Stable annual result in 2010 necessary for investments of 10 billion euro in Dutch and German grid

05-05-2011 • TenneT to invest  EUR 4 to 5 billion euro in Dutch and EUR 5 to 6 billion in German grid over the next 10 years
• Net profit for shareholder rises from EUR 72 million to EUR 76 million
• Impairment of EUR 134 million recorded due to changes in Dutch regulatory regime
• Start of realization of essential high-voltage connection in Randstad area
• Integration of German high voltage grid has positive impact on result development

In 2010 TenneT took an important step towards the establishment of a single European energy market by acquiring the German TSO transpower. The acquisition has had a significant impact on the revenue of Europe’s first cross border electricity transmission operator, which showed an increase from EUR 543 million in 2009 to EUR 7,326 million in 2010. The resale of sustainable energy in Germany accounts for EUR 6 billion of this total, with the associated revenue stream having a neutral impact on results. These are some of the highlights of TenneT’s Annual Report for 2010, which is published today.

Investments

During the year under review TenneT made substantial investments in a number of projects including Randstad380, a high voltage connection between the Maasvlakte and Bleiswijk, and BritNed, an undersea cable link between the Netherlands and the UK. The company further invested in upgrading the Dutch transmission grid and in linking up offshore wind farms to the German transmission grid. Based on the latest insights, the total investment in the Dutch and German grids is estimated at 9 to 11 billion euro over the next ten years. In the Netherlands, the investment projects concern large-scale 380 kV connections in the north, west and south west of the country with a total length of over 400 kilometres. In Germany, TenneT is investing in 7 offshore connections that will link wind farms in the North Sea to the onshore high voltage grid. Furthermore, German investments consist of over 500 km of necessary onshore connections, that will transport wind energy from wind farms in the North to consumption areas in the south and west of Germany.

Operating result

TenneT’s operating result rose from EUR 135 million to EUR 160 million in 2010. The acquired German activities were consolidated with effect from March 2010 and accounted for EUR 204 million of this increase. Operating results in the Netherlands decreased by EUR 189 million due to an impairment of the high voltage grids (EUR 134 million), the non recurring effect of a release from the provision for future decommissioning costs in 2009 (EUR 63 million), and a net decrease in other expenses (EUR 8 million).

Net result

The net result grew from EUR 72 million to EUR 76 million due to an increase in the operating result amounting to EUR 25 million. This was counterbalanced by rising finance expenses totalling EUR 14 million, and a higher corporation tax charge of EUR 7 million. 

Credit rating

Standard & Poor’s awarded TenneT a senior secured credit rating of ‘A- ’, while Moody’s rated TenneT as ‘A3 / stable’. Both credit rating agencies assessed TenneT’s outlook as stable.
 TenneT CEO Mel Kroon is very pleased with how the integration process is advancing: 
“In 2010 we made huge steps towards a north-west European electricity market: we created more interconnector capacity, integrated transpower successfully and with the coupling of the markets of the Central West European countries established the same electricity price for these countries in more than 75% of the time. This helps in creating a level playing field and contributes to the security of electricity supplies. However, a regulatory framework that enables TenneT to achieve an adequate rate of return for our capital providers is essential to all future investments. This is becoming increasingly difficult in the Netherlands. In Germany, too, we are engaged in an intensive dialogue with the Federal Network Agency in order to secure an adequate return on our future investments. TenneT will continue talks on this with relevant authorities, as we work to build an effective and efficient grid at the lowest possible cost.”

Note: TenneT’s full Annual Report is available at http://annualreport.tennet.eu.
Appendix: Consolidated key figures for 2010

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Disclaimer
‘We’, ‘TenneT’, ‘TenneT Holding’, ‘TenneT TSO’, ‘the TenneT Group’, ‘the company’ or similar expressions are used in this press release as a synonym for TenneT Holding B.V. and its subsidiaries. 

Parts of this press release contain prospective information. These parts – without exceptions – may include unqualified statements on future operating results, government measures, the impact of other regulatory measures on all activities of TenneT as a whole, TenneT’s shares and those of its subsidiaries and joint ventures in existing and new markets, industrial and macro economic trends and TenneT’s performance in these. Such statements are preceded or followed by or contain words such as ‘believes’, ‘expects’, ‘anticipates’ or similar expressions. These prospective statements are based on the current assumptions concerning future activities and are subject to known and unknown factors and other uncertainties, many of which are beyond TenneT’s control, so that future actual results may differ significantly from these statements.