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AnnuAl RepoRt 2008 Values at work


Contents Profile

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1

Ke y f i g ur e s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .................... 1 Forward by the chairman of the board of directors*

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2

Forward by the chairman of the management committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................... 4 Prospects and challenges 2008 at a glance * Empathy

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6

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8

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Responsibility

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Our responsibility: safe operation of the Belgian electricity system

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................

10 20 22

Our responsibility: competitive tariffs . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................ 24 . . . . . . . . . . . . . . . . ................

25

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28

Our responsibility: safe operation of the interconnected transmission system with neighbouring countries Our responsibility: efficient management of the transmission system infrastructure

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36

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42

Our responsibility: respecting the environment and promoting sustainable development Entrepreneurship

Integrity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................ 50 Corporate governance* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................ 52 Elia share - information to shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................. 61 Important post-balance sheet events*

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68

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69

Non-audit tasks carried out by the auditors Consolidated financial statements IFRS

68

Notes to the consolidated financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ................ 74 Description of the risks and uncertainties facing the company*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............... 113 Regulatory framework and tariffs* . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............... 116 Reconciliation shareholders’ equity–net profit: Be GAAP-IFRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............... 118 Joint auditors’ report on the consolidated financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............... 119 Abbreviated statutory financial statements of Elia System Operator SA

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...............

* These chapters form the annual report cf. art 119 of the Belgian company code

121


Profile

Elia also ensures that there is a constant balance between

Elia comprises two legal entities, Elia System Operator SA and Elia Asset SA, operating as a single economic entity under the generic name Elia. Together with its subsidiary Elia Engineering, it employs around 1,231 people. Elia is Belgium’s electricity transmission system operator (TSO) under licences awarded to it by the country’s federal government (for the 150 to 380 kV network) and those of its three regions (for the 30 to 70 kV grid). As TSO, Elia operates in line with its values of empathy, responsibility, entrepreneurship and integrity. Elia seeks to engage in open and transparent dialogue with its various stakeholders. This commitment applies to its customers, suppliers, shareholders, potential investors, authorities and the community at large, as well as to Group staff members. The company’s number one duty is to ensure the reliable and safe transmission of electricity from production units in Belgium and Europe to grid users, namely distribution system operators and large industrial consumers. Given the central

production and imports, on the one hand, and consumption and exports, on the other, within its control area. Since electrical energy is difficult to store, it must be generated as and when consumption requires it. To enable it to perform its tasks, Elia must maintain its various facilities, including lines, cables, transformers and dispatching centres. It develops and upgrades its grid using the latest tried-and-tested technologies. This approach incorporates a proactive respect for the environment and supports the sustainable development policies in place in Europe and in Belgium at both federal and regional level. Its unique and central position on the Belgian electricity market allows Elia to develop innovative services and mechanisms aimed at ensuring the effective operation and development of this market within continental Europe. Elia adheres strictly to statutory rules on corporate governance as well as the provisions of the Belgian Corporate Governance Code for listed companies.

position of the Belgian grid in the Western European electric-

Elia has been listed on the regulated market of Euronext

ity system and Belgium’s net import balance, Elia takes con-

Brussels since June 2005.

stant care to ensure safe management of international power flows (imports, exports and transits) on its grid.

Key figures Consolidated IFRS results (in million €, results per share in €)

2008

2007

2006

2005

2004

Revenue

757.3

731.7

711.5

714.2

704.5

EBITDA (1)

334.1

308.5

292.5

295.9

268.1

Profit after tax

103.1

77.6

75.9

76.5

59.5

Earnings per share

2.14

1.62

1.58

1.60

1.42

Dividend per share

1.37

1.30

1.28

1.27

1.27

Number of employees (31/12)

1,231

1,232

1,227

1,221

1,238

Length of the grid in km (31/12)

8,412

8,406

8,367

8,344

8,276

(1)

EBITDA = operating income - cost of goods and services - personnel costs - provisions- write-downs.


Ronnie Belmans, Chairman of the Board of Directors

Foreword Foreword by the Chairman of the Board of Directors

E

nergy was at the heart of European discussions in

Elia is also working closely with the relevant distribution

2008. In January 2008, the European Commission an-

system operators, authorities and regulatory bodies to

nounced its objectives for greenhouse-gas reduction,

examine the possibility of integrating a large number of

sustainable development and the opening of energy markets,

small cogeneration units grouped together in various geo-

thereby establishing a clear framework for discussions and

graphical areas. As a result, a number system connection

targets for companies.

projects to the transmission grid were added to the invest-

Elia is leading the way in achieving the “three x 20s” – 20%

ment programme during the year.

reduction in greenhouse-gas emissions, 20% increase in

The ‘exemplary building’ status conferred by the Brussels

energy efficiency and 20% of renewable energy by 2020

Institute for Management of the Environment (IBGE/BIM)

– and in the forthcoming integration of the electricity mar-

on the new national control centre (due to open next year)

kets of Germany, France and the Benelux, bearing in mind

and the investment ploughed into Elia’s headquarters in

the impact of European and Belgian greenhouse-gas re-

Flanders in Merksem are further proof of Elia’s commit-

duction initiatives amongst others. It should be remem-

ment to sustainable development.

bered that a 20% renewable energy target for Belgium’s

As regards the independence of transmission activi-

total energy needs will mean generating around 34% of

ties from electricity producers and suppliers and historic

the electricity consumed in 2020 from renewable energy

shareholders, Elia can boast a corporate governance mod-

sources (hydro, biomass, wind, solar, etc).

el that ensures a clear division of tasks between the Board

Elia has therefore committed to supporting the develop-

of Directors and the Management Committee and makes

ment of North Sea wind farms. Initiatives include signing

the latter responsible for transmission system operation

a deal to finance connection of the first two wind farms off

and preparing the development plans. The reduction of

the Belgian coast and, further down the line, upgrading its

Electrabel’s stake to 24.35%, and the increase in the mu-

very-high-voltage grid in the coastal region, in order to

nicipalities’ stake, via Publi-T, to 33.01%, testifies to the

accommodate the 2,000 MW of offshore energy that the

same commitment on the part of shareholders.

government ultimately wants to see generated.

Elia has spearheaded many initiatives of national impor-

The cooperation agreement with German transmission

tance. These include installing phase shifting transformers

system operator Vattenfall Europe Transmission, whose

on the north border in order to enhance safe operation of

grid has an energy mix with a very high level of wind en-

the grid at a time when cross-border flows are increas-

ergy, testifies to Elia’s forward-thinking approach in this

ingly difficult to forecast, depending as they do on a range

area and its desire to acquire the expertise it will need to

of factors including changes in wholesale prices and the

safely integrate the energy generated from big wind farms

amount of energy generated by wind farms across Europe;

and other sources.

introducing intraday mechanisms with France; undertak-

2 Elia — Annual Report 2008


ing interconnection projects with Britain and Germany;

of the European Commission and President Obama in the

upgrading interconnections with neighbouring countries;

United States. And quite rightly so, since they are key to

developing pentalateral market coupling (highlighted by

an efficient, competitive and sustainable power supply for

the decision of all stakeholders to adopt the Cosmos al-

us all.

gorithm developed by Belpex); setting up CASC-CWE, a joint services company for all system operators in Central Western Europe; and founding Coreso, the first regional technical coordination centre, with French transmission system operator RTE. Elia has played a leading role in all of these projects and initiatives, which have been welcomed by market players.

Ronnie Belmans

The appointment of Daniel Dobbeni as President of ENTSO-E

Chairman of the Board of Directors

(European Network of Transmission System Operators for Electricity), the new association of 42 European system operators from 34 countries, which will replace the six existing associations UCTE, ETSO, NORDEL, BALTSO, UKTSOA and ATSOI, is further evidence of Elia’s credibility in the world of European TSOs. In the period ahead, which will inevitably be shaped by the recession, Elia will continue to carry out its tasks for the benefit of its customers and the community, taking advantage of the stable and encouraging regulatory and political context. The importance of power grids to sustainable development has been highlighted by President Barroso

Elia — Annual Report 2008  3


Daniel Dobbeni, Chairman of the Management Committee

Foreword Foreword by the Chairman of the Management Committee 2008 will be remembered for the contrast between the

Measures to connect decentralised production units, un-

first three quarters, characterised amongst other things

dertaken in partnership with the relevant distribution sys-

by high inflation linked to sustained demand in all sectors

tem operators, are one tangible way in which Elia supports

of the economy, and the last quarter, which was marked

sustainable development in Belgium’s three regions.

by a major economic and financial crisis that has left no

At an international level, coordination between European

country, industry or business unscathed. It was against

system operators was enhanced at various levels, with

this somewhat unusual backdrop that the Elia Group en-

Elia acting as a driving force throughout. For example, our

tered its first year of multi-annual incentive regulation

experts played a key role in establishing CASC-CWE, the

(2008-2011).

joint services company for all transmission system opera-

Elia once again delivered excellent reliability of electricity

tors in Belgium, France, Germany, Luxembourg and the

supply to our industrial customers and the community at

Netherlands. The first joint capacity allocations on all in-

large. Our equipment replacement and preventive mainte-

ternal borders within this region were carried out success-

nance programmes and continuing staff training undoubt-

fully only a few months after the company was launched.

edly played a big part in this.

With our French counterpart RTE, we also set up Coreso,

The programme of investment in grid upgrades and devel-

the first regional technical coordination centre aimed at

opment was delivered as promised, witness the three of-

enhancing the operational security of grids in Central

ficial inaugurations we organised in Wallonia, Brussels and

Western Europe. The UK system operator National Grid will

Flanders, under the aegis of the relevant ministers.

join Coreso in 2009, and German TSO Vattenfall Europe

Actions to promote market development – an increasingly

Transmission, with whom we have signed a cooperation

important area, given the ongoing liberalisation of the in-

agreement, has expressed its interest in joining.

ternal market and the pressure on energy prices – were

Internally, we have overhauled our organisational struc-

both numerous and effective. The launch of the intraday

ture to ensure that we meet our efficiency and operational

market for transmission capacity with France is a prime

excellence targets. Our engineering company has been in-

example. The increase in volumes traded on the Belpex

corporated into a new subsidiary, Elia Engineering, whose

power exchange confirmed the added value of trilateral

remit will include expertise management and technical

coupling in these three markets. Expansion of market cou-

training for the whole Group.

pling to Germany and Luxembourg bodes well for the inte-

By adapting our mission statement and launching a high-

gration of markets in Central Western Europe (CWE).

profile advertising campaign, we have made clear our corporate objectives and enhanced our image. This is in line with the wishes of our partners, including customers, regulators, politicians and employees.

4 Elia — Annual Report 2008


This year — the first year of the multi-annual tariffs that

In so doing, we are seeking to limit the effects of the

offer our customers stable transmission prices over a four-

economic and financial crisis on our future tariffs while en-

year period — we met CREG’s efficiency improvement tar-

suring that we remain in a position to offer proactive sup-

get, to the benefit of all our customers, as well as the

port to businesses and the community when the economy

additional efficiency target expected by our sharehold-

starts to recover. This is the commitment of all Elia staff

ers. This required a greater-than-predicted effort from all

for 2009 and beyond.

concerned, since inflation turned out to be significantly higher than the Federal Planning Bureau forecasts that we used to determine our transmission tariffs, and we had to refinance our pension funds in response to the financial crisis. The economic and financial crisis also caused a substantial drop in the volumes of energy taken from our grid by industrial customers. This has led to a reduction in revenue which it will not be possible to pass on in our tariffs until

Daniel Dobbeni Chairman of the Management Committee

the second regulatory four-year period. Although this will not affect Elia’s regulated profit, it will require careful attention in order to minimise the increase in interest expenses – something that will benefit our customers. To this end, in the last quarter of 2008 we took a number of measures aimed at further cutting costs and reviewing priorities for our investment programme. The purpose of these measures is to tailor grid development to changes in the industrial and business activities of our customers whilst continuing to meet our supply reliability and quality objectives.

Elia — Annual Report 2008  5


Prospects and challenges

The coming year will be dominated by the internal energy market, sustainable development and a sensible approach to the economic and financial crisis that will enable us to nurture and support the upturn as soon as it arrives.

CASC-CWE, the joint services company for system operators from the Central Western Europe region, will see its remit expanded to include monthly and daily auctions. Coreso, the regional technical cooperation centre set up by RTE and Elia, will become fully operational and will welcome new partners. ENTSO-E, the new association bringing together 42 TSOs from 34 countries in Europe, will begin operating and will undertake its first real actions in preparation for the 2011 implementation of the 3rd package of directives on the internal energy market.

6  Elia — Annual Report 2008


Elia will actively support these actions, while continuing its bilateral projects aimed at the future creation of new interconnections with the UK and Germany, and upgrading its interconnections with neighbouring countries, including France and Luxembourg. Commissioning of the phase shifting transformers installed in 2008 will enable the Belgian grid to be operated safely despite the increasing unpredictability of the power flows crossing the country.

Particular attention will be paid to grid-upgrade projects in several parts of the country. For example, economic development of the port of Antwerp, the connection of offshore wind farms near the coast, the connection of cogeneration units in Flanders and the connection of new production units and onshore wind turbines in Wallonia will benefit from multiple major investments.

Careful management of investment spending and costs, taking into account the anticipated effects of the recession, will be a priority in 2009, to ensure that Elia can offer proactive support to its customers and the community when the economy begins to recover.

Elia — Annual Report 2008  7


2008 at a glance

0 6 / 0 2 / 0 8

2 0 / 0 2 / 0 8

Elia and National Grid propose to build a

The number of intraday gates at the France-Belgium

new interconnector between Belgium and the

interconnection rises to 12.

United Kingdom.

0 9 / 0 5 / 0 8 Elia and Vattenfall Europe Transmission join forces to help boost security of supply, integrate renewable energy sources and develop the European market.

3 0 / 0 6 / 0 8 Connection of the Belwind offshore wind farm to the Elia grid is settled contractually.

0 3 / 1 0 / 0 8 The seven system operators of the Central Western Europe region, covering the Benelux countries, Germany and France, set up CASC-CWE (Capacity Allocation Service Company – Central Western Europe) in Luxembourg.

8  Elia — Annual Report 2008


Y e a r

2 0 0 8

There were no significant post-balance sheet events.

0 3 / 0 4 / 0 8 The Belgian grid experiences a record import level of 3,500 MW between 11 a.m. and midday.

0 5 / 0 6 / 0 8 A year after the protocol agreement was signed, the partners in the Central Western Europe region mark an important step toward an integrated European electricity market.

0 5 / 0 9 / 0 8 RTE and Elia announce their intention to set up a coordination centre to enhance power security in Central Western Europe.

1 9 / 1 2 / 0 8 42 system operators from 34 European countries found ENTSO-E (European Network of Transmission System Operators for Electricity). Daniel Dobbeni is elected President.

Elia — Annual Report 2008  9


P.12 Our customers at the centre of our concerns.

P.13 Sharing information transparently.

P.14 Worker safety: a priority.


M E

Y H T A P

Be open and attentive to the feelings and opinions of others and demonstrate your desire to understand them while maintaining your own authenticity.

P.16

P.17

P.19

The continuing training of staff

Elia organizes for secundary

Since its incorporation, Elia has

throughout their career is a key

technical education different

been keen to give a social dimension

component of Elia’s strategy to

initiatives related to its jobs.

to its security-of-supply and

ensure efficient and professional customer service.

electricity-market service remit.


Empathy:

Elia engages in ongoing dialogue with its various stakeholders Its aim is to know and anticipate the needs and constraints of each group and take them into account in all its various activities.

