Profit decrease on lower incidental gains and increase in sufferance tax

Full-year results 2015: Alliander completes regional network exchange

Alliander's profit after tax decreased from €323 million in 2014 to €235 million in 2015. The main cause was lower incidental gains in 2015. Other negative factors were increased sufferance tax levies and higher TenneT transmission charges. These outcomes are shown in the Annual Report for 2015 that the network company published today. Furthermore  last year Alliander reached an agreement with Enexis for an extensive exchange of regional networks as effectuated on 1 January 2016.

As a result of lower incidental gains in 2015 the profit after tax decreased by €59 million. In addition, sufferance tax levies rose by €30 million to €110 million (up 37%) while the TenneT transmission charges increased by €17 million.

Regional network exchange

On 1 January 2016 Alliander and Enexis exchanged regional networks: the ownership of the Enexis networks in Friesland and Noordoostpolder was transferred to Liander while Enexis became the owner of the network in the Eindhoven and Zuidoost-Brabant region (Endinet). As a result, Alliander will realise a book profit on the sale of Endinet in 2016. The provisional amount of this book profit is disclosed in the annual report for 2015, but final recognition will take place in the annual results for 2016. The book profit is estimated at €173 million, including synergy effects and asset value growth of €112 million.

Costs and investments

Revenue remained virtually stable at €1,586 million (2014: €1,594 million). Total operating expenses amounted to €1,378 million (2014: €1,317 million). This increase was mainly due to higher costs for sufferance tax, higher TenneT transmission charges and higher network maintenance costs. Other operating expenses declined by €14 million compared to 2014. Alliander is continuing to work on further efficiency improvements.

The sufferance tax costs - the municipal tax that Alliander is required to pay for using publicly-owned land - continue to rise: from €80 million in 2014 to €110 million in 2015, up by more than 37%. These local levies inflate the tariffs for all customers (about €37 per customer per year), even though sufferance tax is only levied by some municipalities. Alliander therefore supports the initiative of Minister Plasterk to cap and, ultimately, phase out sufferance tax, even though the planned transition period is very long.

Investments in 2015 amounted to €575 million (2014: €570 million). Of this, €392 million was spent on investments in the electricity and gas networks. In addition, €55 million was invested in the large-scale roll-out of the smart meter, which was offered to 190,000 customers. Liander aims to offer the smart meter to all customers before the end of 2020. This extensive operation is necessary to cope with the rapid and radical changes in the energy system. The smart meter constitutes a crucial link in the energy system of the future. Combined with third-party apps, data from the smart meter can help customers make sensible choices by providing insight into their energy usage and energy-saving opportunities.

Further expenditures included investments of €27 million in e.g. telecom networks (fibre optic networks and mobile communication networks).

Customer satisfaction and outage duration

Liander's customer satisfaction in the consumer market remained 95%, the same level as in 2014. Customer satisfaction in the business segment advanced to 86% (2014: 84%).  The electricity outage duration in 2015 was 21.9 minutes, slightly higher than in 2014 (19.9 minutes) but still within the set target (<22 minutes). Excavation works are often the cause of interruptions. Liander is continuing its efforts to limit the number of incidents. One new step in 2015 was the introduction of the ‘Smart Cable Guard’, a device that detects dormant defects so that these can be repaired at an early stage in order to prevent interruptions.

Changing energy landscape

Customers are the driving force behind the energy transition. For several years now, we have seen strong growth in the number of customers generating their own renewable electricity, notably with solar panels. 2015 showed a further increase to over 107,000 against 72,500 in 2014. The extra peak load arising from this development poses local challenges regarding the stability of the network. Due to the movement towards decentralised generation and energy feed-in, the demand for energy is becoming less predictable. This calls for innovation from Alliander, combined with a reliable electricity network.

New activities

New activities enable Alliander to gain insight into energy distribution patterns and ensure that the energy supply remains reliable, affordable and accessible in the future. One such activity concerns the development of new infrastructures. Via Allego, Alliander is delivering new charging infrastructure for electric mobility in the Netherlands, Germany and Belgium. Alliander Duurzame Gebiedsontwikkeling, for its part, is involved in the innovative heating network in Nijmegen that was opened in 2015. This network uses residual heating from a waste processing plant to heat homes. Alliander is now working on more new, open heating networks at other locations in the Netherlands.

Download our Annual Report 2015