Grid segment

Statutory and regulatory framework in the Grid segment

The fourth new regulatory period for the electricity sector began on 1 January 2019. In an Austria-wide comparison between electricity grid operators, Netz Oberösterreich GmbH (Netz OÖ) was also able to demonstrate a high level of efficiency in the electricity sector following the excellent result in the natural gas sector. The savings targets from the notice are slightly higher than in the natural gas sector. As a result of these new regulatory parameters, grid utilisation fees for end-consumers in the electricity sector were reduced as of 1 January 2019, from -2.8% at grid level 3 to -6.7% at grid level 7.

The grid fees for the natural gas division in Upper Austria were also significantly reduced. The reduction of between -13.1% at grid level 3 and -17.3% at grid level 2 is founded on the reduction of the very high upstream grid costs in the previous year and on compensation payments in the current tariff base.

For the most part, the fundamental regulatory conditions for the 2018/2019 fiscal year are expected to remain unchanged. The regulatory parameters for the fourth regulatory period, which has now commenced, have been fixed until 2023 for the electricity segment. Austria's Federal Chamber of Commerce and the Federal Chamber of Labour objected against the general economic conditions for natural gas mandated by the regulatory authority as of 1 January 2018. A decision on these objections is still outstanding. The objective continues to be the safeguarding of a stable economic environment for grid operators.

Business development in the Grid segment

The Grid segment generated sales revenues of EUR 362.6 million in the reporting period. This represents an decrease of 2.1% compared with the previous year's sales. In fiscal year 2018/2019, the EBIT of the Grid segment amounted to EUR -77.4 million and was EUR 135.1 million down on the previous year's EBIT of EUR 57.7 million.

In the past, the intrinsic value of the grid equipment (electricity) was verified by applying a market-based approach (multiplier method). The suitability of this method presupposes the existence of transactions involving identical, comparable or similar assets. Due to the lack of recently completed market transactions conducted by sufficiently comparable companies, the previous measurement method can no longer be applied after 30 September 2019. The recoverable amount was therefore determined on the basis of the value in use. This valuation resulted in an impairment in the amount of EUR 109.3 million, which adversely affected the EBIT in the reporting period.

Operating results were also adversely affected by regulatory tariff reductions in the electricity and natural gas grids in combination with higher upstream grid costs in the Electricity segment. The regulatory reductions in natural gas tariffs were partially offset by volume increases in the natural gas grid. Higher depreciation, higher maintenance expenses and damage repairs due to strong snow pressure in winter 2018/2019 also contributed to the fall in EBIT.

Electricity and natural gas grid as the backbone of the Upper Austrian supply infrastructure

Electricity grid distribution volume to end customers

in GWh

In the 2018/2019 fiscal year, 8,067 GWh of electricity was distributed to end customers from the electricity grid (previous year: 8,297 GWh). This represents a decrease of 230 GWh (-2.8%) compared with the previous year. The decline in volumes is mainly attributable to a decline in the industrial customer sector resulting from higher in-house procurement. As of 30 September 2019, Netz OÖ supplied approx. 508,000 active customer installations.

At the beginning of the year, the intensive snowfall that lasted for several days in the Salzkammergut, Pyhrn-Eisenwurzen and Mühlviertel areas was a major challenge to grid operation with a noticeable influence on the availability values of the electricity grid. In this situation, the 110 kV high-voltage grid once again proved to be the strong and reliable backbone of the Upper Austrian electricity supply. For details on the availability of the electricity grid in the reporting period, see the Non-Financial Report.

In the 2018/2019 fiscal year, the activities of the Grid segment focused on the consistent implementation of the “Electricity Grid Master Plan Upper Austria 2028 (Stromnetz-Masterplan Oberösterreich 2028)”. In addition to regular grid upgrade and expansion campaigns, these included in particular the completion of the “General renovation of Ranna-Partenstein” project in May 2019, and the continuation of construction work on the “Almtal und Kremstal power supply” in August 2019 (after construction work had been interrupted in August 2018) and the start of building work on the Raab voltage transformation station in March 2019. There are ongoing approval procedures for the “Power Supply Pramtal South” high-voltage line project. The route finding procedure for the “Electricity supply Mühlviertel” project was concluded in June 2019 when a preferred corridor was defined. Detailed planning for the 110 kV overhead line in this 200 metre wide corridor has started. Public communication, detailed planning and routing have commenced in the joint project “Power Supply Central Region Upper Austria” with Austrian Power Grid AG and LINZ NETZ GmbH. The submission of the EIA is planned for autumn 2021.

In the year under review, the programme to replace overhead medium-voltage lines that are particularly susceptible to disruption with underground cable proceeded according to plan. In the eleventh year of this programme, a further 14 kilometres of overhead power lines were replaced by underground cables.

Due to the ongoing integration of local electricity generation facilities, ensuring voltage quality for grid customers on the low-voltage grid remains a challenge. The installed capacity from photovoltaics is already around 243 MW (previous year: 205 MW) with around 20,000 connected systems (previous year: 18,600 systems). Lessons learned from research and development projects are being successfully adopted for efficient grid integration.

Natural gas grid distribution volume to end customers

in GWh

The volume of natural gas transported for end users in the company's own grid rose by 13.2% to 20,831 GWh year-on-year in the 2018/2019 fiscal year (previous year 18,397 GWh). In the high-pressure area, natural gas volumes increased, primarily due to higher proprietary electricity generation by industrial operations and power plants. Volumes in the household and trade sectors remained at the previous year's level.

In addition to expanding the standard grid, natural gas grid connections for larger business customers in Frankenmarkt, Altheim, Redlham, Ebensee, Kremsmünster, Taufkirchen an der Pram, Ried im Traunkreis, Enns and Micheldorf were constructed or expanded in the year under review. New pressure control systems were installed in Frankenmarkt, Pfaffstätt, Schalchen and Krift. In Ebensee, the existing pressure control system was replaced at a new location.

In addition, six high-pressure natural gas pipelines over a total length of 55.5 km were investigated using intelligent pigging. Various repairs to high-pressure pipelines were carried out, and five pig locks were replaced or retrofitted. Continuation of the cyclic fault location measurements and the expansion of the local corrosion protection facilities proceeded according to plan.