Full of Energy - Energie AG Oberösterreich

ANNUAL REPORT2007/2008THE GROUPGROUP MANAGEMENT REPORTTHE ENERGY SEGMENTTHE WASTE MANAGEMENT SEGMENTTHE WATER SEGMENTCONSOLIDATED FINANCIAL STATEMENTS42ecological improvements. During the year under reviewthe largest project was the 15 MW biomass powerstation at Timelkam. In this context, the increased useof biogenic fuels and their impact on emissions andash quality was studied.Moreover, a project on the industrial production ofalgae biomass in artificial biospheres, using CO 2 di -rectly from emissions, as well as oxygen recoveredfrom photosynthesis, is to be started at Timelkam,together with a cooperation partner.EXPANDING PROPRIETARY TRADINGThe volatile price development on international marketshas shown that it is of major importance to havea dynamic orientation and direction concerningthese developments. Energie AG OberösterreichTrading GmbH (Trading GmbH), the central tradinghouse of the Energie AG Group, can therefore befound on the most important market places of theEuropean electricity market and is thus able to reactquickly to price developments. This includes electricitytrading at stock exchanges, in bilateral transactions,as well as via brokers, but also trading inenergy-related products, such as CO 2 -certificates orcertificates of origin. In this context, transactions concerningthe procurement of primary energy on internationalmarket places for coal, natural gas, and oilare of particular importance. In the case of marketliquidity, transactions on futures markets for longtermprice hedging are also possible and are utilizedin order to control risk, as well as to secure futureresults.MAJOR INVESTMENTS FOR THESECURITY OF SUPPLIES BY ENERGIE AGNETZ GMBH INTO NEW TRANSFORMERSTATIONS, CABLES, AND LINES.The central focus of trading activities is to managethe risks and to optimize the costs of the entire intragroupelectricity portfolio. This includes selling andmarketing own electricity, generated by our powerstations, as well as electricity procurement rights,and raising the electricity volumes needed for electricitydistribution. Another major field of activity ofTrading GmbH is to hedge the risks in connectionwith energy transactions and energy production facilities.In addition to optimizing the internal electricity portfolio,proprietary trading is further expanded as partof a precisely defined and efficient risk management.Transparency, as well as efficiency of the trading sectoris secured by strictly separating the optimizationof procurement and distribution from actual tradingactivities. An early warning system that also extendsdeeply into the various portfolios indicates directlythat defined risk limits have been reached. As aresult, the trading processes and decisions have aclear structure and can be reviewed at any time onaccount of a current reporting system.During the 2007/2008 business year proprietarytrad ing amounted to 4,671 GWh. It was thus possibleto increase the volume sold by almost 60% over theprevious year, which also decisively marked the growthof sales of the energy segment and the entire EnergieAG Group.INCENTIVE-BASED REGULATION ANDCOST MANAGEMENT OF THEELECTRICITY DISTRIBUTION SYSTEMAs part of the currently valid incentive-based regulationsystem, the tariffs of Energie AG OberösterreichNetz GmbH (Netz GmbH) were again loweredby E-Control, the regulatory authority, by 1.8% asof 01 January 2008. For customers, the reductionamounted to only 1.1%, as the upstream transmissioncosts of VERBUND-Austrian Power Grid (APG) wentup at the same time. After the decrease by 2.7%, asof 01 January 2007, during the 2006/2007 businessyear, this was the lowest reduction in tariffs sinceincentive-based regulation began.While tariffs for system use were reduced, the procure -ment costs for extra-group supplies and services formaintenance and investments went up considerably.Once again non-scheduled costs to repair damage afterinterruptions due to adverse weather conditions alsowent up. It is only by consistently continuing the costreduction course taken, that it will be possible tosustainably ensure stable results for the distributionbusiness area.On 01 March 2008 the electricity grid of Energie AGwas massively affected by the impact of hurricane"Emma". Thanks to the smoothly functioning emergencymanagement and the targeted deployment ofassembly and technical teams, it was possible to limitthe consequences for the population. Although thedamage caused was less than that caused by hurricane"Kyrill" in January 2007, it once again reachedabove-average dimensions. On account of experiencewith natural disasters in previous years, Netz GmbHbegan to prepare a program already prior to hurricane"Emma" that will reduce the exposure of the grid tometeorological interferences. Additional efforts arebeing made to implement measures in this connection.Putting medium and low-voltage overland lines intothe ground is a particularly effective measure in areasof high damage exposure.While it was possible during the year under review torealize further cost reduction potentials, investmentsinto the security and quality of supplies were onceagain on a high level.During the expired business year, 84 km of mediumvoltagelines and cables, 315 km of low-voltage linesand cables, and 58 transformer and switching stationswere built.The electricity volume distributed to end customersrose again to 6,675 GWh, as compared to the yearbefore (6,529 GWh) which was marked by a mildwinter. Sales to key accounts show a rather constantcourse. The increase in sales is mainly due to highersales to private customers. However, these increasesdid not make it possible to fully compensate the dropin volumes of the previous year. From a multi-yearperspective, the volumes sold to private customers areapproximately in the range of the 2004/2005 businessyear.As a precaution for an eventual introduction of qualityregulation, customer satisfaction was reviewed duringthe expired business year.The quality of customer services was measured in eightclassical system-operator processes: disconnect ing theelectricity distribution, new link-up of a household tothe system, line insulation, statement by municipalities,thinning-out operations, assembly of buildingsiteelec tricity meters, new link-up of a business tothe system, and clearing of a construction site.The interviews revealed a gratifying result for NetzGmbH. On a scale ranging from 1 to 100, the satisfactionindex is at 95.23. For the individual processes,customer satisfaction amounted to values be -tween 99.15 and 90.4. In spite of the ex cellent surveyresult, Netz GmbH will analyze the identifiedpotential for improvements in more detail and takefurther steps to optimize customer-based services.In summary form, the survey shows the professionalapproach of the Netz GmbH staff members and ofthe intra-group service providers at the customer interfaces.During the 2007/2008 business year, Netz GmbH drewup its own guidelines, involving as many staff membersas possible. In the summer of 2007, a comprehensivesurvey had already been conducted amongstaff members. At the beginning of the business yearunder review, the results of that survey were furtherdiscussed at informal "guideline round-tables". In thecourse of these discussions, three priority subjectsemerged for the drafting of the guidelines, in additionto the great commitment and expectations of staffmembers: the benefit of Netz GmbH for all stakeholders,safety at work, as well as internal and externalcommunication.In the summer of 2008, the core statements of the newcompany guidelines were presented to all staff membersof Netz GmbH as principles for their actions.During the summer of 2008, the preparations for thetransition to the 2 nd regulatory period (2010 – 2013)entered into their intensive phase. VEÖ (Associationof Austrian Power Plants) and E-Control exchanged43