Electricity Solutions and Distribution

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

Distribution

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

EUR million II/12 II/11 I-II/12 I-II/11 2011 LTM
Sales 223 215 531 526 973 978
- distribution network transmission 183 181 444 452 809 801
- regional network transmission 28 21 63 49 96 110
- other sales 12 13 24 25 68 67
Operating profit 50 252 167 377 478 268
Comparable operating profit 49 60 159 184 295 270
Comparable EBITDA 101 106 260 277 482 465
Net assets (at period-end)     3,700 3,487 3,589  
Return on net assets, %         13.7 7.7
Comparable return on net assets, %         8.6 7.7
Capital expenditure and gross investments in shares 79 62 123 96 289 316
Number of employees     907 928 898  
             

April - June

The volume of distribution and regional network transmissions during the second quarter of 2012 totalled 5.6 (5.6) TWh and 3.9 (3.8) TWh, respectively.

The Distribution business area's comparable operating profit was EUR 49 (60) million. The main reason to the result decrease was somewhat higher fault repair and customer compensation costs than provisioned for at year-end 2011. In addition, costs relating to the accelerated improvement of network reliability in Finland impacted the result somewhat negatively already in the second quarter.

The operating profit in the second quarter of 2012 totalled 50 (252). The second quarter in 2011 includes a gain of EUR 192 million related to divestments.

January - June

In January–June 2012, the volume of distribution and regional network transmissions totalled 13.9 (14.2) TWh and 8.8 (8.7) TWh, respectively.

The Distribution business area's comparable operating profit was EUR 159 (184) million. The decrease in the result was mainly due to warm weather during the early part of 2012, the timing of the relocation of cables and parts of network, higher fault repair costs and customer compensations.

The operating profit in January-June 2012 totalled 167 (377). The January–June 2011 figure includes a gain of EUR 192 million relating to the divestment of Fingrid Oyj shares.

The rollout of smart metering with hourly measurement capabilities to network customers in Finland continued; by the end of second quarter of 2012, altogether 301,000 customers had received new meters (160,000 at the end of 2011). Before the end of 2013, a total of approximately 620,000 network customers will have smart metering. The benefits of the new system include invoicing based on actual electricity consumption and better control of the use of electricity. The new Finnish legislation on hourly meter reading will become effective 1 January 2014.

In Sweden, the Government’s bill on the hourly measurement of electricity consumption for household customers was passed in the Parliament in mid-June 2012. The legislation stipulates that network companies should be able to offer hourly measurement to customers who have signed an electricity sales agreement that requires hourly measurement. It will come into force on 1 October 2012. The aim is to have all household customers on the hourly system by the end of 2015.

Both in Finland and Sweden, there are legal processes under way concerning the industry appeals made regarding the network income regulatory period 2012–2015, which came into force on 1 January 2012.

Volume of distributed electricity in distribution network, TWh II/12 II/11 I-II/12 I-II/11 2011 LTM
Sweden 3.1 3.1 7.5 7.6 14.2 14.1
Finland 2.0 2.0 5.1 5.2 9.5 9.4
Norway 0.5 0.5 1.3 1.3 2.3 2.3
Estonia - 0.0 - 0.1 0.1 0.0
Total 5.6 5.6 13.9 14.2 26.1 25.8
             
Number of electricity distribution customers by area, thousands 30 June 2012 30 June 2011
Sweden 898 893
Finland 629 624
Norway 102 101
Estonia - 24
Total 1,629 1,642

Electricity Sales

The Electricity Sales business area is responsible for retail sales of electricity to a total of 1.2 million private customers. It is the leading seller of eco-labelled and CO2-free electricity in the Nordic countries. Electricity Sales buys its electricity from the Nordic power exchange.

EUR million II/12 II/11 I-II/12 I-II/11 2011 LTM
Sales 135 183 382 556 900 726
- power sales 129 178 369 546 879 702
- other sales 6 5 13 10 21 24
Operating profit 11 23 22 3 3 22
Comparable operating profit 11 10 20 21 27 26
Comparable EBITDA 11 10 20 22 29 27
Net assets (at period-end)     28 77 11  
Return on net assets, %         4.2 51.2
Comparable return on net assets, %         33.5 80.7
Capital expenditure and gross investments in shares 0 1 0 4 5 1
Number of employees     528 518 519  

April - June

During the second quarter of 2012, the business area's electricity sales volume totalled 2.6 (2.9) TWh. The lower volume is due to the Business Market restructuring, which was still ongoing in the second quarter of 2011, but is now completed.

Electricity Sales' comparable operating profit in the second quarter of 2012 totalled EUR 11 (10) million.

The operating profit totalled EUR 11 (23) million and was affected by non-recurring items, IFRS accounting treatment (IAS 39) of derivatives (Note 4).

January - June

During January–June 2012, the business area's electricity sales volume totalled 6.8 (8.4) TWh. The lower volume was due to the Business Market restructuring, which was still ongoing in the second quarter of 2011, but is now completed.

Electricity Sales' comparable operating profit in January–June 2012 totalled EUR 20 (21) million. Warmer weather than last year and customer retention activities decreased profits slightly compared to last year.

The operating profit totalled EUR 22 (3) million and was affected by non-recurring items, IFRS accounting treatment (IAS 39) of derivatives (Note 4).

New legislation on the hourly measurement of electricity consumption for household customers in Sweden was approved by the Parliament in mid-June. The legislation will come into force on 1 October 2012.