T

his preoccupation obviously applies within the company, with respect to all Group staff, as well as outside it, with respect to our customers, shareholders, poten-

Users’ Group: an exchange and discussion platform

tial investors, the authorities we work with, local residents

For example, our customers get the chance to have their say

living near project sites, students interested in our activi-

via the Users’ Group, a discussion platform bringing together

ties… and many more.

representatives from all stakeholder groups including indus-

Our customers: at the centre of our concerns Elia wants to develop a relationship of trust with its customers, and the commercial department is key to that relationship. As the interface between the company and its customers, the commercial department must act as customers’ ambassadors within the company, drawing on an in-depth knowledge of the grid and electricity market as well as in the customer’s working environment. There are also a number of specific schemes

trial customers, distribution system operators, producers, regulators and energy authorities. The Group focuses on discussing key issues, which are then examined in greater detail by working groups. These include new products, market tools and border capacity allocation.

Customer Day: a unique opportunity to exchange views and information

in place to help strengthen this dialogue between Elia and all

Each year, Elia organises an information day for all of its cus-

electricity market players.

tomers. The 2008 Customer Day attracted around 120 participants and addressed issues as varied as new products and product modifications (connection and access contracts, tel-

12  Elia — Annual Report 2008


When we are applying for permits, we plan a lot of meetings with the municipal and regional authorities. Communication is extremely important and we need to be able to get our message across efficiently and assertively, while ensuring that our projects are followed up and develop well. Unfortunately, we aren’t always given a warm welcome, but we always do our best to put forward our point of view and have it understood.

Valérie Jadot, permits manager

ecoms network, metering, etc.), grid management tools, the initial results of the use of phase shifters, the Belgian grid development plans and changes to them in the wake of renewable energy initiatives, international projects, and so on. In addition, the Customer Day provides an excellent networking opportunity for all involved. Elia also organised a session for business federations in 2008. The initiative went down very well with participants, who for professional reasons were keen to find out more about the services offered by Elia and developments in the Belgian and European electricity markets. Publication of this information meets all the confidentiality re-

Sharing information transparently Its central role at the heart of the energy market means that Elia holds a large amount of information, which it shares with energy market players in a wholly transparent way.

quirements applying to the transmission system operator. Elia also publishes Elia News, a monthly e-newsletter summarising the most relevant information relating to its activities. Anyone interested in the newsletter can take out a subscription.

From real-time information to historic data, Elia’s website is a mine of information, and allows all stakeholders with an interest in the electricity market to access the data they need for their business activities. Sections on the website include consumption, production, imbalance adjustment, physical flows and market information on the use of interconnections, investment projects and unavailability of grid components.

Dialogue with local residents: a completely open process Whether in connection with its development, maintenance or emergency intervention projects, Elia takes care to inform residents living near to its facilities about what it is doing and how this may affect their daily lives, especially during works carried out by subcontractors or maintenance teams. Information meetings with the public and authorities, a hotline to regional technical secretariats in Brussels, Merksem and Namur, magnetic-field measurements carried out free of charge at the request of residents living near our facilities, round-the-clock website access at www.elia.be. These are just a few of the ways Elia caters to individuals and authorities requiring information. All queries to the info@elia.be email address receive an appropriate response, and the regional technical secretariats field around 50,000 questions each year.

Elia — Annual Report 2008  13


From left to right, up and down: Daniel Dobbeni, Jacques Vandermeiren, Jan Gesquière, Markus Berger, Roel Goethals, Frank Vandenberghe and Hubert Lemmens

Staff

Worker safety

On 31 December 2008, the Group employed 1,231 people:

The safety of our employees and contractors is a top priority.

233 at Elia System Operator, 812 at Elia Asset and 186 at Elia Engineering. In 2008, Elia hired 115 people on permanent contracts (compared with 115 in 2007) and eight on fixedterm contracts (30 in 2007).

New name for Elia’s engineering subsidiary Bel Engineering changed its name to Elia Engineering on 3  November 2008. The rebranded company will take over expertise and technical training activities for the whole Elia

Our results show Elia to be one of the safest industrial companies in Belgium and also in Europe. This only goes to prove that our ongoing efforts to improve the intrinsic safety of our facilities are bearing fruit and that we must not waver in our efforts to improve our working methods and procedures. 120 safety audits were carried out in 2008. The aims were twofold: to check that safety procedures and instructions were properly understood and applied, and to ensure effective feedback. A series of findings from these audits have since resulted in specific improvements.

Group and be responsible for investment, consultancy and

To perpetuate, improve and safeguard these safety results

commissioning projects. The name change dovetails nicely

over the long term, measures were taken to effect a lasting

with Elia’s initiatives throughout the year to raise its external

change in behaviour as regards the perception of risks in-

profile and visibility.

volved in the complex technical activities associated with the transmission system operator’s work.

14  Elia — Annual Report 2008


Frequency rate

Severity rate

2005

2006

2007

2008

2005

2006

2007

2008

10.0

8.0

2.7

5.1

0.10

0.18

0.03

0.10

Headquarters

1.4

2.6

0.0

2.7

0.00

0.05

0.00

0.03

Service Area North

8.7

14.6

2.8

5.8

0.08

0.26

0.02

0.12

Service Area South

30.9

17.5

11.3

14.2

0.02

0.31

0.15

0.35

6.8

3.3

0.0

0.0

0.05

0.13

0.00

0.00

Elia

Elia Engineering

Two safety weeks were organised within the company, one in May and one in September. These featured a variety of activities including:

initiation classes in life-saving techniques and actions; a safety photo competition to raise awareness of this topic within the Group.

dedicated safety periods tailored to particular target groups within each department, during which participants looked in depth at the mechanisms responsible for accidents and identified risks for operational staff and those working in an office environment; films posted on the Elia intranet, inviting viewers to think

Safety is also addressed at team meetings, as well as at special quarterly safety meetings held in the various maintenance service centres.

Contractors

about the causes of accidents and how they could be

A project completed in 2008 fleshed out and strengthened the

avoided;

criteria for selecting, excluding and suspending contractors

lunchtime meetings on the subject of office ergonomics; an information campaign, dealing with the manual handling

on safety grounds. These criteria have been incorporated into the procurement process, while care has been taken to limit their impact on prices.

of heavy loads;

Elia Group frequency and severity rates 2005-2008 12 2005 10 2006 Frequency rate

8 6 2008 4 2007 2

0 0.2

0.1

0.0

Severity rate

Elia — Annual Report 2008  15


Recruitment

Knowledge transfer

Elia took on 123 new staff members in 2008 to meet the HR

Since November 2008, expertise and knowledge manage-

needs resulting from retirements and the creation of new po-

ment for the various technical disciplines, together with the

sitions associated with the liberalisation and internationalisa-

Education Centre, have been centralised at Elia Engineering.

tion of the electricity market.

This will result in more efficient and consistent management

Over a third of Elia’s staff are young employees who joined the company after its incorporation. The proportion of employees with more than 10 years of seniority has fallen progressively from 68% in 2002 to 63% in 2008, while the proportion of women stands at around 17% of overall staff.

Continual improvement of human capital The continuing training of staff throughout their career is a

of the various fields of strategic knowledge that the company must safeguard and maintain in order to develop its professional expertise in an ever-changing environment.

Top Employer 2009 This year, as in 2007, Elia took part in the Top Employers survey organised by CRF, and won the coveted title of Top Employer 2009. The title, which is awarded to 42  Belgian companies, is a further boost to Elia’s profile as a leading employer in the labour market.

key component of Elia’s strategy to ensure efficient and professional customer service. In addition to traditional on-the-job training, Elia offers a wide variety of training courses, ranging from all relevant technical

Partnerships with schools and universities

knowledge to language courses, and including programmes

Elia offers significant added value to universities and technical

to develop social and behavioural skills.

schools by allowing students to gain practical experience of

Particular attention is paid to new employees. During their first

the various disciplines associated with operating a transmis-

year with Elia, they follow a dedicated training programme to

sion system. This is a very valuable learning experience for

facilitate their assimilation into the company. An introduction

students and is an opportunity for Elia to attract young people

day and ‘Lighting Day’ provide an opportunity to discover the

to the company.

company’s activities and working environment, get to know

Elia is developing an educational project aimed at technical

one another and start to build up their professional network.

schools, explaining the various aspects of high-voltage sys-

For young executives, a programme called Campus Elia

tems and transmission system operation. An educational bro-

presents the company’s various processes and other as-

chure was produced and sent out to schools in 2008.

pects. The programme rounds off with a business case study, based on a real situation, which the participants have to resolve in teams. The results are presented and discussed in the presence of the CEO and members of the Management Committee.

16  Elia — Annual Report 2008


Composition of Elia Group staff, 31 December 2008 Men

Women

Total

Full-time equivalents

7

0

7

7

Supervisory staff

368

61

429

408.8961

Employees

649

146

795

718.1358

1,024

207

1,231

1,134.0319

Management

Total

Technical Education Trophy

Job fairs

The 2007-2008 academic year saw Elia organise its first

As in previous years, job fairs were a particularly useful aid to

Technical Education Trophy. This is a competition aimed at

Elia’s recruitment activities in 2008. Aside from the two main

students in their final year of technical secondary education,

job fairs, Talentum in spring and Career Launch in autumn,

studying electricity, electrical engineering and electronics. The process began with a written test designed to select the 10 best classes in each language community. These classes then went head-to-head in 10  practical and theory tests, which were both exciting and stimulating. All the schools that

Elia also attended the leading job events organised by universities and colleges.

Presence in universities and colleges

took part found it a fascinating experience, and the educa-

Elia specialists are regularly involved in educational activities

tional aspect was highly appreciated by teachers. First priz-

and private initiatives, as well as speaking at conferences and

es went to Institut Saint-Laurent in Herstal for the French

seminars organised by universities and colleges.

Community and Technisch Instituut Scheppers in Herentals for the Flemish Community. The two winning teams were congratulated at the opening of the Education Centre on 7 May 2008, by a deputy of the French Community’s Education Minister.

Company visits Elia organises guided visits for interested groups, featuring

In 2008, Elia was among the companies that supported the Belgian BEST Engineering Competition (beBEC), organised by the Board of European Students of Technology (BEST), in which teams of students studying various engineering disciplines at six Belgian universities pit their wits against one another. Elia also participated in the BEST Winter Course, aimed at budding engineers across Europe.

a general presentation followed by a visit to a control centre and a high-voltage substation. These visits allow people to find out about the transmission system operator’s activities.

Internships

They usually take place at Elia’s premises in the Brussels port

Elia operates an internship policy for final-year college and

area, which is also home to the Elia Education Centre.

university students. Internships allow students to get to know

Elia Challenge

springboard to subsequent employment with Elia.

the company and its working environment, and are often a

Each year, students from a number of technical schools have the chance to complete an end-of-school project on a subject relating to high-voltage, with assistance from Elia specialists. The programme includes a visit to a high-voltage substation and completion of a project on technologies used in high-voltage systems and Elia’s activities. The school receives financial assistance from Elia as support. The projects are then presented in front of members of the Management Committee.

Elia — Annual Report 2008  17


Opening of the Education Centre The Education Centre for technical training of maintenance staff was set up in several phases over 2007-2008. Completion of the final stage – commissioning of the Edison high-voltage

Employer branding campaign Given the many challenges it faces at both Belgian and European level, it is vital that Elia enjoys a positive image among its various stakeholders. Elia must come across as a dynamic employer offering good

substation, designed as a practical training tool for jobs in the

future prospects if it is to attract the new staff it needs to

high- and low-voltage field – was inevitably followed by an

maintain the efficiency and quality of its service.

official opening.

The success of our transmission grid improvement and expan-

Minister Evelyne Huytebroeck of the Brussels-Capital Region

sion projects depends on winning the trust of local residents

Government attended the academic session on 7 May 2008.

and public authorities. That trust is key to identifying the most

On the same day, she unveiled a plaque commemorating the

appropriate solutions in a spirit of constructive dialogue.

laying of the first stone of the building that will house the

As a listed company, investor confidence is vital if Elia is to

regional and national control centres as of next year. This

have the capital it needs to safeguard the sustainable develop-

building has been rated as ‘exemplary’ in energy terms by

ment of its activities.

the Brussels Institute for Management of the Environment (IBGE/BIM).

As for the public, they need to be provided with clear and easyto-understand information about Elia’s role as transmission system operator, at federal level and within Belgium’s three regions. To this end, Elia conducted a public relations campaign targeting the general public in the daily press and on mainstream radio stations. Launched on 8 September 2008, it was rolled out in two parts. The central image of the campaign was a giant plug being transported, intended as a metaphor for the transmission of high-voltage electricity by Elia professionals 24 hours a day. This powerful and surprising image was, designed to arouse readers’ curiosity and encourage them to find out more about the company. Based on the positive results achieved, similar initiatives will be undertaken in future years.

18  Elia — Annual Report 2008


You can see that safety is a key concern throughout the Elia group. This is why it is important that my colleagues and I are empathetic as we work, as this allows us to put ourselves in the shoes of the various parties. The legal framework remains an important element for Safety, but when it comes to writing a new procedure or instruction, or providing training or advice, I would say that it’s just as important that we, as Safety employees, can understand how internal and external customers think. If you are not empathetic, you run the risk of misunderstandings or differences of opinion.

Hendrik Meert, deputy prevention advisor

The Elia Fund: wonder and discovery for the less able Since its incorporation, Elia has been keen to give a social dimension to its security-of-supply and electricity-market service remit. To this end, it teamed up with the King Baudouin Foundation (KBF), whose ethos of “working together for a better society” makes it an ideal partner for such a project. Working together with KBF specialists, Elia came up with a framework for the Elia Fund. Its target group would be less able people in the broad sense of the term, including people with a mental, physical or sensory disability, older people, families with young children, and so on. Its scope: to go beyond the basic obligations discharged by society and the government, with an emphasis on wonder and discovery. The Elia Fund therefore supports projects offering people with reduced mobility transparent and non-discriminatory access to tourist, cultural and sporting facilities, in the same way as everybody else. To ensure transparency and objectivity, Elia has entrusted management of the Fund, which has an annual budget of €250,000, to the King Baudouin Foundation. KBF assembles the expert jury which selects the winning projects each year. The jury selected 21 projects in 2008, most relating to the

Amusons-nous ensemble ! ASBL Badje — Saint-Gilles

Echt inclusief ! ASBL KVG vrijetijdswerking Antwerpen — AntwerpenBorgerhout

Façonner ensemble des chiens d’assistance ASBL Canimôme — Walhain-Tourinnes-Saint-Lambert

Festival d’Arts Doen ! 2009 ASBL Vereniging personen met een handicap — Bruxelles

Alle camera’s op jou gericht Vzw Mentor — Kortrijk

Klimclusief vzw Jeugddienst Sjalom

Club « Tous à bord ! » ASBL Génération nouvelle — Soignies

Boccia- en Fietsclub voor personen met een motorische handicap Vzw Avalon — Buggenhout

Les malles aux 1000 sens ASBL Horizon 2000 — Charleroi

Kweekvijver voor organisatietalent Vzw VFG-Jong Oost Vlaanderen — Gent-Zwijnaarde

Equitation à destination des enfants et jeunes sourds ASBL Collectif Recherche et Expression — Woluwé-Saint-Lambert

Bocciaspelers BC3 en hun sportmateriaal Vzw Landegem Sport — Gent-Mariakerke

Spectacle « Le Petit Prince et le Poney Bleu » ASBL Les Rênes de la Vie — La Hulpe

integration of disabled people.

