Q3 Interim Report 03:13 Page 1 | Statnett Report 3:2013 005 Directors' report 012 Statement of comprehensive income Table of Balance sheet 013 014 Statement of changes in equity contents 015 Cash flow statement 03:13 Page 2 | Statnett Report 3:2013 In short Highlights Total operating revenues for the Statnett Group in the third quarter of 2013 amounted to NOK 1 105 million (NOK 1 360 million in the third quarter of 2012). As of the third quarter of 2013, the Group’s operating revenues amounted to NOK 3 490 million (NOK 3 993 million in the corresponding period in 2012). The Group reported a profit after tax of NOK 87 million in the third quarter of 2013 (NOK 270 million). The reduction was due to lower congestion revenues and lower tariff reve- nues due to planned downward adjustment of tariffs in 2013. This was reflected in the lower revenue which amounted to NOK 218 million in the third quarter of 2013 (higher revenue of NOK 374 million). At the end of the third quarter of 2013 the profit after tax was NOK 151 million (NOK 722 million). The reduction was due to lower congestion revenues, lower tariff revenues as well as higher operating costs in 2013. This was reflected in the lower revenue which amounted to NOK 620 million at the end of the third quarter of 2013 (higher revenue of NOK 764 million). The lower revenue reduces Statnett’s accumulated higher revenue balance as planned, as the higher revenue will be returned to Statnett’s customers over time through adjustment of tariffs. Corrected for non-reported higher/lower revenue and esti- mated interest expenses, the profit after tax would have been NOK 667 million at the end of the third quarter of 2013. The power situation is still good. Less precipitation than normal resulted in a weakening of the hydrological balance by 2 TWh in the third quarter of 2013, and, compared with normal, there was a hydrological deficit of 7 TWh at the end of the quarter. There was a change in reservoir levels from 2 TWh above median levels at the beginning of the quarter to 8 TWh under the median at the end of the quarter. Page 3 | Statnett Report 3:2013 In short Important events During the quarter there have been two serious incidents Statnett and Lyse Sentralnett AS have signed an agreement involving personnel; a serious incident in Nesbyen where a for Statnett›s acquisition of a 50 percent shareholding personnel lift toppled and a blasting accident at the Ørskog in Lyse Sentralnett AS from 1 January 2014. Statnett will - Sogndal project. acquire another 25 percent when a licence is granted for Lysebotn - Støleheia and the remaining 25 percent upon A new 132 kV power line between Skogfoss and Varanger- completion of the line. botn was completed. Energy exchanges and TSOs in north-western Europe have Two of three cable sets have been laid in Ytre Oslofjord. agreed to implement a common price coupling in the spot market, with the launch scheduled for 26 November 2013. The Ministry of Petroleum and Energy (MPE) has granted The price coupling will ensure more optimal power flow Statnett a final licence to build a new 420 kV power line between the region›s market areas. from Ofoten to Balsfjord. Statnett has adopted the main outline for how pricing of The MPE has granted Statnett a licence to build a new 420 the main grid will be developed in the period 2014-2018. kV power line from Namsos via Fosen to Trollheim to faci- litate development of 3.7 TWh wind power in Fosen and in The NVE has decided that Statnett will maintain its finan- the Snillfjord area. MPE has decided to make the line part cial framework conditions compared with the revenue of the main grid. regulation in 2014. This has been decided on the basis of a benchmark carried out for the European TSOs. Statnett has received a ruling from Fjordane District Court giving Statnett legal access to the transformer site and The state budget proposal contains an allocation of NOK route in Ålfoten, Bremanger. 3.25 billion in new equity for Statnett in 2014, as well as reduced dividend up to 2017. Statnett has submitted an application to the Norwegian Water Resources and Energy Directorate (NVE) for dispen- On 30 August, the independent Latvian TSO Augstspriegu- sation from the terms and conditions of the licence for use ma (AST) became a shareholder in Nord Pool Spot AS after of Statnett›s reserve power plant in Nyhamna. Statnett ap- buying a shareholding of 2 percent in the company. plies for acceptance to start the reserve power plant as an emergency preparedness to supply Ormen Lange if the 420 Statnett has prepared a forecast for a future area structure kV connector between Viklandet and Fræna should fail. in Elspot in Norway for the period 2013-2016, where NO5 The NVE has submitted a recommendation to the MPE. will be expanded and maintained as a separate area from December 2013. Page 4 | Statnett Report 3:2013 N04 Directors' Normal Alert report Strained N03 Very tight Rationing N05 N01 The power situation at the end of September N02 Security of supply September 2013 were NOK 155 million, compared with NOK At the beginning of the third quarter 2013, reservoir levels were 20 million in the corresponding period of 2012. 