EirGrid plc Annual Report 2012

EIRGRID PLC ANNUAL REPORT & ACCOUNTS 2012Chief Executive’s ReviewIt is with great pleasure that I deliver my first Chief Executive’s Review, having takenup the position in October of 2012.This has been a year of transition for EirGrid as well of one of continued progress.Not alone has the organisation seen a change of Chief Executive, following the retirementof Dermot Byrne after a highly distinguished career, but it has also seen the commencementof limited commercial operation of the East West Interconnector (EWIC), which willsignificantly transform the way in which we deliver energy to the entire island of Ireland.System and Market OperationsOn the Operations front, we have enjoyed a highly successful year, with further progresson the integration of renewables while at all times keeping the lights on and maintainingsecurity of supply for our customers in Ireland and Northern Ireland. Considerable progresswas also made in our preparations for operating the power system of tomorrow, as evidencedby the Delivering a Secure Sustainable Electricity System (DS3) programme and majorimprovements in wind generation controllability.The Single Electricity Market (SEM) continued to operate smoothly and transparently,setting prices, invoicing participants in a timely fashion and transferring funds securely.During the year, Intra-Day Trading was introduced, which facilitates electricity trading closerto real time and ultimately will promote greater competition in the market. The successfulimplementation of Intra-Day Trading represents one of the most significant changes to theSEM since its inception, offering two additional opportunities to market participants totrade in the day ahead and within day timeframes.Financial ResultsEirGrid’s revenue for the year to 30 September 2012 was €542m, compared to €471m forthe previous year. The main factor in this significant increase in revenue was the increasein the Imperfections tariff collected by SEMO in respect of an under-recovery of constraintcosts in the previous regulatory period.The operating profit of €23m for the year to 30 September 2012 compares to an operatingprofit of €30m for the year to 30 September 2011. The operating profit figure has decreaseddue to the correction of a previous regulatory over-recovery of SONI regulated tariffs, alongwith reduced profitability in the SEMO business for 2012.EirGrid has continued to maintain strong banking relationships, which have enabled it tocontinue to invest very substantially in the East West Interconnector Project and also tomanage the variable liquidity requirements associated with constraint costs in the SEM.InnovationInnovation has been very much to the fore in 2012, as evidenced by a broad number ofexamples, including DS3, our programme for Delivering a Secure Sustainable ElectricitySystem, and the establishment of our Smart Grid Programme. A key element of the SmartGrid Programme was the launch, in collaboration with the NDRC (National Digital ResearchCentre), of our Smart Grid Innovation Hub, which provides assistance to entrepreneurs,academics and SMEs.7