Het creëren van een « zit-o-meter »

The Elia Fund – 2008 projects

Projet Eléonore

Het Sportimonium Anders Bekeken

Toegankelijke cultuur

WZC Sint-Antonius — Peer

Vzw Sportmuseum Vlaanderen — Hofstade-Zemst

L’Accessible Etoile ASBL Maison du Tourisme du Pays de la Forêt d’Anlier — Neufchâteau

Art in the Dark Vzw Blindenzorg Licht en Liefde — Jabbeke-Varsenare

asbl Ligue des Familles — Ixelles

Cultuurcentrum De Werft — Geel

Samen op stap in de Vlaamse Ardennen Wandelclub Comité 2000 Ename — Oudenaarde

Ogen open en aan de slag ! UZ Gent — Gent

Elia — Annual Report 2008  19


S E PON R

P.22

P.26

Elia constantly monitors

In 2008, the European Union awarded

the balance of production and

Elia a grant of â‚Ź2 million as part of

import vs. consumptions and

its funding for priority projects on

exports within its control area.

the trans-european energy network.


SIB ILIT Y Be aware of the importance of your work and therefore bring it to a successful conclusion using the appropriate resources, while at the same time respecting others and organisational constraints and accepting the consequences of your actions.

P.27

P.28

P.36

Continuity of electricity supply

Elia’s infrastructure management

Elia develops and designs projects

in Belgium is a priority for Elia,

policy is geared towards reconciling

that enable the integration of

as is maintaining grid reliability.

four major factors, namely reliability,

renewable energies, at both

sustainable development, market

European and national level.

opening and economic optimisation.


Our responsibility:

safe operation of the Belgian electricity system Elia constantly monitors the balance of production and imports vs. consumption and exports within its control area.

S

ince electrical energy cannot be stored in any great

Belgium is definitely one of the best countries in Europe in

quantity, it must be generated as and when required.

terms of quality of electricity supply.

It is therefore vital to ensure a real-time balance be-

tween the quantities of electricity injected into the grid and those taken from it (i.e. consumed), in order to safeguard the

country’s security of supply.

Consumption The consumption indicator1 for the Elia control area was down 1%, from 88.9 TWh in 2007 to 88 TWh in 2008. Overall, cli-

Security of supply

matic conditions in 2008 were similar to those in 2007, al-

In 2008, security of supply remained at a very high level,

slightly in the first quarter, resulting in an overall increase

exceeding that of the previous year, which was already

(up to and including September) of 1.4% compared with the

excellent.

same period in 2007.

The average number of interruptions on the Elia grid

though the winter lasted slightly longer. Consumption rose

By contrast, the last quarter of 2008 saw consumption af-

per consumer (Average Interruption Frequency) was

fected by the economic crisis. In November 2008, it was

0.08, equivalent to one interruption per customer every

down 8.5% compared with November 2007. In December it

12 years.

dropped even further, to 10.1% less than the previous year.

The average duration of interruptions was 38 minutes and 29 seconds. Spread across all customers, the average duration of interruption was 3 minutes and 7 seconds per customer

This fall in consumption originated mainly with industrial customers. Among companies connected directly to the Elia grid, consumption fell by 14.6% in November and 28.5% in December, compared with the same period in 2007.

(Average Interruption Time), equivalent to an average reliability of more than 99.999%. 1

 he Elia consumption indicator covers the majority of electricity consumption in Belgium. It includes all production connected to the Elia grid plus the net import-export balance. T The share of consumption supplied directly by production units connected to the distribution grids is not included in the indicator.

22  Elia — Annual Report 2008


We have a duty to look after the interests of all of our stakeholders. Being well-prepared for a crisis, bearing in mind available resources and constraints, is part of this. To do this, it is important to foster a spirit of cooperation, in view of the complexity of the task and the number of people involved. It’s the only way to make sure that each person takes a share of the responsibility.

Filip Carton, emergency plan responsible

Consumption peaks

Since energy generated and consumed locally is not taken

In 2008, the maximum consumption on the Elia grid was

although it is included in the domestic consumption indicator.

13,435  MW, recorded on 16 January 2008 between 17:45

In 2008, net offtakes were down 0.3% compared with 2007,

and 18:00. This is lower than the record value observed on

from 78,598 TWh in 2007 to 78,392 TWh in 2008.

from the Elia grid, it is not counted as part of the net offtake,

17 December 2007 (14,040 MW) as well as the highest value in 2006 (13,702  MW on 2 February). The lowest consumption point (6,377.1 MW) was recorded on Christmas morning (between 7:15 and 7:30) and is also slightly lower than the minimum value from August 2007 (6,464 MW).

Balancing production and consumption meets the needs of the Belgian market Balancing production and consumption is primarily the

Net offtake from the grid

responsibility of market players, more particularly access

Net offtake is a measure of the volumes of energy taken from

responsible parties (ARPs). ARPs are expected to ensure the

the Elia grid.

best possible balance between the injection and offtake of

In the case of local production, some or all of the power generated is consumed directly on the site of the industrial customer or distribution system operator. Compared with 2007, local production was up by 24%, reflecting the growing importance of cogeneration and wind in Belgium’s energy mix.

their consumer customers. Each ARP must inform Elia, one day ahead, of all the energy exchanges that it will carry out, on a quarter-hourly basis for each point on the grid. This applies to injections and offtakes, exchanges between ARPs, imports and exports. The volumes of energy activated by Elia to ensure the balance of the control area were 581 GWh in 2008, compared to

Consumption per month

551 GWh the year before.

GWh/month

9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

2008 GWH PAR MOIS

PROGRESSION

2007 2008

2007

15.000 +5,4

-18,3 -11,0

-20,1

-2,9

10.000

+4,8

+8,0

AOÛT

SEPT

+10,2 +22,1

-1,4 +2,7

5.000

0

JAN

FÉV

MARS

AVR

MAI

JUIN

JUIL

OCT

NOV

DÉC

Elia — Annual Report 2008  23


Our responsibility:

competitive tarif fs Incentive tariffs for wind energy

W

hen Elia intervenes with its balancing service, the cost of each intervention is passed on to each access responsible party, for whom it is designed as

an incentive tariff set in January 2006. This tariff aims to encourage each ARP to limit imbalances between injections and offtakes by its customers on the grid. The reserve production capacity contracted by Elia can thus be limited; this reduces

To this end, in 2008 Elia put in place a new mechanism for calculating imbalance volumes for future wind farms located in the North Sea. In line with Article 7(3) of the Electricity Act, the offshore wind-energy support mechanism proposed by Elia limits the effect of the lack of forecast accuracy caused by wind variability. In the case of deviations from the nominations below a certain threshold, Elia will sell or purchase the energy difference. In the case of deviations above this threshold, the normal imbalance mechanism will apply to the surplus.

one of the components of the transmission tariff accordingly,

Consequently, tariffs for balance volumes activated for

thereby benefiting all consumers located in Belgium.

these installations will be progressive and will only take ef-

For ARPs at production units using renewable energy sources such as wind, it is difficult to forecast with any accuracy the amount of energy that will be injected into the grid during each quarter-hour of the following day. The incentive tariff must therefore take account of these specific characteristics, in order to enable and encourage the development of renewable electricity production.

24  Elia — Annual Report 2008

fect if there are significant deviations from the day-ahead production forecasts communicated to Elia.


Our responsibility:

safe operation of the interconnected transmission system with neighbouring countries Imports and exports

P

Net imports totalled 10.57  TWh, up 60% on the 2007 level (6.6  TWh). This high level corresponds to the times of the

hysical exchanges of electricity with neighbouring

year when over a third of Belgium’s consumption was sourced

countries via the Elia grid totalled 23.7 TWh in 2008,

through the interconnections with neighbouring countries.

down 4% on 2007.

Imports/Exports (GWh)

2008

2007

Change 08-07

import

7,386

8,332

-11%

export

2,039

2,322

-12%

FR

NL import

8,119

5,266

54%

export

3,005

5,084

-41%

import

1,629

2,084

-22%

export

1,518

1,631

-7%

LUX

Elia — Annual Report 2008  25


Imports and exports per month in 2008 1,000

500

0

-500

-1,000

Imports from the Netherlands Exports to the Netherlands

-1,500

Imports from France Exports to France Net Balance

-2,000 Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Phase shifting transformers

Two of them are located at the new Van Eyck high-voltage

In 2008, the European Union awarded Elia a grant of â‚Ź2 mil-

ders. The third is installed at Zandvliet, north of the port of

lion as part of its funding for priority projects on the trans-Eu-

Antwerp.

ropean energy network. The money is to be used for installing phase shifting transformers and capacitor banks (in order to make our grid less dependent on the number and location of production units). This financial contribution will be passed on to grid users and hence to Belgian consumers, as it will be deducted from future tariffs.

substation in Limburg, near to the Dutch and German bor-

These phase shifters allow Elia to influence the distribution of electricity flows resulting from imports, exports and transits from neighbouring countries across the different interconnections. They will also enable it to maintain the operational security of the grid without reducing the commercial capacity made available to the market, despite the substantial in-

The three 380-kV phase shifting transformers (also known

crease in flow variability on the Belgian grid resulting from the

as phase shifters) installed on the interconnections with the

growing proportion of electricity generated from intermittent

Netherlands were commissioned in the summer of 2008.

energy sources (in particular large wind farms in northern

26  Elia — Annual Report 2008


For me, responsibility means performing every aspect of the job I’ve been given. It means daring to take decisions with the future in mind and substantiating, defending and answering for these decisions with regard to customers, society and colleagues. Responsibility also means respecting your limits and managing your team in such a way that they respect these limits too.

Gino Bosman, deputy chief high-voltage

Germany). When operating conditions permit, they will al-

In addition, a number of steps have been taken to prepare

low Elia to offer additional transmission capacity to market

staff to deal with a crisis situation as effectively as possible.

players. Commissioning the transformers involved tests that

These include:

required the cooperation of transmission system operators in neighbouring countries, since the equipment has the potential to significantly alter flows on their respective transmission systems.

Preparing for crises Continuity of electricity supply in Belgium is a priority for Elia, as is maintaining grid reliability.

establishing a transversal project designed to optimise information, communication and feedback procedures in the event of incidents; developing an IT tool (to be completed in the near future) enabling more effective communication in a crisis situation; harmonising crisis management plans; taking part in Federal Crisis Unit exercises, including one

A blackout, i.e. a complete interruption of power supply, is

initiated by the European Union to map the socio-economic

the most extreme situation for which Elia must be prepared,

consequences of a large-scale blackout;

whilst deploying all available resources to prevent such a scenario from occurring.

organising refresher courses in crisis management procedures for teams.

Following a blackout, Elia must ensure that power plants can to all consumers affected. To this end, specially equipped pro-

Research and development

duction units known as ‘black start’ units must be ready to

In addition to its experts’ involvement in the European Wind

start operating at Elia’s request. These are checked regularly

Integration Study (EWIS) and collaborations with universities

to make sure they are operating properly. Three black start

(ULB and KUL), Elia is also working with other European trans-

units underwent special testing in 2008.

mission system operators to develop a common research and

restart so that the electricity supply can be gradually restored

development programme that meets European Commission objectives under the Strategic Energy Technology Plan (SET Plan), with a view to achieving the Commission’s “three x 20s” targets.

Elia — Annual Report 2008  27


Our responsibility:

efficient management of the transmission system infrastructure Elia’s infrastructure management policy is geared towards reconciling four major factors, namely reliability, sustainable development, market openness and economic optimisation.

A

system comprising 8,412  km of high-voltage lines and cables (overhead and underground) and more than 20,000  towers spread right across the country

requires responsible day-to-day management. Elia develops and upgrades its grid using the latest tried-andtested technologies. This approach incorporates a proactive respect for the environment and supports the sustainable development policies in place at European and Belgian (both federal and regional) level.

Connections requested by industrial customers Ghlin: Google

Herstal: Intradel The

Liège

intermunicipal

waste-processing

association

Intradel plans to replace the unit it uses to recover energy from household and related waste (which is currently connected to the RESA former ALE 15-kV network) with a new unit fitted with a 35-MVA turbine generator. This requires it to be connected to the Elia transmission system, since the peak capacity of energy not consumed by the plant – around 27 MW – and the short-circuit capacities generated by the project preclude connection to the medium-voltage network.

Solre-Saint-Géry: Greenwind turbines This project is being carried out at the request of the cus-

Elia installed a 150-kV connection for Google’s new European

tomer, Greenwind, which requires ten 2.5-MW wind turbines

data centre at Ghlin. Reliability and quality of supply are key

at Froidchapelle to be connected to the 70-kV Solre-Saint-

requirements for Google, whose investment in the region has

Géry substation.

created a number of jobs and been widely reported in the press.

28  Elia — Annual Report 2008


Harmignies: Windvision turbines This project involves connecting Windvision’s eleven 6-MW

Overhead and underground connections

wind turbines (66  MW in all) at Estinnes to the Harmignies substation.

Beerse/Turnhout

Amercœur/Gouy: Electrabel

Work was carried out on the high-voltage (70-kV) lines between Beerse and Turnhout, where pylons were replaced.

Work was carried out at the Gouy substation to connect Electrabel’s new Amercœur unit. There are currently two Electrabel production units connected to Elia’s 150-kV Amercœur substation, a steam turbine with an eventual capacity of 152  MW and a second unit with a capacity of 125 MW. Electrabel plans to repower unit 1 of the power station, which is currently shut down. The repowering will involve installing a gas turbine with a capacity of 308 MW. The orientation study carried out at the customer’s request found that this capacity could potentially be evacuated to the 150-kV Gouy substation, via a new underground connection.

Zelzate : Fluxys A 36-kV connection to the Kennedylaan substation is planned. The Zelzate compressor station took just under two years to build. As well as expanding its transmission capacity, the new station will allow Fluxys to transport larger volumes from and to its underground storage facility in Loenhout. By 2010, Fluxys plans to use the station as a new entry point for additional natural gas flows from the Dutch gas transport network.

The timely replacement of transmission system equipment is a major focus of investment.

Steense Dijk: C-Power The 36-kV undersea cable connection to the first of C-Power’s North Sea wind turbines was commissioned at the end of 2008.

Elia — Annual Report 2008  29


Substations and other equipment

Projects under way or under study

Angleur/Liberchies

Connection of new production units

A complete overhaul of the 70-kV Angleur substation was carried out in 2008. The Liberchies 70/MV substation was also completely overhauled and upgraded to medium voltage. This solution was developed in coordination with the distribution system operator.

Brugge Zuid The overhaul and transformation upgrade to medium voltage at the Brugge Zuid 36-kV facilities is now complete.

Brussels Work to upgrade the Voltaire substation – part of the 36-kV network – is complete.

Investments in capacitor banks The fitting of capacitor banks is vital to make voltage regula-

Many connection projects for new power production units were researched in 2008. On behalf of its power production customers, Elia carried out orientation studies for connecting each of these power stations to the transmission system. This information enables it to fine-tune its feasibility studies for these substantial investments.

Decentralised production units on distribution systems In Wallonia and Flanders, a series of decentralised production units have been announced in recent months. Most of these are wind farms and cogeneration units. Although they are connected to the distribution system, the number and location of these units may require a capacity upgrade of the Elia transmission system.

tion less dependent on the location and availability of central

Elia is working with distribution system operators to analyse

production units. As such, this investment contributes to elec-

viable solutions for connecting these units. A number of spe-

tricity market liberalisation and has been recognised by the

cific measures have already been approved, in cooperation

European Commission as a priority project for the trans-Eu-

with the distribution system operators concerned, and will be

ropean energy network. Several capacitor banks were com-

implemented from 2009 onwards as part of the investment

missioned in 2008.

programme.

