Power

The Power Division consists of Fortum’s power generation, power trading and power capacity development as well as expert services for power producers.

EUR million III/12 III/11 I-III/12 I-III/11 2011 LTM
Sales 506 560 1,696 1,827 2,481 2,350
- power sales 475 532 1,614 1,735 2,353 2,232
of which Nordic power sales* 435 491 1,477 1,471 2,041 2,047
- other sales 31 28 82 92 128 118
Operating profit 205 273 786 1,033 1,476 1,229
Comparable operating profit 201 268 764 850 1,201 1,115
Comparable EBITDA 230 295 849 931 1,310 1,228
Net assets (at period-end)     6,471 5,956 6,247  
Return on net assets, %         24.6 20.0
Comparable return on net assets, %         19.9 18.3
Capital expenditure and gross investments in shares 66 31 126 100 148 174
Number of employees     1,921 1,902 1,847  
             
Power generation by source, TWh III/12 III/11 I-III/12 I-III/11 2011 LTM
Hydropower, Nordic 6.3 5.7 18.1 14.6 21.0 24.5
Nuclear power, Nordic 5.0 5.7 16.9 18.2 24.9 23.6
Thermal power, Nordic 0.2 0.1 0.4 2.1 2.2 0.5
Total in the Nordic countries 11.5 11.5 35.4 34.9 48.1 48.6
Thermal power in other countries 0.2 0.3 0.8 0.9 1.2 1.1
Total 11.7 11.8 36.2 35.8 49.3 49.7
             
Nordic sales volumes, TWh III/12 III/11 I-III/12 I-III/11 2011 LTM
Nordic sales volume 11.8 12.0 36.5 36.4 50.0 50.1
of which Nordic power sales volume* 11.0 11.0 33.8 31.6 44.3 46.5
* The Nordic power sales income and volume does not include thermal generation, market price-related purchases or minorities (i.e. Meri-Pori, Inkoo and imports from Russia).
             
Sales price, EUR/MWh III/12 III/11 I-III/12 I-III/11 2011 LTM
Power's Nordic power price** 39.7 44.3 43.7 46.5 46.1 44.1
** Power's Nordic power price does not include sales income from thermal generation, market price-related purchases or minorities (i.e. Meri-Pori, Inkoo and imports from Russia).

July - September

In the third quarter of 2012, the Power Division’s comparable operating profit was EUR 201 (268) million, i.e. EUR 67 million lower than in the corresponding period in 2011. The system and all area prices were clearly lower during the third quarter of 2012 compared to the same period in 2011. The average system spot price of electricity in Nord Pool was EUR 20.8 (36.0) per MWh. The average area price in Helsinki, Finland, was EUR 30.9 (43.4) per MWh and in Stockholm, Sweden, (SE3) EUR 23.2 (38.1) per MWh. The lower prices impacted the achieved power price, which was EUR 39.7 per MWh, EUR 4.6 per MWh lower than in the corresponding period in 2011. In addition, the Power Division’s result was burdened mainly by the weak performance at the Oskarshamn nuclear power plant unit 1. In Sweden, prolonged repairs of Oskarshamn unit 1 were ongoing and caused a reduction in production volumes. The impact of price- and prolonged repairs was partly offset by the increased hydro generation. The hydro production was historically high for a quarter, which also led to lower physical optimisation hydro margins. Water reservoir levels were high, but inflow in the third quarter was approximately at the same level compared to the corresponding period in 2011. During the third quarter of 2012, Fortum thermal production volume in the Nordic countries was very low.

Operating profit, EUR 205 (273) million, was affected by non-recurring items, a EUR 12 (11) million IFRS accounting treatment (IAS 39) of derivatives mainly used for hedging Fortum's power production and nuclear fund adjustments (Note 4).

In the third quarter of 2012, the division's total power generation in the Nordic countries was 11.5 (11.5) TWh, which is at the same level as in the corresponding period in 2011. Power’s achieved Nordic power price amounted to EUR 39.7 per MWh, which was EUR 4.6 per MWh lower than in the third quarter of 2011. The high area price hedging level affected the achieved price.

