Vattenfall profits rise despite low energy price

Swedish energy group Vattenfall said Tuesday that a sluggish economy and growth in renewable energy had brought European energy prices down to "a new normal", as it nevertheless posted a rise in full-year profit.

Vattenfall profits rise despite low energy price

“Demand is still low as a result of the economic recession. At the same time, new capacity is being added, especially in renewable energy production, which has led to low electricity prices,” chief executive Øystein Løseth said in a statement.

“Previous market forecasts have been overturned, and what used to be considered ‘normal’ no longer applies. This is the new normal,” he added.

The report stated that low demand and competition from renewable energy sources pushing down prices had spelled “a tough year” for the energy market.

After making a loss in the third quarter, the state-owned utility returned to profit in the fourth quarter, reporting a 16-percent rise in net profit to 6.5 billion kronor ($1.01 billion), on revenue that was 5 percent lower.

Annual net profit rose 53 percent to 16.9 billion kronor, despite an 8-percent slide in revenue to 167.3 billion kronor.

The rise in profit was partly due to a weak result in 2011 when Germany decided to shutter some nuclear reactors.

Vattenfall said it had completed a three-year, 6 billion kronor cost cutting plan one year ahead of schedule, and announced another 3 billion kronor in cost reductions for 2013.

The board proposed a dividend payout of 6.9 billion kronor or 40 percent of the annual profit after tax.

Last year, the payout landed on 4.4 billion kronor.

AFP/The Local/at

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Sweden’s parties agree on goal to cut peak power consumption

Sweden's Social Democrat caretaker government has agreed with the incoming Moderates on a goal of cutting peak power consumption by 5 percent as part of an EU scheme.

Sweden's parties agree on goal to cut peak power consumption

Now the election is over, both parties seem willing to consider ways to encourage citizens to reduce power use, an obvious measure to reduce winter power prices that was conspicuously absent from the campaign. 

At the same time, the Moderates are downplaying their election campaign pledge to bring in “high-cost protection” to reimburse citizens for much of the impact of high power costs by the start of November. 

At a meeting of the parliament’s Committee on Industry and Trade, the two parties agreed that both the caretaker Social Democrat government and the incoming Moderate-led government should take action to cut power consumption by between 5 percent and 10 percent. 

“If we succeed in carrying this out on a coordinated EU level, we will be on the way to at the very least halving electricity prices,” Energy minister Khashayar Farmanbar told Sweden’s TT newswire. 

“We stand behind the ambition to reduce consumption,” agreed Carl-Oskar Bohlin, the Moderate Party’s power spokesperson, after a meeting of the committee on Wednesday. 

But he said that meeting the goal would be very much dependent on outside factors, particularly how cold the winter is in Sweden. 

“Then there are questions of how that should happen practically in real terms,” he said. “In Sweden, electricity use is largely dependent on the outside temperature. If we have a mild winter, it will be extremely easy to hit the 5 percent target, if we have a really harsh winter, it might be impossible.”

The Moderates are agreed that the public sector should reduce “unnecessary power consumption”, but have yet to agree on measures that households should take, such as reducing indoor temperatures or turning off the lights. 

At the same time, Bohlin admitted on Wednesday that the high-cost protection that Ulf Kristersson pledged in the campaign by November 1st, may be delayed by the government negotiations. 

“We promised high-cost protection from November 1st, on the condition that a new government was in place rapidly,” he told the Svenska Dagbladet newspaper. “The problem is that Svenska kraftnät [the company that owns and operates Sweden’s power grid], is working to another schedule, one given by the current government.” 

The outgoing Social Democrat government has given Svenska kraftnät until November 15th to propose a system for high-cost protection. The cash paid back to households and businesses would be taken from the bottle-neck income which the grid operator receives as a result of capacity shortages in the network. 

The outgoing Social Democrats have also changed their rhetoric since the end of the campaign .

On September 9th, two days before the election took place, the Social Democrat government framed a meeting of EU ministers on September 9th as a “breakthrough” in the EU negotiations. 

Farmanbar is now describing it as “a process”. 

“What we can promise right now is that we’re going to work as hard as we can to get a breakthrough,” he said.