30  Elia — Annual Report 2008


Length of high-voltage networks Voltage (kV)

Total

Underground cables (km)

Overhead lines (km)

Total (km)

380

-

891

891

220

-

297

297

150

413

2,011

2,424

70

282

2,412

2,694

36

1,932

8

1,940

30

140

26

166

2,767

5,645

8,412

Upgrading transmission capacity between the coast and the transmission system: future connection of offshore wind farms Elia’s investment plan led to the conclusion that it was neces-

the increase in load resulting from, amongst other things, the compression of gas in the Zeebrugge port area. This connection would also be needed were an interconnection with the UK to be built.

Upgrading electrical connections in the port of Antwerp

sary to upgrade the 380-kV network in the Belgian coastal

Following intensive development over recent decades, the

region to enable the connection of future large offshore wind

port of Antwerp’s high-voltage infrastructure is reaching satu-

farms (as desired by the Belgian government), with the aim

ration point and transmission capacity needs to be increased

of achieving a North Sea production capacity of over 2,000

in order to accommodate new industrial facilities, for both

MW. Thanks to the upgrade carried out between Koksijde and

electricity production and industry.

Slijkens, the transmission system is now able to accommo-

The first phase of the upgrade will include construction of a

date the first three offshore wind farms. In addition, a 380-kV

new 380-kV overhead line from the Zandvliet high-voltage

connection to the coast will need to be built to accommodate

substation to the Lillo substation. The second phase will involve erecting a new overhead line from Lillo to the Kallo highvoltage substation. Most of the new line will be located in industrial zones. Next, Elia will install a 150-kV underground line between the high-voltage substations of Kallo and Beveren. Finally, the 150-kV connection between the Mercator and Kallo high-voltage substations will be upgraded to 380 kV. As well as significantly boosting the region’s economic potential, the upgrade will also improve long-term security of supply.

Supplying medium-voltage networks Over the next few years, a number of supply upgrades to medium-voltage networks are planned, including on the 150kV network at Battice, Koksijde and Walgoed. In other cases, the medium-voltage network will be supplied by the 70 or 36-kV network, as at Wingene, Tisselt, Dorinne and Monceauen-Ardennes. In central Brussels, a number of investments are planned, aimed at addressing the rise in consumption on the medium-voltage networks. This programme includes the installation of new 150/11-kV transformers in Brussels city centre. They will be supplied by new 150-kV cables.

Elia — Annual Report 2008  31


Interconnections with neighbouring countries To enhance security of supply and make the Belgian market more open to competition, Elia is studying the benefits associated with expanding the number of countries to which Belgium is connected and also increasing the transmission capacity on existing interconnections. It should be noted in this connection that uncertainties regarding the location and capacity of power production units in Belgium over the coming years and the growing importance of intermittent wind

energy as a renewable energy source increase the need for a large exchange capacity with neighbouring countries. With flow predictability set to decline in the years to come, installing phase-shift transformers will reduce the risk of having to cut the commercial transmission capacity we offer to our customers. However, they will be of no use if installed production facilities in Belgium are unable to supply the country’s electricity needs around the clock.

Interconnections with France As part of ongoing efforts to upgrade exchange capacity between France and Belgium, Elia plans to install a second 3-phase transmission line on the existing 220-kV connection between Aubange and Moulaine and to fit more efficient conductors on the current 3-phase transmission line, enabling more energy to be transported. This investment will boost the technical transmission capacity from 395 MW to 852 MW, depending on the outside temperature amongst other factors.

Interconnection with Luxembourg Laying two underground cables between the substations of Aubange (Elia) and Bascharage (Cegedel) would allow 700 MW of import capacity to be created at the border between the two countries. It would also enhance security of supply in the two regions concerned and would allow electricity to be imported and exported from and to Germany, via Luxembourg. Research into this new connection is being carried out in close collaboration with Cegedel.

32  Elia — Annual Report 2008


Each of Elia’s employees has to take on responsibilities as part of their work. Whether we are making decisions on the management of the company or performing switching operations on the grid, each of us is responsible for carrying out our task efficiently with a view to guaranteeing high-quality service for both internal customers and the community.

Michel Caers, environmental expert

Interconnection with Germany Elia and RWE Transportnetz AG are investigating the options for creating the first interconnection between Belgium and Germany. The technical and economic findings of the feasibility study highlight the benefits of a direct-current connection with a capacity of around 1,000 MW. A more detailed analysis of the projected route for the connection is scheduled for 2009. Technical/economic analyses relating to this future direct connection are currently under way.

Interconnection with the United Kingdom A third interconnection capacity development project is an undersea direct-current connection (700 to 1,300 MW) between the UK and Belgium. The current interconnection between the UK grid and the continent is only 2,000 MW, well below the minimum threshold set by the European Union (over 8,000 MW).

Interconnection with the Netherlands Elia is looking with TenneT at ways of upgrading transmission capacity with the Netherlands, with the aim, amongst other things, of offering Belgian market players access to imports from Norway via the NordNed undersea cable.

Facility openings Thy-le-Château On 29 April 2008, the new high-voltage substation at Thyle-Château played host to the Walloon Government’s Energy Minister André Antoine, who officially inaugurated four separate projects: the interconnection upgrade between Monceau and Chooz, installation of the phase shifting transformer at Monceau and the new underground connection between Monceau and Thy-le-Château, and the new high-voltage substation on the outskirts of the village of Thy. These invest-

In September, Elia teamed up with RTE and National Grid, the

ments are intended to optimise the use of transmission ca-

French and British transmission system operators, to launch

pacity on the interconnection between Belgium and France.

a market consultation aimed at assessing exchange capac-

They will also improve the reliability and quality of our grid

ity needs between the UK and the rest of Europe. The TSOs

and Belgium’s electricity supply, ensure greater security of

also want to find out what products the market would like to

supply for electricity transmission in the region and support

see developed.

local economic growth.

The planned undersea cable between Belgium and the UK will increase liquidity in the electricity market and enhance security of supply in both countries through greater diversification of supply sources. The project entered a new phase in 2008, intended to study the route of the undersea connection in detail.

The Petrol high-voltage substation in Antwerp and the administrative building in Merksem Elia’s operational headquarters in Flanders, on Vaartkaai in Merksem-Antwerp, was the setting for two official openings on 8 December. The first was the official commissioning of the new 150/15-kV Petrol high-voltage substation on Herbouvillekaai in Antwerp - a major new boost to the medium-voltage network in the south of Antwerp.

Elia — Annual Report 2008  33


A number of VIPs gathered to mark the occasion and cel-

With regard to high-voltage substations, Elia personnel carry

ebrate Elia’s ambitious projects in Belgium and abroad.

out preventive maintenance on around 10,000 infrastructure

Flemish Minister-President Kris Peeters praised Elia’s efforts to support the economy. Mr Peeters also agreed to officially open

sub-units across the country. In 2008, nearly 2,650 operations were carried out by teams in the field.

the new administrative building, while Robert Voorhamme,

When it comes to replacement investments, a synergy is

alderman for education, economy, employment and small

sought between investments in upgrades and investments in

businesses, symbolically commissioned the new Petrol high-

replacements. In many cases, technological progress means

voltage substation.

that the replacement of cables and transformers goes handin-hand with an increase in transmission capacity.

Preventive grid maintenance Thanks to the expertise of the teams responsible for preventive and corrective maintenance of the transmission system and to the investments in equipment replacement over recent decades, security of supply has attained a very high level of performance. To achieve this goal, Elia has implemented a preventive incident risk management strategy including a preventive maintenance programme and replacement policies covering the wide range of technologies and components that make up its grid infrastructure. Productivity efforts are mainly evidenced in greater standardisation and harmonisation of databases

In 2008, nearly €50  million was invested in upgrading endof-life equipment. Many projects were carried out, including the upgrading of the 70-kV Zwevegem-Desselgem and Desselgem-Sint-Baafs-Vijve lines, the replacement of circuit breakers, disconnectors, busbars and line sets, power and current transformers, lightning arresters, meter boxes and protection relays, at all voltage levels. Other works also deserve a mention, including such complex operations as the commissioning of the Zandvliet and Van Eyck phase shifting transformers and painting of the Nieuwe Vaart 150-kV substation, due to a high risk in terms of security and reliability of supply for surrounding industry.

and working procedures as well as a progressive standardisa-

Maintenance and replacement activities account for a signifi-

tion of grid infrastructure equipment. Elia’s teams also take

cant proportion of Elia’s human resources. The operational

care to integrate safety improvements into this strategy.

management teams for the system comprise some 600 peo-

In order to benefit from experience acquired in the field, incidents that occurred on the system are analysed systematically. In 2008, 525 incidents were subject to a specific analysis, even though most of them did not lead to any interruption of supply for customers. For the lines, cables and towers part, preventive maintenance encompasses multiple forms of inspection, such as infrared and camera inspection of all 20,000 or so towers, which are inspected several times a year.

34  Elia — Annual Report 2008

ple, of whom two-thirds work directly in the field and onethird provide technical and administrative support.


Proactive technology watch

used to carry the conductors. The same goes for the IT and

In studies conducted with neighbouring countries, Elia is ex-

of ‘smart grids’. These are grids in which consumers are in-

amining use of high-voltage direct-current (HVDC) technol-

formed of electricity prices in near real time, allowing them

ogy. Converters at either end of a direct-current connection

to modify their consumption and thus control the size of their

transform alternating current into direct current and vice

bills. These grids of the future are also better at integrating

versa. Despite costing between 5 and 10 times more than

local production through cogeneration and renewable energy,

an alternating-current overhead connection, this type of con-

thereby balancing production and consumption at a lower

nection is set to become more and more common, either for

cost, even down to residential customer level (e.g. electricity

interconnections using undersea cables or when the distance

generated using photovoltaic cells).

telecommunication technologies underpinning the concept

between the place of production and the place of consumption is great. Elia is also committed to using technologies, such as hightemperature conductors, which allow transmission capacity to be increased without having to alter the design of the towers

Elia — Annual Report 2008  35


Our responsibility:

respecting the environment and promoting sustainable development Elia develops and designs projects that enable the integration of renewable energies, at both European and national level. However, its commitment to sustainable development does not stop there.

E

lia also seeks to minimise the impact of its facili-

ence, with various research centres and universities forming

ties on the environment and engages in transpar-

part of the Belgian BioElectroMagnetic Group (BBEMG). The

ent and constructive dialogue with the authorities,

BBEMG studies the effects of electric and magnetic fields gen-

environmental groups, grid users and the community at

erated by the transmission and use of electrical energy at

large. Similarly, it informs and communicates regarding its

work and in our day-to-day lives.

environmental policy and policy outcomes

Electromagnetic fields The magnetic field produced by the electricity system has a very low frequency (50 Hz), much lower than that used by mobile telephones for example, and its intensity declines rapidly the further you move from the source. However, there are concerns among the public about its possible effect on human health. International scientific studies carried out over the past three decades have not established a correlation between 50-Hz magnetic fields and health problems. For the past few years, Elia has been actively contributing to the advancement of scientific knowledge on this subject. It has signed a cooperation agreement, including full guarantees of scientific independ-

36  Elia — Annual Report 2008

To ensure transparency, Elia regularly performs magnetic-field measurements in the field at the request of local residents. In the absence of specific Belgian legislation in this area,


Elia

by

The maintenance policy is designed to keep operations involv-

the International Commission on Non-Ionizing Radiation

applies

the

European

recommendation

issued

ing compartments containing SF6 gas to an absolute minimum.

Protection (ICNIRP) and the Council of the European Union.

Maintenance of the equipment concerned is carried out by

When planning new investments, magnetic fields are simu-

specially trained teams. This training complies with European

lated at the study phase where necessary, so that the project

legislation and a staff certification system is being drawn up

or the layout of the facilities can be adapted as appropriate.

in conjunction with the relevant authorities (cf. EU regulations

Transformer tanks

842/2006 and 305/2008). The consumption of SF6 gas (as a replacement and as a top-up in the event of a leak) is tracked closely using a system that monitors each bottle of SF6.

Because transformers contain large quantities of mineral oil, with an oil-water separator to prevent environmental pollu-

Accidental soil pollution

tion in the event of a leak. In the past, transformers were

Elia manages a lot of land: around 700 substations and nu-

not fitted with these oil collection systems; Elia therefore put

merous tower-base areas across the country. To preserve

in place a multi-year investment programme to equip these

this land from waste dumping (fly-tipping) and protect the

older transformers with watertight tanks. Fifty such tanks

surrounding environment (soil, ground and surface water,

were fitted in 2008.

etc.) in the event of accidental pollution, all contamination is

new equipment is systematically installed in a watertight tank

cleared as quickly and efficiently as possible following notifi-

Eliminating PCBs

cation. Our internal maintenance teams have the necessary

In line with the relevant legislation, by the end of 2005 none

ist firm seven days a week in the case of more serious pollu-

of Elia’s facilities had PCB (polychlorobiphenyl) levels exceed-

tion. There were around 20 major interventions in 2008, half

ing 500 ppm. However, transformers with concentrations be-

of them owing to fly-tipping outside our facilities, the other

low 500 are currently in operation and Elia has voluntarily un-

half related to operation of our equipment.

equipment (absorbent matting, etc.) and can call in a special-

dertaken to decontaminate or replace this equipment before the end of its lifetime. The funds need to complete this project have been earmarked through to 2015. Nine transformers were decontaminated by an authorised firm in 2008.

SF6 SF6 gas has been used in electrical equipment for over 30 years, mainly as an electrical insulator in high-voltage devices. Gas insulated switchgear (GIS) is a key application of SF6 gas in electricity systems. The main advantage of GIS is that it is more compact that traditional outdoor switchgear, where the air acts as an insulator. To date, there is no alternative to SF6 in high- and very-high-voltage equipment. For medium-voltage equipment, Elia uses vacuum circuit-breaking chambers.

Elia — Annual Report 2008  37


Historic soil pollution

Wildlife projects

At the time of Elia’s incorporation, soil studies were carried

For a number of years now, Elia has been managing some

out at over 200 sites in Flanders, in accordance with Flemish

of its towers to make them more environmentally friendly.

soil legislation. These studies showed that our transformers,

In 2008, a scheme was launched with non-profit associa-

though potentially responsible for local oil pollution, posed lit-

tion Faune & Biotopes to landscape 10 or so tower bases.

tle or no risk to the environment in the majority of cases. At

Various types of landscaping will be tested, including grass

sites where significant soil pollution was observed, this pollu-

and shrubs, and wildlife at the sites monitored over the next

tion was historic and was the result not of electricity transmis-

three years. The scheme could then be extended to other

sion activities but rather of earlier or nearby industrial activi-

tower bases owned by Elia.

ties (gas plants, blast furnaces, chemicals, etc.). Work is under way or completed at all sites requiring decontamination. The Brussels-Capital Region introduced soil legislation in 2004. Although under no legal obligation from this legislation (which is not back-dated), Elia is nonetheless cataloguing the risks present at each site and consolidating them into a programme, similar to the one it operates in Wallonia. In addition, a number of soil studies have been launched. Unlike in Flanders, there are on 31 December 2008 no requirements regarding soil studies in the Walloon Region. The ‘soil decree’ was approved by the Walloon Parliament in December and was published on 18 February 2009. The decree will enter into force three months after its publication, with the exception of Article 212, which will only enter into force after 18 months. However, since our facilities are often situated on current or former industrial sites, Elia is keen to catalogue instances of soil pollution at its Walloon sites also. To this end, a preliminary study (involving a visual inspection and limited sampling) was carried out at 54 sites in 2007, with the remaining 136 sites being inspected in 2008. Based on this preliminary study, sites displaying a soil pollution risk have been identified with a view to in-depth investigation. To date, several dozen soil studies have been commissioned.