The negative effect of lower nuclear volumes and the lower achieved power price in spite of higher hydro volumes was approximately EUR 45 million during the third quarter of 2012 compared to the corresponding period in 2011. Operating costs increased by approximately EUR 20 million due to the stronger SEK (EUR 12 million) and higher nuclear fuel costs as well as higher nuclear waste fees in Sweden. In addition, longer outage costs, higher co-owned nuclear procurement costs due to increased depreciation and interest costs impacted the operating cost level.

January - September

In January - September 2012, the Power Division’s comparable operating profit was EUR 764 (850) million, i.e. EUR 86 million lower than in the corresponding period in 2011. The achieved power price was EUR 2.8 per MWh lower than in the corresponding period in 2011, as the system and all area prices were clearly lower in January - September 2012 than during the same period a year ago. The average system spot price was EUR 29.2 (51.5) per MWh and the average area price in Helsinki, Finland, EUR 35.3 (53.4) per MWh, and in Stockholm, Sweden, (SE3) EUR 30.6 (52.1) per MWh. High water reservoir levels as well as high inflow increased hydro generation significantly. Nuclear availability was at a high level in all reactors except Oskarshamn 1 in Sweden; it has been shut down for the whole year 2012. The total nuclear volume was thus lower than during the corresponding period in 2011. Thermal production was clearly lower than a year before, due to low power prices.

Operating profit was EUR 786 (1 033) million. A gain of EUR 47 million, related to the divestments of small hydro plants in Finland, was booked in the first quarter of 2012. Operating profit was also affected by a EUR -1 (199) million IFRS accounting treatment (IAS 39) of derivatives used mainly for hedging Fortum's power production and nuclear fund adjustments (Note 4).

The combined effect of increased hydro generation, lower nuclear and thermal volumes as well as a lower achieved power price had a negative impact of approximately EUR 25 million during January - September 2012 compared to the corresponding period in 2011. Operating costs increased by approximately EUR 60 million, mainly due to a stronger SEK (EUR 14 million), higher nuclear fuel prices, higher nuclear waste fees in Sweden, longer outage costs, higher co-owned nuclear procurement costs mainly caused by longer outages, increased depreciation and interest costs.

In January - September, the prolonged shutdown of Oskarshamn 1 in Sweden has had an over EUR 30 million negative impact, mainly due to lost production, but also due to somewhat higher costs. For the full year 2012, the increase in waste fees is estimated to be approximately EUR 15 million and the increase in nuclear fuel prices approximately EUR 15 million.

In January - September 2012, the division's total power generation in the Nordic countries was 35.4 (34.9) TWh. Power’s achieved Nordic power price amounted to EUR 43.7 per MWh, which was EUR 2.8 per MWh lower than in the same period of 2011. The system price and both Finnish and Swedish area prices were clearly lower during January - September 2012 compared to the same period in 2011.

Fortum has two fully-owned reactors in Loviisa and the company is also a co-owner in eight reactors at the Olkiluoto, Oskarshamn and Forsmark nuclear power plants. Nuclear availability was at a high level in all of the reactors except Oskarshamn 1 and 3. Oskarshamn 1 was shut down at the end of October 2011 for an extensive turbine overhaul and, according to current data, is estimated to be back in operation in November 2012. Oskarshamn 3 has continued the commissioning tests after the successfully executed and tested recovery actions to stabilise production at the increased power level of 1,400 MW. Some of the power increase-related tests have not yet been completed.

European-wide safety evaluations have been carried out after the Fukushima incident in 2011. As part of the evaluations, so-called peer reviews were carried out in several European nuclear power plants, including the Loviisa nuclear power plant, in March 2012. The results from the evaluations were announced during the summer and some additional safety criteria will be introduced for nuclear power plants based on the evaluations. However, they will be implemented for the Loviisa nuclear power plant within the framework of the annual investment programmes.