Ellevio announces investment plans for the next regulation period 2020-2023
With one year left in the current regulatory period, Ellevio has reassessed the investment plans for the coming regulation period in order to adjust to the new regulatory framework with decreased allowed revenue. It is Ellevio’s view that the framework does not support the long-term target to secure the continued high reliability of the network and to enable the transition to a climate-smart society.
In August 2018, the former Swedish government decided on a new ordinance regarding the regulatory framework for the third regulatory period, 2020-2023. The ordinance stipulates a decreased allowed revenue, which will affect all Swedish distribution system operators, from state- and municipality-owned to private companies.
With one year left in the current regulatory period (2016 to 2019) Ellevio has reassessed the investment plans for the next regulation period in order to adjust to the new framework. In the period of 2020-2023 Ellevio will invest 4.3 billion into the network, so called base investments. This implies more than 40 percent decrease compared to the original plans and to the investments in 2016-2019, a decrease that will have a negative effect on the electricity infrastructure and the society as a whole.
The focus of the investments will be to continue weatherproofing in rural areas and securing capacity in the urban areas enabling for instance the extension of the subway in Stockholm. The investments in the next generation of smart electricity meters are not included in these plans, as they will be decided during early spring, following the procurement period.
The new framework does not support the long-term target to secure the continued high reliability of the network for our customers and to enable the transition to a climate-smart society. Already today, capacity is an issue in the largest cities in Sweden. Investments are needed to restore capacity, enable new businesses, housing projects, public transportation, schools, hospitals etc. to secure continued growth in these areas. As the owner of the electricity infrastructure in Stockholm Ellevio is expected to deliver high reliability in the grid as well as enable the future development of the city. The weatherproofing need to continue. Even though large efforts have been put into Ellevio’s weatherproofing programme the past 15 years, the programme is far from ready and should be carried out at an even higher pace, something that is not possible with the current framework.
Johan Lindehag, CEO at Ellevio, comments, “we have made hard prioritization in the investment plans focusing on the most important projects for our customers and for the society. We know there are many other investment projects that cannot wait for much longer, but the current regulatory framework does not give us any other choice then to put these projects on hold. We have an obligation not only towards our customers and the society to deliver electricity in a safe and reliable manner but also towards our employees, contractors, suppliers, lenders and owners to manage our company in a responsible way.”
Lindehag continues, “this is not an ideal solution for anyone. In the short term, the new regulation will initially lead to decreased but more volatile prices for customers but I am concerned that we in the long term jeopardize the entire energy transition. We risk finding ourselves in a situation where the power grids, in terms of ability to integrate larger volumes of renewables, capacity to enable growing cities, efficiency and smartness, will stop us from reaching the climate targets.”
For further information
Maria, Bang, Head of Financial and Sustainability Communication,
+ 46 708 94 60 83, maria.bang@ellevio.se
This is information is such that Ellevio AB (publ) is obliged to make public in accordance with the EU Market Abuse Regulation and the Swedish Securities Markets Act. The information was submitted for publication, through the agency of the contact persons set out above, at 09.00 CET on 8 January, 2019.
About Ellevio
Ellevio AB (publ) is one of Sweden’s largest distribution network operators. Ellevio invest in, develop and maintain the company’s power grids in order to ensure a reliable electricity supply to the 941,000 customers. Our customers are spread across Mid-Sweden, the West Coast and the Stockholm area. By investing in a long-term sustainable power grid Ellevio works to improve the quality of life for its customers as well as to enable the ongoing energy transformation and the continued digitization of the society. Ellevio, which has its head office in Stockholm, is owned by the Third National Pension fund, Folksam, the First National Pension fund and OMERS Infrastructure. Learn more about our company on ellevio.se/en/English
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