2

 rt. 21 makes it compulsory to have a study carried out when applying for permisA sion to perform a non-risky activity if this is due to take place on a site where a risky activity is performed.

38  Elia — Annual Report 2008


Decentralised production units

recurrent savings of 1.5% on their primary energy consump-

In partnership with distribution system operators and the rel-

Elia reached its 2008 target – a saving of 26.7 GWh of elec-

evant regional bodies, Elia has pledged to develop projects

trical energy – by subsidising energy-saving measures im-

to connect decentralised production units as part of regional

plemented by its industrial customers. Results to the end of

initiatives to promote sustainable development. In Flanders,

December 2008 already showed a saving of 38.6 GWh, well

the main beneficiaries will be cogeneration units for the hor-

ahead of the initial target. 23 schemes have been introduced

ticulture sector. Several geographical areas have been identi-

and 19 customers have undertaken to invest in energy-saving

fied for the connection of cogeneration and renewable energy

schemes. Since 2003, thanks to Elia’s work with its industrial

facilities, including Merksplas, Lier and Rijkevorsel. Research

customers, a combined total of 242 GWh of energy had been

is under way to determine whether connection would be pos-

saved by the end of December 2008 – equivalent to some

sible in Hoogstraten, an area in the far north of the Campine

79,000 tonnes of CO2.

tion for each MWh supplied, for facilities connected at between 36 kV and 70 kV.

region. In Wallonia, studies carried out in partnership with ICEED and APERe have revealed that there is plenty of scope for accommodating renewable decentralised production units

Support for renewable energies: the Belwind offshore wind farm

(mainly onshore wind farms) in the region spanning the south

Belwind, the company developing the second offshore wind

of the province of Liège and the north of the province of

farm in the North Sea, signed a connection contract for

Luxembourg. The initial findings confirm the many connection

the Elia grid in late June. The wind farm, with a capacity of

requests already received for this rural 70-kV network (the

330 MW, will be built on Bligh Bank, a sandbank situated 46

so-called Eastern ring), with around a further 210 MW to be

km off the Belgian coast. Belwind envisages annual produc-

added to the existing 150 MW in the near future. The study

tion of 1.2 TWh, equivalent to 1.35% of the annual consump-

will be extended to the whole of Wallonia with the aim of de-

tion of the Elia control area. The Belwind wind farm will be

termining the optimum grid development scenario in terms of

connected to the Elia grid via the 150-kV Blondeellaan substa-

the region’s renewable energy targets.

tion in Zeebrugge. The first phase is scheduled to commission in 2010. As required by law, Elia is contributing €25 million to

Rational Use of Energy (RUE) and renewable energies

the cost of the undersea cable.

Promoting RUE among our customers As part of its public service obligations in Flanders, each year Elia implements an action plan aimed at encouraging Rational Use of Energy (RUE) among its customers. In Flanders, Elia provides its customers with the resources required to make

Elia — Annual Report 2008  39


Support for renewable energies: green certificatess

Rational Use of Energy within Elia

Federal and regional legislators have developed market mech-

A new building is under construction at Elia’s site on Avenue

anisms aimed at encouraging investment in facilities for gen-

de Vilvorde, Brussels. The building was designed to be as

erating electricity from renewable energies. These include the

environmentally friendly as possible. It uses state-of-the-art

‘green certificates’ awarded to producers by the regulator, at-

technologies to minimise consumption of energy (heat recov-

testing to the green credentials of their electricity. Suppliers

ered from cooling machines used to heat building, passive air-

produce the certificates annually in proportion to their

conditioning guaranteeing maximum comfort without wasting

sales, with the proportion being set by law. The value of the

energy, top-quality insulation, etc.) and water (green roof,

‘Exemplary’ building at Schaerbeek site

certificates is decided by negotiation between producers and suppliers. As transmission system operator, Elia is required by law to purchase the certificates offered to it at a minimum price. As in previous years, Elia returned these certificates to the market by means of auctions. The balance remaining from the difference between minimum price and auction price is covered by the transmission tariffs. For wind energy generated in the North Sea, the minimum price for green certificates is currently €107/MWh for the first 216 MW and €90/MWh for the remaining production capacity.

Support for the integration of wind energy: EWIS Proposed by electricity transmission system operators and funded by the European Commission, the European Wind Integration Study (EWIS) aims to come up with hard and fast solutions for integrating the intermittent energy generated by large wind farms into the European energy landscape, more particularly very-high-voltage grids. The project is the result of collaboration with the main parties involved, including the European Wind Energy Association (EWEA). EWIS is made up of various working groups covering both technical and regulatory/legal aspects. It is due to produce a final report in October 2009, which will set out realistic proposals for encouraging the rise of this type of renewable energy.

40  Elia — Annual Report 2008

Driven by the Umicore Solar Team comprising current and former electrical engineering and electronics students at Leuven, the Umicar – whose main backers include Elia – finished second in the World Solar Challenge, the unofficial world championship for solar cars held in Australia.


For me, responsibility at work means bearing the company in mind in everything I do. It means thinking of the company’s image when we communicate, whether verbally or otherwise, and thinking of our social commitment by being ethical in our practices and choices.

Karine Samson, senior buyer energy

recovery of rainwater, etc.), and has photovoltaic panels built into the roof. All these efforts have been recognised by the Brussels Institute for Management of the Environment (IBGE/ BIM), which named it as an ‘exemplary building’ and awarded Elia a €200,000 grant. The building will house the national control centre and the regional control centre for central Belgium from the end of 2009.

Staff awareness-raising campaign on RUE. A large-scale awareness-raising campaign encouraging staff to save energy was conducted throughout 2008. It focused on a number of areas including heating, lighting and computer use. A programme aimed at slashing paper consumption was implemented successfully at all levels of the company.

Energy audit of the Schaerbeek site An outside company performed an energy audit on the various buildings comprising the Schaerbeek site. The resulting recommendations should enable Elia to make considerable energy savings and to significantly reduce CO2 emissions associated with heating and cooling buildings. Another energy audit is under way at Elia’s headquarters.

Elia — Annual Report 2008  41


T R N EPR E

P.44 Elia has enhanced its European and international presence by participating actively in an number of projects.

EN

P.44 A revised mission statement.


NEu

RSHIP Actively seek opportunities and show the courage, along with others, to take the plunge with regard to improvements, overhauls or chances to help Elia to develop and serve our customers better.

P.47

P.47

P.49

Belpex plans to launch a green

Pentalateral market coupling

Entrepreneurship:

certificate exchange in Flanders and

(CWE) and CASC-CWE.

greater cooperation between

Wallonia in early 2009.

European TSOs.


Entrepreneurship in a European electricit y market Through its stakes in the Belgian power exchange Belpex and the transmission system operators’ holding (HGRT), which is principal shareholder in the French power exchange, Elia has played its part in implementing new mechanisms designed to improve market operation.

E

lia has enhanced its European and international presence by participating actively in a number of projects, including the creation of an integrated re-

gional market in Central Western Europe (CWE) by expanding trilateral market coupling between Belgium, France and the Netherlands to include Germany and Luxembourg. A cooperation agreement has also been signed with Vattenfall Europe Transmission which will see Elia benefit from Vattenfall’s expertise in managing a grid with a high level of wind-energy production. Elia experts have completed a number of consultancy contracts, mainly in northern Africa, the Middle East and Ireland, and Elia was actively involved in founding a system operators’ association – ENTSO-E – which will replace the various existing European and regional associations (ETSO, UCTE, NORDEL, BALTSO, UKTSOA and ATSOI) in 2009.

Entrepreneurship: a revised mission statement Since the start of liberalisation, the Belgian and European electricity market has undergone unprecedented expansion. As a transmission system operator, Elia is a key player in that market. What was once largely a domestic task – ensuring the security and reliability of the Belgian high-voltage grid – has expanded into a much broader remit with a European dimension. As a result, Elia’s original mission statement, drafted in 2003 and based on the idea of “Keeping the lights on” by safeguarding the country’s electricity supply around the clock, has been revised and reformulated to better reflect Elia’s current function and ambitions in this international context. Elia has therefore come up with a new mission statement, reflecting its commitment to the European electricity market, its customers and Belgium as a whole.

44  Elia — Annual Report 2008


Having an entrepreneurial spirit? By actively participating in European studies such as the European Wind Integration Study (EWIS), Elia is making its knowhow available for others and taking proactive steps towards simplifying the integration of wind energy and facilitating the operation of the European market.

Hans Vandenbroucke, market development manager

We are a team of professionals with the

tween day-ahead prices: prices were identical for 70% of the

ambition to create shared wins for our

time in the second year compared with 60% in the first.

customers and the community and to

The overall assessment of market coupling is very positive,

develop the European electricity market in a reliable, sustainable and ef ficient way.

with not a single day of interruption in the past 18 months. Publication of the market results of the three exchanges is subject to a joint closure time set at 11:00 a.m. CET and takes place within quarter of an hour on average. The un-

With this mission statement, Elia wants to show that, in addi-

disputed success of TLC is a first major step towards market

tion to its core business of providing an efficient, reliable and

coupling in the CWE region.

high-quality electricity supply, it also has new, bigger ambitions for its customers and the community. Elia aims to be more enterprising, in a spirit of genuine partnership that benefits its customers and the wider community. As a driving force behind the development of the European electricity market, Elia also develops other initiatives, and considers not only efficiency and reliability but also sustainability and respect for the environment in everything that it does.

Belpex: the Belgian power exchange Belpex allows producers, suppliers, large industrial consumers and traders the chance to optimise their portfolio in the short term at a transparent and internationally competitive market price. Elia holds a 60% stake in Belpex. The remaining 40% is divided up equally between TenneT, RTE, APX and Powernext.

Enterprise: Belpex and market coupling

At the end of 2008, a total of 32 market players – producers, suppliers, traders and banks – were registered and operational on Belpex, compared with 24 at the end of 2007. This

On 21 November 2008, trilateral market coupling (TLC) cel-

number should continue to rise in the coming years. Thanks

ebrated its second birthday. This innovative market mecha-

to the success of trilateral market coupling, Belpex achieved

nism, which couples the Belgian, French and Dutch electricity

positive financial results in its first year of operation. This situ-

markets, was introduced by the Belgian, French and Dutch

ation continued in 2008, meaning that the company can offer

power exchanges (Belpex, Powernext and APX respectively)

new products to its Belgian and European customers.

and the transmission system operators of the three countries (Elia, RTE and TenneT). As well as allowing day-ahead prices to be defined in a coordinated and efficient way in the three markets, TLC also makes it possible to optimise cross-border exchanges between the three countries on the same timescale. Thanks to TLC, each market enjoys considerable flexibility, enabling it to minimise short-term price volatility. Prices on Powernext, Belpex and APX were identical for 65% of the time

Increase in volumes In 2008, the average daily volume on Belpex was 30,372 MWh, up 46% compared with 2007. This is equivalent to 12.6% of domestic consumption and therefore represents a significant share of the Belgian market. The highest daily volume was 77,623.3 MWh, recorded on 3 May; this is equivalent to 36.4% of average consumption on the Elia grid.

on average over the first two years of coupling. These results are improving all the time, with increasing convergence be-

Elia — Annual Report 2008  45


Converging prices

on which to trade any unexpected changes in their electric-

Market coupling links the purchase orders with the highest

forecasts, etc.) up to five minutes prior to delivery. CIM is

price and the sales orders with the lowest price on the three

therefore a risk management tool for new players, consum-

exchanges, regardless of the country where they were sub-

ers and industrial producers using renewable energy sources,

mitted, but taking into account the daily capacity available

which are less easy to forecast.

on the interconnections. This means that a demand is met by the cheapest supply bid, irrespective of the country from which the bid originates. Whether demand in one country can be fulfilled with an offer from another country depends on the daily capacity available at the interconnections. If the capacity is sufficient, the price is the same on Belpex, APX and Powernext. If the capacity is insufficient, price differences

ity portfolio (breakdown of a production unit, change in wind

The second new market segment is the continuous dayahead market (CoDAM), which offers the possibility of trading standardised products such as baseloads, peakloads, off-peak loads and weekend contracts. CoDAM is open for trading during weekday working hours and offers all available products up to two days prior to delivery.

are nevertheless limited by saturating the capacities to their

In 2008, the volume traded on the two markets totalled

limit.

94,070.8 MWh.

The average price was €70.6 per MWh, lying slightly higher

Intraday capacity allocations on the border with France, which

than the French and Dutch averages of €69.17 and €70.05

Elia introduced in 2007, obviously further the development

respectively. The prices were identical on the three exchanges

of CIM and boost the international competitiveness of that

for 69.1% of the time (compared with 63% in 2007). The

market segment.

Belgian and French prices were identical for 84.5% of the 83.8% of the time.

Selection of the Cosmos algorithm

Efficient market coupling

As part of the project to couple the Belgian, French, Dutch

Market coupling has enabled greater liquidity on the three

experts unanimously chose the Cosmos solution from among

markets. The congestion seen from time to time on the bor-

the tree international contenders for the joint calculation of

ders accounted for just 0.8% of the 8,784 hours of the year.

prices on these markets.

time, with the Belgian and Dutch exchanges converging for

Without market coupling, the price differences between the three markets would have been much bigger. Each day, market coupling generated an average export volume of 1,816 MWh and an average import volume of 18,582 MWh.

Continuous markets From 13 March 2008, Belpex added two new market segments to the existing day-ahead market. The first new market segment is the continuous intraday market (CIM), which offers market players a transparent platform

46  Elia — Annual Report 2008

and German markets, the project partners and independent

Cosmos is a coupling algorithm, i.e. a system that calculates the optimum electricity prices and cross-border exchanges for the 24 hours of the following day during fixing of coupled countries’ exchanges. It can efficiently process different grid models and a large number of different products (including orders based on the ‘use it or lose it’ principle and orders considered difficult to process). It therefore offers markets a high level of flexibility, making it a durable solution and an excellent candidate for future extensions of market coupling to other European countries.


Cosmos was developed by Belpex in collaboration with Elia’s electricity-system experts and specialists in operational research (N-Side, UCL, KUL, MIT).

Looking ahead: green certificate exchange Belpex plans to launch a green certificate exchange in Flanders and Wallonia in early 2009. The exchange is intended to enhance transparency on the certificate market and facilitate contact between buyers and sellers. The exchange will offer standardised products, in terms of both green certificates and cogeneration certificates. The fact that the regional regulators VREG and CWAPE are involved in the project is a guarantee of delivery and reliable operation of the exchange.

Pentalateral market coupling (CWE) and CASC-CWE In consultation with national regulators, the European Commission has defined eight geographical areas, based on their nature and location, which will eventually form regional electricity trading markets. This is an important step in setting up a single European market. One of these areas, known as Central Western Europe (CWE), encompasses France, Belgium, the Netherlands, Germany and Luxembourg. This area accounts for 40% of Europe’s electricity consumption and has a total of 170 million inhabitants. One of the objectives of this process is to extend the market coupling between France, Belgium and the Netherlands, introduced in 2006 at the initiative of Elia and Belpex, to include Germany and Luxembourg. As part of the Pentalateral Forum, the partners submitted the CWE Market Coupling Implementation Study for approval by the regulators of Belgium, France, Germany, Luxembourg and the Netherlands in early August 2008. This is an important milestone as it sets out the concept of market coupling proposed for implementation. The launch of market coupling in the CWE region is scheduled for late 2009/early 2010.

Estimation of annual and monthly transmission capacities available to the market To enable the first coordinated auctions of long-term capacity to take place while guaranteeing an appropriate level of security, an initial set of annual capacities established by coordination between the eight system operators has been made available. Elia was a driving force at each stage of the process, proving its ability to coordinate work within the CWE region.

