After reduction of prices of electricity and gas transmission services for Lithuanian consumers from the beginning of the year, the revenue of a state-owned group of energy transmission and exchange companies EPSO-G earned over the period of the first nine months of 2017 accounted for 164.4 million Euros. It is by 3.7 percent less compared to the same period n the last year when the consolidated revenue of the group amounted to 170,7 million Euros. The effect of state-regulated tariffs was outweighed by increased volumes of transmission services.
From 1 January 2017 companies of EPSO-G group provide services to Lithuanian consumers at a lower rate – the average electricity transmission price has decreased by 2.75 percent to 0.672 cents per one kilowatt hour, and the average natural gas transmission price decreased by 7.8 percent to 1.78 Euros per megawatt hour.
“A growing demand for energy provides us with an opportunity to use electricity and gas transmission infrastructure more effectively and provide services at a lower rate. The fact that in the next year all direct subsidiaries of EPSO-G - electricity and gas transmission system operators and the Lithuanian biofuel exchange – will provide their services to Lithuanian residents and business entities at significantly lower service rates, thus contributing to enhancing competitiveness of the national economy, is very positive”, - says Rolandas Zukas, Chief Executive OfficerGeneral Director of EPSO-G.
From 1 January 2018 the average electricity transmission price will decrease by 7.9 percent to 0.619 cents per one kilowatt hour, the average natural gas transmission price will decrease by 36.5 percent to 1.13 Euros for megawatt hour. The trading cost of biofuels for the participants of energy exchange will be by 12.9% lower (0.61 EUR/toe). For this reason, Lithuanian consumers of energy transmission and exchange systems will spend approximately 15 million Euros less next year.
Demand for electricity and gas transmission services increases
Increasing energy consumption in Lithuania resulted in increased quantity of electricity transmitted. This quantity over the nine months of 2017 increased by 3.3 percent compared to the same period in 2016. The total of 6 585 GWh of electricity was transmitted to the consumers of the distribution network operator (Energijos Skirstymo Operatorius AB), i.e. by 1.9 percent more compared to the last year, while the total of electricity transmitted to other consumers connected to the transmission network was 773 GWh , 17.3 percent more compared to the same period in 2016. Based on such growth rates it can be predicted that electricity consumption in the country in 2017 will be the highest since 1992.
Electricity consumption was growing in all sectors – quantity of electricity consumed by the residents over the first nine months of the year was by 2 percent bigger, the quantity consumed by agricultural sector was by 2.3 percent bigger, the quantity consumed by service sector was by 2.4 percent bigger, the quantity consumed by transport sector was by 1.4 percent bigger compared to the quantity consumed over the same period of 2016. The biggest consumption growth, i.e. 4.4 percent was recorded in the industrial sector. The greatest growth potential remains in the transport sector, especially in the field of railway activity.
A positive trend was also observed in the natural gas sector. The total of 17 190 GWh of natural gas was transmitted to Lithuanian consumers over the first nine months of 2017. The quantities of the gas transmitted have increased by 9.7 pecent compared to the same period in 2016 when the total of 15 675 GWh of natural gas was transmitted. The larger transmitted quantities of gas resulted from natural gas consumption for fertilizer production that has increased by 22.5 percent.
The trading sites established by Natural Gas Exchange GET Baltic began their operation in Latvia and Estonia on 1 July 2017. GET Baltic became a regional gas trading platform for the Baltic States and made another important step – started to provide the services of distribution of short-term cross-border transmission capacities to the natural gas transmission system operators of the Baltic states. Provision of this service established the status of GET Baltic as regional market and integrated short-term natural gas markets of the Baltic states.
Over the first nine months trading volumes of GET Baltic exchange amounted to more than 338 GWh, 94 percent of which fell within the period from July to September. After GET Baltic became a regional gas trading platform, the trading volumes have increased more than threefold compared to the same period in 2016 (106 GWh).
The total of 269 thousand toe of biofuel was acquired by district heating companies and controlled independent heat producers over the first nine months of 2017 in Energy Exchange Baltpool onwed by EPSO-G group, i.e. 84 percent of all biofuel consumed for the production of heat in a centralized system. It is by 11 percent more compared to the quantity acquired during the same period of the last year when the total of 242 thousand toe (76percent of biofuel demand) was supplied to the heat producers controlled through the exchange. In the third quarter Baltpool introduced a new product to the market - trade in biofuel reserves. It is likely that the market participants will use this product not only as a reserve in cases of urgent need, but also as an instrument for reduction of market price fluctuations.
Revenue and costs
An increased quantity of transmitted electricity (increased by 3.3 percent over the first nine months of 2017) resulted in increase of revenue for electricity transmission by 1.1 percent compared to three quarters of 2016, up to 50.3 million Euros and accounted for 30.6 percent of all revenue of the Group. Revenue from transmission of natural gas over the nine months of 2017 accounted for 40.6 million Euros. It has decreased by 1.8 percent compared to the same period of 2016 and accounted for 24.7 percent of all revenue of the Group.
Revenue from systemic electricity services has increased by 20.7 percent, up to 31.3 million Euros after the National Commission for Energy Control and Prices has established from 1 January 2017 a tariff of systemic services that is by 17 percent higher. Revenue from sale of balancing (regulating) electricity has decreased by 21.5 percent up to 13.5 million Euros. This was mainly due to the decreased demand for energy balancing and reliably operating intersystem connections.
The Group‘s costs over the nine months of 2017 accounted for 138.1 million Euros. It has decreased by 1.3 million Euros compared to the same period in 2016.
The consolidated net profit of EPSO-G encompassing nine months of 2017 accounted for 19.6 million Euros, i.e. it was by 18 percent lower compared to the same period in 2016 when the Group earned the net profit of 23.9 million Euros. Profitability of the Group's main activity remained in the level of 2016 because the decreased revenue from the main activity was offset by decreasing costs and a growing demand for transmission services. A profit level was affected by interest income that has decreased by 4 million Euros.
The Group‘s operating profit before tax, interest, depreciation and amortization (EBITDA) over the first nine months of 2017 amounted to 57.3 million Euros. EBITDA has decreased by 10.7 percent compared to the same period. EBITDA margin in three quarters of 2017 amounted to 34.9 percent (in the first quarter of 2016 – 37.6 percent).
Debt is declining
EPSO-G managed to decrease financial liabilities for the shares of the subsidiary company “Litgrid” over the first nine months of 2017 significantly faster than it was provided for in the approved payment schedule – from the beginning of the year the debt to the state-owned company “Lietuvos energija” was reduced by 35.4 million Euros to 170.4 million Euros.
On 30 September 2017 the Group‘s assets amounted to 1 053.9 million Euros.