Fortum promises to step up efforts to upgrade electricity grid

Extensive damage caused by recent storms a wakeup call for electric utility

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Fortum, Finland’s largest supplier of electricity to private households, hasfaced heavy criticism for its slow efforts to restore electricity in areas where recent storms knocked down power lines.
      It has been pointed out that Fortum makes considerable profits from the transmission of electricity, while investing fairly little in upgrading the electricity grid.
      With some remote areas served by Fortum still without power after a storm that hit the south of Finland on December 26th, the company has promised to speed up its efforts to move overhead cables underground.
     
As the transmission of electricity is a local monopoly, it is regulated by the Energy Market Authority.
      The authority’s figures indicate that Fortum’s turnover in electricity transmission in Finland in 2010 was EUR 300 million, on which the company made a hefty profit of EUR 130 million.
     
Meanwhile, the extent of the damage caused by the recent storms drew attention to the fact that most of Fortum's electricity distribution network at the individual household level involves antiquated overhead cables which are vulnerable to extreme weather.
      The same is indicated by figures put out by the Energy Market Authority on the degree to which electric utilities have replaced overhead power lines with underground cables.
     
The data shows that in Espoo, Kauniainen, and Kirkkonummi, which are all served by Fortum, the process of burying electric cables lags behind that of areas of Vantaa where the residential structure is similar.
      Fortum has put about 67 per cent of its low voltage cables underground, while Vantaa Energy has done so with 80 per cent of its cables. In Helsinki, with a denser residential structure, the figure is 95 per cent.
     
Fortum also supplies electricity to large areas of the southwest of Finland, where only 34 per cent of electric cables are below the ground.
      After the storm Fortum said that only 29 per cent of its network in Finland had its cables underground. The figure includes both networks on the local level as well as transmission network at the intermediate level.
     
In the Kuopio region, the local electricity distributor Savon Voima has only 17 per cent of its network below ground.
      However, the area is more sparsely populated than the areas served by Fortum.
     
The Energy Market Authority plans to pay closer scrutiny to how utilities invest in their networks as of next year.
      The authority will publish information on how each company invests in infrastructure – a move that it hopes will spur investments.
     
Fortum’s low figures are attributable to the fact that while profitability of its electricity transmission business is high, the activity is only a small proportion of the company’s business operations as a whole, and consequently, it is not the highest priority of Fortum’s management.
      Fortum makes most of its money from electricity generation and wholesale sales of electric power in Finland and Sweden. Last year, the operations brought in a profit of EUR 1.3 billion.
      As restrictions in competition have made it impossible to buy more electricity from suppliers in the Nordic Countries, Fortum has bought generating capacity in Russia, where it plans to invest EUR 4 billion in the coming years.


Previously in HS International Edition:
  Calls for better preparation for storms by electric utilities (3.1.2012)
  Storms leave thousands without electricity (2.1.2012)
  Fortum prepares to pay EUR 17 million in damages over storm-related power blackouts (9.1.2012)

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