Elia — Annual Report 2008  47


Market model for analysing system adequacy A group of experts from the eight transmission system operators has developed a market model for the CWE region that enables the TSOs to analyse system adequacy (i.e. the system’s ability to satisfy the load requirement at any given time) and perform market simulations (estimating how market players’ behaviour will impact on prices, exchanges, etc.). The model was presented to regulators and ministers from the five countries concerned.

Adjustment to calculation method for south-border capacity

Allocation of intraday capacity on the north border from 2009 Allocation of intraday capacity on the north border (Belgium – Netherlands) will likely begin operating at the start of 2009. Originally, the new market mechanism was due to start in June 2008. However, during the development phase, TenneT noticed an inconsistency with its domestic intraday mechanism. Solving this problem requires a major adjustment to the IT systems used by TenneT. As a result, the launch of the mechanisms will depend on how long it takes to make the necessary adjustments. An intraday mechanism has been operating on the Belgian-French border since May 2007.

As of 1 July 2008, Elia and RTE have adjusted the method they use to calculate the daily capacity available on the interconnection lines between Belgium and France. Calculation of daily capacity is subject to the ‘netting’ principle. In other words, calculation of the daily capacity in a given direction (i.e. import or export) factors in not only the net transfer capacity (NTC) for that direction, which reflects the capacity that can be offered to the market without compromising grid security, but also the nominations introduced for monthly and annual capacity, in both directions. Taking into account nominations in the opposite direction means that it is now possible to offer more daily capacity. In addition, Elia is continuing its discussions with Dutch system operator TenneT with a view to introducing the same netting principle for daily capacity calculations on the Dutch border. The daily capacity on both borders and in both directions is made available to the power exchanges (Belpex in the case of Belgium).

48  Elia — Annual Report 2008

Opening of Elia’s operational headquarters at Merksem on 8 December 2008 in the presence of Robert Voorhamme, Alderman for Education, Economy and the Self-Employed, Daniel Dobbeni, Chairman of Elia’s Management Committee and Kris Peeters, Minister-President of the Flemish Government.


For me, entrepreneurship means “seeing our problems and daily pursuits as challenges and opportunities and creatively turning these into activities that will help us to work more efficiently and explore new directions”. An example of this would be our approach to connecting customers and looking for new activities and developing new tools to improve budgeting and budget management.

Elsa Celens, projects service area South

Peer cooperation: Vattenfall Europe Transmission In June 2008, Elia entered into a cooperation agreement with its German counterpart Vattenfall Europe Transmission, to enhance the exchange of knowledge, experience and best practice.

Entrepreneurship: greater cooperation between European TSOs On 27 June 2008, 42 European system operators agreed to enhance their cooperation by setting up a new association en-

Elia has expertise in setting up and operating market coupling

abling them to work together more closely to meet European

with implicit auctioning of border transmission capacity, while

Commission targets.

Vattenfall ET has built up experience in operating a grid into which large wind farms inject energy at very high voltage. This agreement highlights both the efforts made by the two companies towards further integration of the European electricity market and their active contribution to meeting climatic and environmental targets at national and European level.

They made good this commitment on 19 December 2008, with the creation of ENTSO-E (European Network of Transmission System Operators for Electricity). The new association will replace the six existing ones, UCTE, ETSO, NORDEL, BALTSO, UKTSOA and ATSOI, which will cease operating in 2009. ENTSO-E brings together 42 system operators from 34 countries. Its creation will mean increased collaboration between TSOs in a range of key areas such as the development of rules governing technical and market operation and the coordination of system operation and grid development, with the aim of fostering integration of the European electricity market, the development of sustainable energy and the reliable operation of the European transmission system. Daniel Dobbeni, Chairman of Elia’s Management Committee, was elected as president of the association for a two-year period.

Elia — Annual Report 2008  49


P.52 Management and supervisory bodies of the company.

P.56 Significant event in 2008.

P.60 Remuneration.


EG

R

I

Y T

I

T N

P.61 Elia share: information to shareholders.

Being open, loyal and honest with others, respecting them personally and their professional ethics. Making commitments and keeping to your word.

P.68 Financial calendar.

P.69 Consolidated financial statements IFRS.


From left to right, up and down: Jean-Marie Laurent Josi , Claude Grégoire, Jacques de Smet, Francis Vermeiren, Johan De Roo, Luc Van Nevel, Clement De Meersman, Walter Peeraer, Jacqueline Boucher, Ronnie Belmans, Ingrid Lieten, Thierry Willemarck

Corporate governance Management and supervisory bodies Board of Directors Chairman

Vice-chairmen

Ronnie Belmans Appointed as Chairman for three years on 24 June 2008

Francis Vermeiren Appointed as Vice-Chairman for three years on 24 June 2008

Thierry Willemarck Appointed as Vice-Chairman for three years on 24 June 2008

Directors Jacqueline Boucher Electrabel

Jean-Marie Laurent Josi Independent

Clement De Meersman Independent

Ingrid Lieten Independent

Johan De Roo Publi-T

Walter Peeraer Electrabel

Jacques de Smet Independent

Luc Van Nevel Independent

Claude Grégoire Publi-T

52  Elia — Annual Report 2008


Corporate Governance Committee Thierry Willemarck (Chairman) Luc Van Nevel Ingrid Lieten

Audit Committee Clement De Meersman (Chairman) Claude Grégoire Jacques de Smet

Remuneration Committee Jean-Marie Laurent Josi (Chairman) Walter Peeraer Jacques de Smet

Temporary Ad hoc committees (specific international issues)

Auditors Klynveld Peat Marwick Goerdeler Company Auditors, represented by Alexis Palm Ernst & Young Company Auditors, represented by Jacques Vandernoot

Management Committee Chairman and Chief Executive Officer - Daniel Dobbeni Vice-Chairman and Chief Corporate Officer - Jacques Vandermeiren Chief Officer Grid Services - Hubert Lemmens Chief Financial Officer - Jan Gesquière Chief Executive Officer Elia Engineering - Markus Berger Chief Officer Transmission - Roel Goethals Chief Officer Customers & Market - Frank Vandenberghe

Secretary-general Pierre Bernard

Jean-Marie Laurent Josi Jacques de Smet Luc Van Nevel

Elia — Annual Report 2008  53


Board of Directors

non-independent members of the Boards of Directors of Elia

The Boards of Directors of Elia System Operator and Elia

as the tasks of the latter. The appointment procedures are laid

Asset each have 12 members. The same members sit on both

down in the law of 29 April 1999 on the organisation of the

Boards. These members do not have a management function

electricity market.

within either Elia System Operator or Elia Asset. Half of the members are independent directors, appointed by the general meeting and having received a positive unanimous opinion by CREG on their independence.

System Operator and Elia Asset and their committees, as well

In practice, non-independent directors are appointed after having been nominated by shareholders. Independent directors are appointed in accordance with a procedure established by the law of 29 April 1999 on the organisation of the elec-

In accordance with provisions stipulated by legislation and the

tricity market and the articles of association. The Corporate

articles of association, the Boards of Directors of Elia System

Governance Committee presents a list of candidates; for each

Operator and Elia Asset are supported by three committees: a

candidate, the Committee takes into account an up-to-date

Corporate Governance Committee, an Audit Committee and a

CV and a signed formal declaration outlining the criteria for

Remuneration Committee. Three temporary ad-hoc commit-

independence as stipulated by legislation applying to Elia and

tees were set up by the Board of Directors in 2008 to support

the articles of association. The general meeting then appoints

Elia’s management in various matters.

the independent directors. These appointments are submitted

The Management Committee was also set up on 29 July

to CREG for its opinion concerning the independence of each

2003, under Article 524a of the Belgian Company Code and

independent director.

the law of 29 April 1999 on the organisation of the electricity

A similar procedure applies if a director is co-opted onto

market.

the Board of Directors. One of the Corporate Governance

The chairmanship and vice-chairmanships of the Boards of

Committee’s tasks is therefore to appoint the independent

Directors of Elia System Operator and Elia Asset were re-

directors.

newed indefinitely by the Boards of Elia System Operator and Elia Asset at their meeting on 24 June 2008.

Appointment of directors

Appointment of committee members The chairmanships, vice-chairmanships and memberships

The general meeting of 10 May 2005 appointed six non-inde-

of the various committees supporting the Board of Directors

pendent directors and six independent directors.

were renewed indefinitely by the Board of Directors at its

All these directorships will expire at the end of the 2011 gen-

meeting on 24 June 2008.

eral meeting. This six-year period diverges from the period stipulated in the Belgian Corporate Governance Code, a fact justified by the technical, financial and legal specificities and complexities associated with the tasks of the transmission system operator. It should be remembered that specific corporate governance rules exist regarding the appointment of the independent and

54  Elia — Annual Report 2008


The Insurance team is responsible for managing insurance contracts to cover certain risks and for the management of claims relating to these contracts or to damage caused by third parties to our facilities. In all of our many dealings with internal customers and external parties (e.g. contractors, experts, insurance companies), it is crucial that the Insurance team always communicates fully and accurately and that we handle the information we receive carefully. If we want to work constructively with the parties involved to find the best possible solution, we must be objective and neutral and respect the agreements we made. In other words, we must ‘say what we’ll do and do as we say’. We therefore have to be aware of our company’s mission and the rules, procedures and obligations applying to our profession.

Tom Luyts, insurance

Temporary ad-hoc committees

Additional remuneration of €286,092.73 was requested by

Pursuant to Article 522 of the Company Code, the Board of

vice and other special tasks.

the auditors for duties relating to the IFRS accounts, tax ad-

Directors set up a number of temporary ad-hoc committees in 2008 to assist Elia’s management in specific matters. Ad-hoc committee on international issues An ad-hoc committee was set up to assist the Management Committee and Board of Directors, where necessary, in ex-

Board of Directors’ activity report Under the law of 29 April 1999, the Board of Directors defines the company’s general policy;

amining a number of projects of international significance.

exercises the powers attributed to it by the Belgian Company

Its members are Messrs Grégoire, Laurent-Josi, Van Nevel,

Code or in accordance with that Code, with the exception

Peeraer and de Smet. The committee met three times.

of powers attributed or delegated to the Management Committee;

Ad-hoc committee on corporate issues The

committee

comprises

Messrs

Belmans,

Vermeiren,

Peeraer and Willemarck. It examines the legal, corporate governance and other arrangements that would be required for the company to meet the demands of certain currently unrepresented shareholders to be represented on the Board. The committee met once. Committee on financial issues The committee comprises Messrs Laurent-Josi, de Smet and Van Nevel and held one meeting. It was set up to assist the Management Committee and Board of Directors, where necessary, in examining the company’s long-term financing needs, including by means of a bond issue if appropriate. The committee met once.

Auditors At the general meeting of 13 May 2008, Ernst & Young Réviseurs d’Entreprises, represented by Jacques Vandernoot, and Klynveld Peat Marwick Goerdeler Réviseurs d’Entreprises, represented by Alexis Palm, were appointed as auditors.

exercises general control over the Management Committee in accordance with statutory restrictions regarding access to commercial and other confidential information relating to grid users and the processing thereof; exercises powers attributed to it by the articles of association. The Board of Directors met five times in 2008. The following members were absent on one or more occasions: J. Boucher (24 June 2008) W. Peeraer (15 February 2007) C. De Meersman (24 June 2008) Luc Van Nevel (25 January 2007) F. Vermeiren (30 August 2007) T. Willemarck (30 August 2007, 29 November 2007) Johan de Roo (14 February 2008 and 24 June 2008) Members who are unable to attend are usually represented by another member. Under the provisions of the articles of association, an absent director may authorise another member

Remuneration for each auditor was fixed at €111,250 for each

to represent him or her by giving prior written permission. No

financial year for Elia System Operator, Elia Asset and Elia

member may represent more than two directors.

Engineering, to be indexed annually. The auditors were appointed for a period of three years. Their mandate is therefore due to expire at the end of the ordinary general meeting for the year ending 31 December 2010.

Elia — Annual Report 2008  55


Significant event in 2008 Founding of CASC-CWE SA On 1 October 2098, Elia and six other transmission system operators from Belgium, Germany, France, the Netherlands and Luxembourg (Cegedel Net, EnBW TNG, E.ON Netz, RTE, RWE TSO and TenneT) founded CASC-CWE (Capacity Allocation Service Company for the Central Western European Electricity Market), a company under Luxembourg law. The aim is to combine their border capacity allocation activities in accordance with the agreement signed on 6 June 2007 between the aforementioned companies, the European Commission and the power exchanges and regulators of the countries concerned.

The creation of Coreso comes in response to the need for greater operational cooperation between TSOs as expressed by the European Commission in its draft Directive and by electricity market players. Amongst other things, Coreso will enable better regional integration of renewable generation and guarantee safe management of cross-border flows, which are increasing sharply with the development of intraday markets.

Capital increase The extraordinary general meeting of 8 May 2007 approved a dual capital increase reserved for personnel comprising a first capital increase in 2007 and a second capital increase in 2008 of no more than €760,000, by issuing new category B shares, eliminating the preference right of existing sharehold-

The consent of the European Commission was secured on 14

ers in favour of personnel of the company or its subsidiaries,

August 2008 under the normal notification procedure.

where appropriate below par of existing shares in the same

CASC-CWE will be a services company acting as a central auc-

category.

tion office offering and administering services relating to the

Capital increase 2008 was carried out and subscribed up

monthly and yearly allocation of transmission capacity on the

to €354,502.96, with 15,254 shares issued. Consequently,

borders between the five aforementioned countries.

Articles 4.1 and 4.2 of the articles of association were amended with respect to the share capital and number of shares.

Founding of Coreso SA Coreso, a public limited company under Belgian law, was founded on 19 December 2008, also pursuant to the abovementioned agreement of 6 June 2007. Elia System Operator holds 7,065 shares, representing 50% of the company’s share capital. The French transmission system operator RTE also holds a 50% stake. Coreso is the first regional technical coordination centre to be shared by several transmission system operators (TSOs) in the Central Western Europe region. It aims to enhance security and promote cooperation between TSOs.

Amendments to the articles of association The articles of association of Elia System Operator were amended on 31 March 2008 in order to adjust the capital pursuant to the capital increase of €354,502.96, as mentioned in the paragraph above.

Remuneration Committee In addition to its usual support role to the Board of Directors

The centre will provide forecasts and real-time monitoring of

and in accordance with the law of 29 April 1999, the

electricity flows on the grids of Central Western Europe in

Remuneration Committee is required to make recommenda-

preparation for market coupling in the region. It will begin operating in 2009.

56  Elia — Annual Report 2008


tions to the Board of Directors with regard to remuneration

The Audit Committee met on four occasions in 2008 and each

policy and remuneration of the Management Committee. The

meeting was attended by all three directors of the Committee,

Remuneration Committee met on four occasions and each

with the exception of the Audit Committee meeting on 25

meeting was attended by all members.

August, at which the chairman Clement De Meersman was

The company evaluates its management staff on a yearly basis in accordance with its performance management policy. This policy also applies to members of the Management Committee. The Remuneration Committee evaluates the members of the Management Committee on the basis of a series of collective and individual objectives, of a qualitative and quantitative nature. At the end of December 2008, the Remuneration Committee then evaluated the extent to which these objectives had been achieved. The Remuneration Committee also examined the impact of the new multi-year tariff criteria on Management Committee remuneration. It proposed a new pillar for the variable portion of the Management Committee’s remuneration. This proposal was approved by the Board of Directors at its meeting on 24 June 2008. The variable portion of the remuneration henceforth comprises two pillars. The first pillar is based on criteria set annually and the second pillar on multi-annual criteria set for four years.

