Elenia increased investments in weatherproof network
The revised Electricity Market Act took effect at the beginning of September 2013, marking an important milestone in the development of the Finnish electricity market. The legislation expanded the general development obligation to cover electricity networks in order to improve supply reliability. All electricity network companies need to prepare improvement plans. The legislation also sets financial incentives and sanctions on network development.
The Electricity Market Act is in line with Elenia’s strategy
The statutory obligation to improve supply reliability is completely in line with our strategic goals. Elenia is a forerunner in reliable electricity networks. In 2009, we began to implement a strategy that focuses on ensuring electricity supply under all circumstances. In practice, this means that all of our new investments and renovations have been implemented as weatherproof underground electricity networks. In an increasingly digital society, customers require reliable electricity supply and do not tolerate long power outages. In addition, extreme weather conditions have increased the need for weatherproof networks.
Low profitability hinders investment in the energy sector
The energy sector is facing challenges as a result of the continued weak economy. A reasonable return for electricity network companies is tied to the interest rate of ten-year government bonds. The interest rate has been low for a long time, resulting in a historically low return for network companies. This makes it challenging for companies to invest in accordance with the Electricity Market Act. However, it is clear that the legislation is now guiding electricity network operations in the right direction. This development should not be jeopardised by economic cycles. Investments in basic infrastructure create jobs locally and ensure our competitiveness as a society.
Storms caused costs in late 2013
Financially, 2013 was divided into two parts. We progressed as planned up until the end of October. At that point, it seemed that we would exceed our financial targets. However, operationally and financially, 2013 was affected by five strong storms, one in June and four in November and in December. The impact of these strong storms on EBITDA was approximately EUR 13.5 million, of which EUR 11.2 million is classified as exceptional due to the unusual strength of the storms. Our result was also burdened by the warm weather.
However, our investments were successful. Our cost-efficiency and investment-efficiency exceeded our goals in 2013. Our total investment increased by around EUR 20 million from 2012, which meant a great deal of additional work. In line with our strategy, our investments focus on the construction of a weatherproof electricity network. Our total investment in 2013 was more than EUR 80 million. We have increased our cabling rate from 20% in 2009 to around 28% in 2013. Our goal is to increase the rate to 70% within the next 15 years. To achieve this goal, we will construct around 1,600–2,200 kilometres of weatherproof electricity network annually.
Excellent customer service
Customer service remains one of our highest priorities. In recent years, we have strongly invested in our ability to rapidly respond to customer needs in all service channels. In 2013, we achieved an excellent level in customer service. We reached our goals in terms of our general response rate and exceeded them in major fault situations.
In 2012, we introduced the Elenia Mukana mobile application, which enables customers to monitor their electricity consumption and billing history. In addition, they can check whether electricity is running in their locations and submit fault reports with images. In 2013, we further developed and expanded the service, based on customer feedback. It now includes a new feature that enables customers to see how their electricity bill total is divided between electricity, distribution and taxes. This information is updated daily. In December 2013, the number of Elenia Mukana users reached 13,000.
The financing arrangement supports the investment programme
In December 2013, we implemented a whole business securitisation structure and successfully issued two bonds. The new financing arrangement supports the implementation of our investment programme.
To implement the arrangement, we established a new public limited company. Elenia Oy now has two subsidiaries: Elenia Lämpö Oy and Elenia Finance Oyj. In addition, we continued to develop our corporate governance. In particular, we invested in strengthening the resources and organisation of our financial department. We succeeded in laying a solid foundation for administration and financing in the Elenia Group.
High quality in all operations
At the end of 2013, we became the first Nordic electricity distribution company to receive the highly valued PAS 55 certification from the British Lloyd’s Register, a company specialising in corporate safety and risk management. The certification represents international recognition of the quality of our electricity network development, construction, maintenance and use. We will continue to invest in extremely high quality in the construction of our weatherproof electricity network. Our customers and society in general expect this of us. In addition to PAS 55, we have an OHSAS 18001 occupational safety system and an ISO 14001 environmental management system in place.
To be able to provide high-quality services, we must continually improve our employees’ competencies and well-being at work. In the autumn of 2012, we launched an extensive programme to familiarise our employees with our strategy and its goals. The programme was completed in the autumn of 2013. In addition, we develop our employees’ competencies and collaboration beyond sectoral borders through a coaching approach to supervisory work and through competence and performance management discussions.
I would like to take this opportunity to thank our customers, employees, partners, Board members and owners for their invaluable input in the development of our services, administration and financing in 2013. Together, we have created favourable conditions for further development. We can look to the future with confidence.