68 percent, 2 percentage points above the median (from the 1993-2012 measuring period). Little snow in the mountains at There were few serious operating interruptions in the third quar- the beginning of the quarter, as well as less precipitation than ter of 2013. The most important operational interruptions were: normal in the period, resulted in reservoir levels being 77 percent • A fault in the SF6 facility in Tegneby on 22 July resulted in an at the end of the period, 10 percentage points below the median. outage on the 420 kV line between Tegneby and Hasle. The power limits for the SF6 facility have been reduced until the The hydrological balance fell by 2 TWh in the third quarter of fault is corrected. 2013 and, compared with normal, there was a hydrological de- • Major lightning storms between 22 July and 1 August resul- ficit of 7 TWh at the end of the period. At the end of the third ted in many outages. The consequences were most serious quarter 2012, there was a surplus in the hydrological balance of in eastern Finnmark, where Vardø and Vadsø were without approximately 7 TWh. electricity for several hours and a transformer caught fire in Adamselv on 29 July. A new transformer was installed later Total power generation and consumption was 29.5 TWh and the same week. 25 TWh, respectively, in the third quarter of 2013. This resulted • On 31 July, there was an outage on the Aura - Ranes - Troll- in a net export of 4.5 TWh during the period. Net export was 6 heim line as a result of landslides in Todalen. The Ranes - TWh in the corresponding quarter in 2012. Trollheim line was reconnected the same day, but the Aura - Ranes line was out of operation until 26 August. In August and September there was a high upgrade activity in the grid. This resulted in reduced trading capacity out of Nor- In addition, there was an incident on 9 August where the ca- way, in particular from southern Norway. ble between Merkesvik and Kollsneset (BKK) broke down. As a result, supply to Kollsnes will not have full back-up until a new The secondary reserve market was re-started on 15 Septem- connector is installed. ber. Norway’s share is 35 MW, of a total of 100 MW in the Investments Statnett Group Nordic region. NOK million 2 000 On Sunday, 4 August, Nord Pool Spot was unable to calculate 1 800 Elspot prices for the subsequent Monday. Prices and volumes had to be copied from Friday, 2 August in accordance with 1 600 Nord Pool’s regulations. The market for frequency-controlled 1 400 reserves was set aside and most revisions starting Monday 1 200 were cancelled. The situation resulted in an increased risk of 1 000 major imbalance and demanding operations, but had no nega- tive consequences. 800 600 There were few incidents in the third quarter of 2013 which 400 caused disruptions for end-users. Preliminary estimated outage 200 costs for connected end-users (under the KILE (Quality-adjus- 0 ted revenue cap for energy not supplied) scheme) amounted Q1-11 Q2-11* Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13**Q3-13 to NOK 15 million, compared with NOK 3 million in the corre- * Includes acquisition of assets from Hafslund sponding period in 2012. Estimated outage costs at the end of ** Includes acquisition of Nydalen Allè 33 Page 5 | Statnett Report 3:2013 Investments Statnett has major development projects under planning and At the end of the third quarter of 2013 Statnett had invested implementation. These plans are presented in Statnett’s 2013 NOK 4 465 million (NOK 2 238 million), including both commis- grid development plan. The plans are in line with Report to the sioned and ongoing investment projects. Storting, No. 14 (2011-2012), the Grid Report. Overview of major investment projects are shown in the table below. Overview of major investement projects See www.statnett.no for more information about the projects. Project Location Expected investments NOK million Under implementation Ørskog - Sogndal, new 420 kV power line Møre og Romsdal/Sogn og Fjordane 4 600 - 5 600 Station investments (transformer capacity Eastern Norway, reactors for power reduction, spare transformers, Feda, Frogner and others) 2 200 - 2 700 Skagerrak 4 Norway/Denmark 1 400 - 1 700 1) Eastern Corridor, voltage upgrade and new power line Vest-Agder/Telemark 1 300 - 1 600 Ytre Oslofjord Vestfold/Østfold 1 200 - 1 400 Sima - Samnanger, new 420 kV power line Hordaland