Audit Committee

not present. Jacques de Smet acted as chairman on that occasion. The Audit Committee examined the annual accounts for 2007, drawn up in accordance with both Belgian GAAP and IFRS. The Committee then analysed the quarterly results stated on 31 March 2008, the half-yearly results stated on 30 June 2008 and the figures for the first three quarters stated on 30 September 2008, drawn up in accordance with Belgian GAAP and IFRS. The Committee took note of the audits and recommendations made. The further expansion of risk management within the company was also explained and approved by the Committee. An action plan was drawn up for each of the audits and recommendations in order to improve the quality and application of procedures and the associated communication. The Committee examined the follow-up to action plans resulting from this audit and earlier audits from multiple points of view (timetable, results, risk) on the basis of an activity report from the Internal Audit Department. The Committee concluded that these action plans had been carried out properly and within the agreed timeframes. The 2009 audit plan was submitted to and approved by the Committee.

In addition to its usual support role to the Board of Directors and in accordance with the law of 29 April 1999, the Audit Committee examines the accounts, ensures that the budget is controlled, monitors audit activities, evaluates the reliability of financial information, assesses internal control and checks the efficiency of internal risk management systems. The Audit Committee may investigate any matter that falls within the scope of its activities. It is given the resources it needs to perform this task, has access to all information (with the exception of commercial data concerning grid users) and can call on internal and external experts for advice.

Elia — Annual Report 2008  57


Corporate Governance Committee

Remuneration

In addition to its usual support role to the Board of Directors

Remuneration policy for directors was agreed upon at the

and in accordance with the law of 29 April 1999, the Corporate

general meeting of shareholders. Total remuneration paid to

Governance Committee puts forward candidates to be ap-

the 12 Elia directors in 2008 was €500,316 (€250,158 for

pointed as independent directors, gives prior approval for

Elia System Operator and €250,158 for Elia Asset), including

the appointment of members of the Management Committee,

indexing. The table below lists the individual gross sums paid

and, at the request of any independent director, the chairman

to each director:

of the Management Committee or CREG, examines all cases of conflicts of interests between the transmission system operator and a dominant shareholder or company associated with a dominant shareholder in order to report to the Board of Directors. This latter task aims to strengthen the directors’ independence above and beyond the procedure stipulated under Article 524 of the Belgian Company Code, which is also applied by the company. The Committee is also expected to give an opinion in cases of incompatibility on behalf of members of the management and personnel, to ensure that the provisions contained under Articles 9 and 9b of the law of 29 April 1999 on the organisation of the electricity market are applied, evaluate how effectively they have been applied in terms of fulfilling the objectives of operating the transmission system in an independent and impartial manner and submit an annual report to CREG. The Committee met twice in 2008. All members attended all the meetings, with the exception of one member at one meeting. As far as confidentiality rules permit, the Committee is kept

Ronnie Belmans

49,372  €

Jacqueline Boucher

28,376  €

Clement De Meersman

36,094  €

Johan De Roo

14,188  €

Claude Grégoire

42,904  €

Ingrid Lieten

35,186  €

Jean-Marie Laurent Josi

49,714  €

Walter Peeraer

49,714  €

Luc Van Nevel

48,806  €

Francis Vermeiren

40,860  €

Jacques de Smet

57,432  €

Thierry Willemarck

47,670  €

These figures were calculated on the basis of five Board meetings in 2008. The Audit, Remuneration and Corporate Governance Committees met four times. The number of temporary ad-hoc committee meetings is detailed below. The figures are gross sums and include social security costs and other necessary deductions.

regularly informed by the Management Committee on issues

Directors’ remuneration consists of a basic remuneration of

of major importance such as the purchase of ancillary services

€25,000 per year (€12,500 for Elia System Operator and

and the content of the infrastructure project portfolio, in order

€12,500 for Elia Asset) plus an additional €800 (€400 for Elia

to ensure the opening of the electricity market. In addition to

System Operator and €400 for Elia Asset) for each meeting

these ongoing issues, specific matters are dealt with at par-

after the 8th Board meeting during the year, including meet-

ticular meetings. For example, the Committee was informed

ings with regulators. These two remunerations are increased

of the conclusions of the confidentiality audit and the minor

by 50% for the Chairman and 20% for each Vice-Chairman of

adjustments required in the wake of proposed amendments

the Board of Directors.

to the Corporate Governance Code.

58  Elia — Annual Report 2008


Integrity is an essential value in my work as it allows me to instil a feeling of mutual trust and respect in the departments for which I am responsible as business controller. Respecting commitments and deadlines, communicating clearly and honestly and handling confidential files with discretion are all keywords relating to the most important values for success in my work at Elia.

Carole Devillers, business controller

An additional fixed remuneration of €6,000 per year per com-

Management Committee

mittee (€3,000 for Elia System Operator and €3,000 for Elia

Under the law of 29 April 1999, the transmission system op-

Asset) is awarded to directors who sit on a support commit-

erator’s Management Committee manages the electricity sys-

tee, with an additional remuneration of €800 (€400 for Elia

tem and the transmission system operator on a day-to-day

System Operator and €400 for Elia Asset) for each additional

basis and exercises other powers delegated to it by the Board

committee meeting (i.e. each meeting after the three cov-

of Directors and the articles of association.

ered by the basic remuneration), including meetings with regulators. This remuneration covers all costs and is included in the company’s operating costs. It is indexed annually in accordance with the consumer price index. All remunerations are paid on a pro rata basis during the director’s term of office.

The Management Committee usually meets formally at least once a month. Members also attend informal weekly meetings. The Management Committee met 14 times in 2008. Members who are unable to attend usually have a representative. In accordance with the Committee’s internal rules of procedure, an absent director may authorise another member to

Directors receive an advance on their annual remuneration at

represent him or her by giving prior written permission. No

the end of the first, second and third quarters. The advance is

member may represent more than two directors.

calculated on the basis of the basic indexed fee and on a pro rata basis in relation to the duration of the directorship during the quarter in question.

Each quarter, the Management Committee reports to the Board of Directors on the company’s financial situation (in particular on the balance between the budget and the results

A detailed account is prepared during the month of December

stated). It also reports on transmission system operation at

for the financial year. This account takes into consideration any

each Board meeting.

additional remuneration on top of the basic remuneration.

As regards transmission system operation, the Committee

Directors do not receive any other benefits in kind, stock op-

updated the Board on developments in legislation and case

tions, special loans or advances.

law affecting Elia, progress on drafting the new royal decree on the investment factor (X-incentive), regulators’ decisions,

Evaluation

transmission system management and subsidiaries, including

In 2007, the Board of Directors of Elia System Operator or-

as international project developments.

ganised a formal procedure to evaluate its operation in accordance with the provisions (Article 4.1.1 et seq.) of the corporate governance code for listed companies in Belgium (the Belgian Corporate Governance Code). In line with the rules of corporate governance, such a process will be organised every two to three years.

implementation of Belpex and the founding of Coreso as well

Some of the company’s senior managers rotated roles at the end of the financial year. Mark Berger replaced Roel Goethals as CEO of Elia Engineering. Roel Goethals replaced Hubert Lemmens as Chief Officer Transmission, while Hubert Lemmens took over from Mark Berger as Chief Officer Grid Services. These appointments were approved by the Board at its meeting on 27 November 2008.

Elia — Annual Report 2008  59


Remuneration

Shares The Chairman of the Management Committee of Elia System

Basic and variable remuneration In 2008, remuneration for the Chairman of the Management Committee, which is paid by Elia System Operator, totalled €488,351.69, of which 29.37% was variable pay. Remuneration paid by Elia to the other members of the Management Committee in 2008 totalled €1,545,679.60 (€801,357.11 for Elia System Operator and €744,322.49 for Elia Asset), of which 21.66% was variable pay. A total of €2,034,031.29 was therefore paid to members of the Management Committee in 2008.

Other elements of remuneration The costs incurred by Elia System Operator in 2008 for the corporate pension plan were €90,773.61 for the Chairman of the Management Committee and €282,974.75 (€147,926.84 for Elia System Operator and €135,047.92 for Elia Asset) for the other members of the Management Committee.

Operator holds 4,360 shares in Elia System Operator. The other members of the Management Committee hold a total of 13,730 shares. Elia has yet to implement a long-term share allotment policy.

Provisions of employment contracts The terms set out in the employment contracts for members of the Management Committee, including the Chairman, do not contain any specific provisions as regards notice of dismissal.

Code of conduct Elia has a code of conduct that all employees likely to have access to privileged information on the Group (i.e. insiders) must comply with. The code of conduct lays down a series of regulations for stock exchange transactions by insiders, in ac-

Other benefits awarded to members of the Management

cordance with the provisions of Directive 2003/6/EC on insid-

Committee, such as guaranteed income in the event of long-

er trading and market manipulation and the law of 2 August

term illness or an accident, health-care and hospitalisation

2002 on monitoring of the financial sector and other financial

insurance, invalidity insurance, life insurance, tariff benefits

services. The Board of Directors approved the code of conduct

and provision of a company car are in line with the regulations

on 22 December 2005. The Secretary-general ensures that

applying to all company managers. There was no Elia stock

the code of conduct is applied correctly and updated.

option plan for the Management Committee in 2008.

CBFA notification In accordance with the law of 1 April 2007 on takeover bids, Publi-T, a shareholder in Elia System Operator, sent notification to the CBFA to inform it of a change in its shareholding. This notification, which was communicated to Elia on 27 August 2008, is published in full on the Elia website, pursuant to the law of 1 April 2007.

60  Elia — Annual Report 2008


The Arco Group also sent the CBFA notification of a significant shareholding. Elia received a copy of this notification on 18 January 2008, and has published it on its website.

Elia share - information to shareholders Shareholder structure On 31 December 2008, the shareholder structure of Elia System Operator SA was as follows:

Shareholder structure Shareholders

Shares

% Stake

Voting rights

Publi-T

15,871,284

33.01%

33.01%

Electrabel

11,706,177

24.35%

24.35%

Group Arco

4,984,624

10.37%

10.37%

Publipart

1,221,405

2.54%

2.54%

Free float

14,293,459

29.73%

29.73%

48,076,949

100.00%

100.00%

Total

Elia — Annual Report 2008  61


Group structure was as presented hereunder:

Free float*

Publi-T

40,1 %

Electrabel

33,01 %

Publipart

24,35 %

2,54 %

Elia System Operator Elia Asset 99,99 % economic unit

14,8 %

24,5 %

CASC-CWE

HGRT

50 % Coreso

100 % Elia Re**

100 % Elia Engineering**

60 % Belpex

*  The Arco Group announced on 21 October that it has 10.37% of the Elia shares in its possession. **  Elia system operator owns a share of Elia Re and a share of Elia Engineering.

The share in 2008 2008 was unquestionably a very turbulent year for the Stock Exchange. The financial crisis, which turned out to be bigger than forecast, triggered an economic crisis which all economists agree will last into 2009.

the markets was at its height, did it fall close to the €20 mark – only to recover fully in early November. The share’s liquidity fell by around 33% (from a daily average of 25,016 units to a daily average of 16,682 units), primarily owing to the fact that Elia operates in a regulatory framework, with a high level of visibility in terms of profitability

Elia, whose activities are almost entirely regulated, has been

(and therefore less affected by the crisis), and that around

subject to a system of multi-year tariffs since 1 January. As a

25% of the freely tradable shares are held by Arco Group.

result, the Elia share has weathered the economic and financial turmoil very well, which has meant it is one of the few to conserve its ‘safe investment’ status. The Elia share dipped slightly in 2008, most notably after the dividend payout on 28 May. Only in October, when panic on

62  Elia — Annual Report 2008


Elia share price and volume in 2008 Price (€)

Volume (thousands)

30.00

400

28.00

350 300

26.00

250

24.00

200 150

22.00

100 20.00

50

18.00

0 Jan 2008

Feb 2008

Mar 2008

Apr 2008

May 2008

Jun 2008

Jul 2008

Aug 2008

Sep 2008

Oct 2008

Nov 2008

Dec 2008

The Elia share finished 2007 at a price of €27.81. The clos-

Over the year as whole, therefore, the Elia share significantly

ing price at the end of 2008 was €24.56, a drop of 11.69%.

outperformed the Bel20, which fell by 53.6% in 2008.

Factoring in the dividend of €1.30, the drop was only 7.01%. The lowest price in 2008 was €20.10, recorded on 10 October. The share peaked on 7 May at a price of €29.09.

Elia share price and Bel20 in 2008 102.50 97.50 92.50 87.50 82.50 77.50 72.50 67.50 62.50 57.50 52.50 47.50 42.50

Jan 2008

Feb 2008

Mar 2008

Apr 2008

May 2008

Jun 2008

Jul 2008

Aug 2008

Sep 2008

Oct 2008

Nov 2008

Dec 2008

Elia — Annual Report 2008  63


Compared with other listed transmission system operators, Elia performed slightly better than Red Electrica – Spain (-15.9%), Terna – Italy (-16.3%) and National Grid – UK (-18%).

106 96 86 76 66 56 46 Jan 2008

Feb 2008

Mar 2008

Apr 2008

May 2008

Jun 2008

Jul 2008

Aug 2008

Sep 2008

Oct 2008

Nov 2008

Dec 2008

ELIA Terna Red Electricia National Grid Down Jones Utility index

With 48,076,949 shares outstanding, the company’s mar-

The table hereafter gives an overview of monthly statistics for

ket capitalisation stood at €1,180,769,867 at the end of

the Elia share on Euronext Brussels in 2008.

December. In 2008, a total of 4,270,597 Elia shares were traded on Euronext Brussels, equating to 22.59% of the freely tradable shares.

64  Elia — Annual Report 2008


Monthy statistics for the Elia share in 2008 Price Volume (daily average)

Closing price

Maximum

Minimum

Freefloat turnover rate

Market capitalisation (million €)]

January

31,363

28.09

28.15

27.29

3.65 %

1,350

February

25,320

28.97

29.00

27.00

2.81 %

1,392

March

17,398

28.23

28.77

27.00

1.75 %

1,357

April

10,403

28.59

28.88

27.51

1.21 %

1,374

May

6,364

27.10

29.09

26.66

0.71 %

1,303

June

14,392

26.50

27.60

26.00

1.60 %

1,274

July

13,390

26.01

26.79

25.15

1.63 %

1,250

August

10,430

26.30

26.80

25.50

1.16 %

1,264

September

13,967

26.28

26.85

25.40

1.63 %

1,263

October

19,061

24.49

27.00

20.10

2.32 %

1,177

November

26,760

25.10

26.50

24.09

2.83 %

1,207

December

11,701

24.56

26.50

24.00

1.30 %

1,181

16,682

24.56

29.09

20.10

22.59 %

1,181

Month

2008

The Elia share and its codes Elia share on the stock exchange

Elia strips on the stock exchange

Stock exchange :

Euronext Brussel

Stock exchange :

Euronext Brussel

Index :

BEL MID

Ticker :

ELIS

Ticker :

ELI

ISIN :

BE 0005597688

ISIN :

BE 0003822393

Code Bloomberg :

ELIS BB

Code Bloomberg :

ELI BB

Code Reuters :

ELIS BR

Code Reuters :

ELI BR

Elia — Annual Report 2008  65


Share indexes

Elia’s management explains the company’s results, strategies

On 31 December 2008, Elia’s share formed part of the Bel Mid

the market to shareholders and analysts.

index. Elia’s weight on that date was 5.41%, ranking it 7th in the index.

Sustainable and socially responsible company

and decisions and conveys the concerns and perceptions of

To mark the launch of multi-year tariffs on 1 January 2008, a large number of roadshows were organised in the first half of 2008 aimed at institutional investors in Europe’s major financial centres and, for the first time, in New York and Boston. In between roadshows, investors and analysts had a chance to talk to the company’s top management, either in person

The Elia share was included in the Ethibel Excellence

or by videoconference. Elia also attended many national and

Investment Register

international investment conferences.

