VILNIUS. Pusuing the implementation of strategic synchronization and gas market integration projects, EPSO-G, a state-owned group of companies of energy transmission and exchange, earned 63.8 million EUR of income during the first three months of 2018, 4.1 % more compared with the same period a year ago. A consolidated net profit of EPSO-G group compared with the same period of the last year was lower due to significantly lowered prices for the services provided.
According to Rolandas Zukas, the Chief Executive Officer of EPSO-G, the rise of electricity demand that stemmed from sustained economy growth and the focus of operating efficiency has helped to offset the impact of lower prices for services on revenues for the second year running. Higher demand for natural gas transportation services due to a colder than usual weather at the end of the winter also contributed positively to the revenue growth.
“Targeted action aimed at implementation of synchronization and gas market integration projects that are of great importance for Lithuania, focus on operating efficiency and a uniform good governance practice being introduced in all companies of the group yielded positive results. We are proud that while providing energy transmission services for the country's residents and businesses at significantly lower costs we have ensured not only income growth but also the high quality of the services provided: there was not a single malfunctioning in high voltage electricity grid and natural gas transmission systems in the first quarter of 2018 that would fall within responsibility of the operator”, - R. Zukas said.
The demand for energy transmission services was growing
A sustainable growth trend continued in Lithuanian economy in the first three months of 2018. The growth of the country‘s economy resulted in increase in energy consumption, as well as in demand for energy transmission services. Accordingly, energy transmission infrastructure has been used more effectively, and the services have been provided at a more favourable price for the second year in a row. From the 1 January 2018 the average price of electricity transmission decreased by 7.9 % , i.e. to 0.619 cents per kilowatt-hour. The cost of natural gas transmission services for the users of Lithuanian system from the beginning of this year has decreased by 36.5% on average. The trading cost of biofuels for the participants of Energy Exchange was 12.9 % lower. For this reason, Lithuanian consumers of energy transmission and exchange systems will spend approximately 15 million euros less in 2018.
In the context of a growing energy demand in Lithuania, 2,778 million kilowatt-hours (kWh) of electricity have been transmitted in the first quarter of this year via high voltage transmission networks to meet the needs of the country's population and businesses. It is 6.0 % more compared to the same period in 2017. Electricity consumption in Lithuania increased in all manufacturing and service sectors, and was the highest since 1992.
There were also positive trends in the natural gas sector: gas consumption increased for the second year in a row. In the first three months of the year 8 024 GWh of a natural gas have been transported for Lithuanian consumers to gas distribution or directly connected consumer systems. It is 3.8 % more compared with 7 728 GWh in the same period of the last year.
In the first quarter of 2018 volume of trade of GET Baltic gas exchange amounted to 177 GWh. Volume of trade in GET Baltic exchange, after it became de facto a regional gas trading platform, compared with the same period in 2017, has increased by a factor of 10.
131 thousand tne of biofuel have exchanged hands in the first three months of 2018 on “Baltpool” Energy Exchange by suppliers of central heating and regulated independent heat producers. This was 6.1 % more compared with the same period in 2017.
Reliable energy supply
Despite of an increase in the volume of services provided, the power transmission network and connections operated reliably: there was not a single malfunctioning in high voltage electricity grid and natural gas transmission systems in the first quarter of 2018 that falls within responsibility of the operator. Gas transmission network availability for the system users also stood at one hundred percent.
Asynchronous interconnections enabling importing cheaper electricity from the Nordic countries operated reliably. In the first three months of 2018, market accessibility to NordBalt interconnection with Sweden was 92 % (78.1 % in the 1st quarter of 2017). Lithuania–Poland interconnection LitPol Link operated smoothly (market accessibility – 100 %).
Income and expenses
A consolidated income of EPSO-G group in the first three months of 2018, compared with the same period in the last year, has increased by 4.1 % to 63.8 million Euros, despite of significantly lower service rates that were applicable for the second consecutive year. This was mainly influenced by the increased amount of electricity and natural gas transmitted to system consumers.
Income from sale of electricity, compared with the same period in the last year, in essence remained at the same level. It has decreased by 1.1 % to 18.1 million euros and amounted to 28.3 % of all the income of the group. The income has decreased by 1.1 % to 18.1 million euros and amounted to 28.3 % of all the income of the group.
Income from natural gas transmission services in the first three months of 2018 amounted to 13.9 million euros or 21.8 percent of all the income of EPSO-G group. As result of a gas rate that is more than one-third less that the previous one and is applicable from the beginning of the year the income from this field of activity, compared with the same period in the last year, was 21.0 percent lower. The effect of more favourable prices for the system consumers was amortized by a higher volume of services provided in Lithuania and to neighbouring countries.
Operating costs of the group in three months of 2018 amounted to 52.6 million euros because the increased scope of technological, systemic and balancing services has lead to the increased costs of energy resources and related services. Compared with the same period in 2017, the overall cost level has increased by 6.7 million euros. This was the result of a greater operational efficiency.
The net profit of EPSO-G companies of three months of 2018 was 8.9 million euros, compared with 12.0 million euros in the same period of the last year. This was mainly influenced by significantly lower rates for electricity and gas transmission services that are applicable from the beginning of the year.
EBITDA (earnings before interest, taxes, depreciation and amortisation) of the group in the first three months of 2018 was 21.0 million euros, compared with 25.7 million euros in the same period of the last year. EBITDA margin in the first quarter of 2018 amounted to 32.89 % (42.0 % in the first quarter of 2017).
At the Conference “Business Management 2018: Victory Management” in Lithuania, organized by business daily media “Verslo žinios”, “Litgrid”, a company of EPSO-G group, was recognized as a leader in the energy sector. Six indicators, specifically profit, income, annual change in both, profitability and average wages, have been rated by analytics when ranking companies.
The solution of the regional trading platform for natural gas with an integrated trading model that was implemented by the natural gas exchange GET Baltic, which is a company of EPSO-G group, together with its partners was awarded as the Project of the Year in the ceremony of the National Business Awards.