as on monitoring committees for the recon- Stakeholder engagement cessioning of hydropower plants (GRI G4-25). The goal of the annual Stakeholder Forum is to take account of the opinions of all stakeholder G4-24 Stakeholder groups engaged ASR 2016 61 – groups on sustainability issues relating to ewz (GRI G4-26). In 2016, after assessing suggestions made by forum participants, ewz adjusted G4-25 Identification and selection of stakeholders ASR 2016 61 – the significance and definition of individual sustainability themes (GRI G4-23). For example, customers’ energy efficiency was rated much G4-26 Approach to stakeholder engagement ASR 2016 61 – more highly than in the previous year (GRI G4-27). These themes also require the involvement of very diverse business areas (GRI G4-20). G4-27 Stakeholder concerns ASR 2016 61 – In 2016, there were no structural changes requiring adjustments to sustainability indicators (GRI G4-22). Report profile Additional information on the GRI G4 content can be found in the GRI Report 2016 at ewz.ch/nachhaltig. G4-28 Reporting period ASR 2016 62 – G4-29 Date of most recent previous report GRI Report 2016 7 – G4-30 Reporting cycle ASR 2016 62 – G4-31 Contact point ASR 2016 62 – G4-32 GRI Index chosen option ASR 2016 60, 61 – G4-33 External audits GRI Report 2016 7 – Governance G4-34 Governance structure ASR 2016 4, 12, 13, 17 – Ethics and integrity G4-56 Values, norms of behavior ASR 2016 46, 47 – GRI Report 2016 7 –

60 61 ABOUT THIS REPORT.

KEY POINTS AT A GLANCE. This annual and sustainability report covers the 2016 calendar year. The publishing date is PUBLICATION DETAILS. Publisher. the end of April 2017. It covers all investments in excess of 50 % (GRI G4-17). The sustaina- ewz bility reporting is based on the Global Reporting Initiative (GRI) and its reporting principles, Tramstrasse 35 specifically the G4 guidelines. GRI is the leading standard for sustainability reporting. 8050 Zurich The contents of this report reflect the material topics that show the development of ewz. Phone +41 58 319 41 11 ewz attaches great importance to including the points of view of employees, management [email protected] and outside stakeholders in the sustainability management, and it regularly invites repre- sentatives of different stakeholder groups to contribute their suggestions (GRI G4-18). ewz April 2017 currently publishes its achievements annually in the annual and sustainability report. Fur- Duplication permitted with indication of source ther details can be found in the GRI index at ewz.ch/nachhaltig.

The photographs show various stakeholders in a location of direct relevance to their per- Copies. sonal Possibility Maker story. In this report, ewz takes a look at the future with school pupils German: 650 copies and e-paper and visits the banks of a renaturated stream in Grisons with a family that buys green power. English: 200 copies and e-paper Successful energy savers are portrayed, a contracting partnership for eco-friendly energy French: e-paper with the SBB is presented, and female colleagues committed to the ewz women’s network Climate neutral printing using green power on 100 % recycled paper, introduce themselves. “The Blue Angel” certification ewz thanks all those involved for sharing their personal story and making time to have their photograph taken. They represent all the other stakeholders with whom ewz is moving for- ward with shared commitment. A big vote of thanks is also due to the photographer Micha Editing and coordination. Freutel for the visual realization. Sustainability Management/Marketing and Communication

Questions about the content. [email protected]

Design, production. KSP, Krieg Schlupp Partner Werbeagentur AG

Illustration. Michael Stünzi, Zurich

Photography. Micha Freutel, Zurich PHYSICAL UNITS AND kW Kilowatt (1,000 watts) ABBREVIATIONS. MW Megawatt (1 million watts) GW Gigawatt (1 billion watts) Print. Wh Watt-hour Abächerli Media AG, Sarnen kWh Kilowatt-hour (1,000 watt-hours) MWh Megawatt-hour (1 million watt-hours) GWh Gigawatt-hour (1 billion watt-hours) Further information.

CO2-eq CO2 equivalent ewz.ch/nachhaltig GRI Global Reporting Initiative PPA Power Purchase Agreement PERFORMANCE

neutral Printed Matter No. 01-17-194936 – www.myclimate.org ONR 49000 Austrian Standards Institute Rule © myclimate – The Climate Protection Partnership “Risk management for organizations and systems” ISO 31000 International Organization for Standardization “Risk Management – Principles and Guidelines” OHSAS 18001 Occupational Health and Safety Assessment Series ElCom The Swiss Federal Electricity Commission: independent national regula- tory authority for the electricity sector

62 ewz INVITES YOU to meet some of the Possibility Makers in person: Register for a visit and look over the shoulder of ewz employees at, say, the Albigna dam, Tinizong and Höngg power plants, and the Oerlikon grid base. ewz.ch/fuehrungen