Ethibel promotes socially responsible investing (SRI) in

Elia is also committed to private investors and takes part in

Belgium and Europe. It administers two labels: Ethibel Pioneer

the annual events organised by the Vlaamse Federatie van

and Ethibel excellence. These quality labels are registered in

Beleggingsclubs en Beleggers (VFB) in Antwerp and the

15 EU countries and offer investors a guarantee that the com-

Financial Cocktail event held by Euronext.

panies they are investing in are sustainable. When compiling the register, Forum Ethibel looks for companies that play a fields of corporate social responsibility (CSR).

Transparency regulations and reporting of interests

Audits are performed by ratings agency VIGEO, which screens

Under the Belgian Transparency Act, stakes of at least 5%

every company in four specific areas:

(or a multiple of 5%) of total share capital must be reported

pioneering role, or a leading role within their sector, in all

internal social policy; environmental policy; external social policy; economic policy.

to the Belgian Banking, Finance and Insurance Commission (CBFA) and the company itself. Under new transparency legislation (Law of 2 May 2007, Royal Decree of 14 February 2008 published in the Belgian Official Gazette on 4 March 2008) that came into force in October 2008, the following interests were reported in October 2008:

Investor relations The task of the Investor Relations department is to ensure the best possible communication with current and potential investors. By engaging in transparent dialogue with investors and financial analysts, Elia seeks to achieve a fair value for its share. A key objective of the department is to make Elia’s management accessible to national and international investors. A primary aim is to ensure two-way communication, whereby

66  Elia — Annual Report 2008


Notification Reporting date

Shareholder

Shares

Stake

21 October 2008

Groep ARCO

4 984 624

10,37 %

30 October 2008

Publi-T

15 871 284

33,01 %

30 October 2008

Electrabel

11 706 177

24,35 %

30 October 2008

Publipart

1 221 405

2,54 %

The Arco group announced on 21 October 2008 that it held 10.37% of Elia’s shares. The disclosures by Publi-T, Electrabel and Publipart on 30 October 2008 confirmed their percentage stakes in Elia.

Dividend On 19 February 2009, Elia’s Board of Directors decided to

Dividend policy Elia is obliged by its articles of association to pay out at least 85% of profit gained, after having retained a 5% reserve in accordance with provisions, representing a payout of 81% recorded profit. Taking into account the financial market and regulations, Elia’s Board of Directors decided in 2009 to change the dividend policy.

propose the following dividend payments for shareholders at

Following the introduction of multi-year tariffs, part of the net

the general meeting of 12 May 2009:

profit, derived from writing off decommissioning-related of

In accordance with dividend policy and on the condition that the annual general meeting gives its approval, a normal dividend of €65.87 million or €1.37 per share (gross) will be proposed. This gives a net result of €1.0275 per share without VVPR strip or €1.1645 per share with VVPR strip.

fixed assets in the tariffs, must be reserved under capital and reserves. As a result, the overall payout ratio will fall, but this situation will considerably enhance Elia’s (self-)financing capacity. It will therefore be easier in future to launch new and bigger projects. In principle, the absolute dividend will not be lower than last year, depending on market circumstances and the regulatory framework.

The following paying agents will pay out dividends to shareholders: Fortis Bank, ING Belgium, KBC Bank, CBC Banque and Dexia Bank. Dividend payouts for shares held in a stock account will be settled automatically by the bank or stockbroker. Elia will pay out dividends on registered shares directly to shareholders listed on the company’s register.

Elia — Annual Report 2008  67


Financial calendar 20 February 2009 8.00 a.m.

Publication of annual figures for 2008

10 April 2009

2008 annual report published in pdf

12 May 2009

General meeting of shareholders

27 May 2009

Payment of dividend for 2008 (coupon No. 4)

28 August 2009 8.00 a.m.

Important post-balance sheet events No significant events occurred after the balance sheet date.

Non-audit tasks carried out by the auditors In addition to standard audit tasks, Elia also asked the au-

Publication of half-yearly figures for 2009

ditors Klynveld Peat Marwick Goerdeler Company Auditors, represented by Alexis Palm, and Ernst & Young Company

Investors For any questions regarding the Elia share, please contact: Elia Investor Relations Department

Auditors, represented by Jacques Vandernoot, to carry out the following tasks: IFRS: additional activities and consultancy Capital increase

Boulevard de l’Empereur 20

Declaration of levies

1000 Brussels

Declaration of decommissioning of fixed assets

Belgium Tel. : +32 2 546 72 39

Various consultancy tasks

Fax : +32 2 546 71 80

A total of €167,150 was recorded for these tasks.

Email : bert.maes@elia.be

Ernst & Young Tax Consultants advised Elia System Operator SA, Elia Asset and Elia Engineering and Belpex on various top-

Information about the company (press releases, annual re-

ics, providing for example advice and support with regard to

ports, share prices, disclosures, etc.) can be found on the

the tax audit and the legal ruling and recurring advice about

Elia website www.elia.be in three languages (French, Dutch

VAT and corporate income taxes. A total of €81,606 was in-

and English).

voiced for these services.

Elia’s financial newsletter Investor News provides investors

Ernst & Young Consultants also performed some tasks to

with up-to-date information about the company. An e-mail

support the internal audit department. The cost of this was

alert is also available.

€37,336.

68  Elia — Annual Report 2008


Consolidated financial statements IFRS Consolidated income statement (in million €) Revenue

Notes

2008

2007

Change (%)

(3)

757.3

731.7

3.5

724.4

705.7

2.6

32.9

26.0

26.5

(519.4)

(517.0)

0.5

Revenue Other operating revenue Total operating expenses

(4)

Cost of materials

(4.1)

(6.8)

(8.6)

(20.9)

Services and other goods

(4.1)

(281.9)

(281.0)

0.3

Personnel expenses

(4.2)

(118.8)

(114.0)

4.2

Depreciation, amortization, impairment and changes in provisions

(4.3)

(96.2)

(93.8)

2.6

Other expenses

(4.4)

Results from operating activities Net finance expenses

(5)

Finance expenses Finance income Share of profit of equity accounted investees (net of income tax) Profit before tax Income tax expenses

(6)

Profit for the period Attributable to equity holders of the company Attributable to minority interest

(15.7)

(19.6)

(19.9)

237.9

214.7

10.8

(109.3)

(104.0)

5.1

8.3

3.7

124.3

(117.6)

(107.7)

9.2

2.0

0.0

130.6

110.7

18.0

(27.2)

(32.9)

(17.3)

103.4

77.8

32.9

103.1

77.6

32.9

0.3

0.2

50.0

Per share information (€) Earnings per share attributable to equity holders of the company

(30)

2.1

1.6

31.3

Diluted earnings per share attributable to equity holders of the company

(30)

2.1

1.6

31.3

Elia — Annual Report 2008  69


Consolidated balance sheet (in million €)

Notes

31 December 2008

31 December 2007

Assets 3,938.1

3,760.0

Property, plant and equipment

Non-current assets (7)

2,060.4

1,993.2

Intangible assets

(8)

1,727.0

1,722.7

Trade and other receivables

(9)

98.7

0.0

Investments in equity accounted investees

(10)

10.1

8.1

Derivatives

(23)

0.0

5.5

(11) (31)*

17.7

16.8

Other financial assets Deferred tax assets

(21)

Current assets Inventories Trade and other receivables

(12)

13.7 217.9

13.7

13.2

(13) (31)*

246.9

171.2

2.1

0.0

(14) (31)*

27.3

33.5

4,228.1

3,977.9

Income tax receivable Cash and cash equivalents

24.2 290.0

Total assets

Equity & liabilities Equity

Equity attributable to equity holders of the company

(15)

Share capital Share premium Reserves

1,349.7

1,339.9

1,348.1

1,338.6

1,202.1

1,201.7

8.5

8.5

21.0

18.4

Hedging reserve

(16.0)

3.6

Retained earnings

132.5

106.4

Minority interest

1.6

1.3

Minority interest

1.6

1.3

1,774.8

2,385.5

1,593.5

2,230.2

Non-current liabilities Loans and borrowings

(16) (31)*

Employee benefits

(17)

142.7

143.6

Derivatives

(23)

24.3

0.0

Provisions

(18)

4.7

5.4

Deferred tax liabilities

(21)

6.5

5.3

3.1

1.0

1,103.6

252.5

804.3

0.0

Other non-current liabilities Current liabilities Loans and borrowings Provisions Trade and other payables

(16) (18)

10.3

9.4

(19) (31)*

281.7

204.8

Income tax payables Other current liabilities

(20) (31)*

Total equity & liabilities *  These captions include reclassifications of the figures as at 31/12/2007 for the reason of comparison.

70  Elia — Annual Report 2008

0.2

2.7

7.1

35.6

4,228.1

3,977.9


Consolidated cash-flow statement (in million €)

Notes

31 December 2008

31 December 2007

103.4

77.8

Operating activities Profit for the period Net interest expenses

(5) (31) *

114.7

104.2

Income tax expenses

(6) (31) *

20.2

29.5

Adjustments for: Share of profit of investments accounted for using the equity method

(10)

(2.0)

0.0

Depreciation of property, plant and equipment and amortization of intangible assets

(7) (8)

95.4

92.5

Net loss on disposal/sale of property, plant and equipment

(7) (8)

3.6

3.1

Impairment losses of current assets

(4.3)

0.1

0.4

Changes in provisions

(18)

(18.8)

(20.1)

Changes in fair value of derivatives

(23)

1.1

0.4

Changes in deferred taxes

(21)

7.0

3.0

0.1

0.7

324.8

291.5

Changes in non-cash items

Cash flows from operating activities Changes in: Inventories

(12)

(0.6)

(0.7)

Trade and other receivables

(13)

(80.7)

(60.7)

0.5

46.4

Other current assets Trade and other payables Other current liabilities

(19)

76.9

84.3

(20) (31) *

(27.3)

(83.3)

(31.2)

(14.0)

(31) *

(116.7)

(103.2)

(6)

(118.6)

(27.1)

58.3

147.2

(7) (8)

(170.5)

(150.0)

0.0

(7.6)

(0.5)

0.0

Changes in working capital Interest paid Income tax paid Net cash from operating activities Acquisition of property, plant and equipment and intangible assets Investments in equity accounted investees

(10)

Investments recognised at cost Interest received

(5) (31) *

Net cash used in investing activities Proceeds from issue share capital

(15)

2.5

2.9

(168.5)

(154.7)

0.4

4.2

Expenses related to issue share capital

(15)

0.0

(0.1)

Dividends paid (-)

(15)

(62.5)

(61.3)

Repayment of borrowings (-)

(16)

0.0

(200.0)

Proceeds from withdrawal borrowings (+)

(16)

166.5

270.0

(0.4)

(0.7)

104.0

12.1

Changes in fair value of financial assets through income

(31) *

Net cash from (used in) financing activities Net increase (decrease) in cash and cash equivalents

(6.2)

4.6

Cash & Cash equivalents at 1 January

(14) (31) *

33.5

29.0

Cash & Cash equivalents at 31 December

(14) (31) *

27.3

33.5

*  These captions include reclassifications of the figures as at 31/12/2007 for the reason of comparison.

Elia — Annual Report 2008  71


Consolidated statement of recognised income and expenses (in million €) Net change in fair value of cash flow hedges transferred to profit or loss Defined benefit plan actuarial gains (losses)

Annexes

2008

2007

(23)

(19.7)

5.2

(17)

(12.0)

4.9

Income and expenses recognised directly in equity

(31.7)

10.1

Profit for the period

103.4

77.8

Total recognised income and expenses for the period

71.7

87.9

Attributable to equity holders of the company

71.4

87.7

Attributable to minority interest

0.3

0.2

72  Elia — Annual Report 2008


Contents of the notes to the financial statements 1.  Reporting entity.......................................................................................................................................................................... 74 2.  Significant accounting policies for financial reporting under IFRS........................................................................................ 74 3.  Revenue..................................................................................................................................................................................... 82 4.  Operating expenses................................................................................................................................................................. 84 4.1.  Cost of materials, services and other goods....................................................................................................................... 84 4.2.  Personnel expenses.............................................................................................................................................................. 84 4.3.  Depreciations, impairment and amortisation, changes in provisions............................................................................. 85 4.4.  Other operating expenses.................................................................................................................................................... 85 5.  Finance income and expenses................................................................................................................................................ 86 6.  Income taxes............................................................................................................................................................................. 87 7.  Property, plant and equipment................................................................................................................................................ 88 8.  Intangible assets....................................................................................................................................................................... 90 9.  Trade and other receivables.....................................................................................................................................................91 10.  Equity accounted investees.....................................................................................................................................................91 11.  Other financial assets.............................................................................................................................................................. 92 12.  Inventories................................................................................................................................................................................ 92 13.  Trade and other receivables................................................................................................................................................... 92 14.  Cash and cash equivalents.................................................................................................................................................... 93 15.  Shareholders’ equity................................................................................................................................................................ 94 16.  Interest-bearing loans and borrowings................................................................................................................................ 96 17.  Employee benefits.................................................................................................................................................................... 98 18.  Provisions................................................................................................................................................................................ 101 19.  Trade and other payables......................................................................................................................................................102 20.  Other current liabilities...........................................................................................................................................................102 21.  Deferred tax assets and liabilities.........................................................................................................................................103 22.  Share-based payments........................................................................................................................................................104 23.  Financial instruments.............................................................................................................................................................104 24.  Operating lease contracts.....................................................................................................................................................108 25.  Investments and other liabilities...........................................................................................................................................109 26.  Contingent liabilities and uncertainties................................................................................................................................109 27.  Disclosure about related parties.......................................................................................................................................... 110 28.  Group entities......................................................................................................................................................................... 110 29.  Business combinations.......................................................................................................................................................... 111 30.  Basic earnings per share...................................................................................................................................................... 112 31.  Reclassification....................................................................................................................................................................... 112 32.  Non-audit tasks carried out by the auditor......................................................................................................................... 112

Elia — Annual Report 2008  73


Notes to the consolidated financial statements 1. Reporting entity

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and the interpretations of IFRS that are established

Established in Belgium, Elia System Operator SA has its reg-

by the International Accounting Standards Board (IASB) as

istered office at Boulevard de l’Empereur 20, 1000 Brussels.

adopted for use in the European Union. The Group has applied

The Group’s consolidated financial statements for the 2008

all new and revised standards and interpretations published

financial year include Elia System Operator SA and four sub-

by IASB and applicable to its activities which are in force for

sidiaries, i.e. Elia Asset SA, Elia Engineering SA, Belpex SA

financial years starting on or after 1 January 2008. The appli-

and Elia Re SA and also an associated company, HGRT S.A.S.

cation of these new and revised standards and interpretations

(see note 10). HGRT S.A.S is included in the consolidated

did not result in changes to the accounting policies used by

statements on the basis of the equity method. Stakes in the

the Group.

companies CASC-CWE SA and Coreso SA, both of which were established in 2008, are recognised at cost price in the section on Financial assets.

The following amended and new standards are effective but are not applicable to the Group: IFRIC 11: IFRS 2: Group and treasury share transactions.

Elia is the Belgian transmission system operator, transmitting

IFRIC 12: Service concession arrangements.

electricity from producers to distribution system operators

IFRIC 14: IAS 19: The limit on a defined benefit asset mini-

and major industrial users and importing and exporting elec-

mum funding requirements and their interaction.

trical power from and to Belgium’s neighbouring countries.

The standards and interpretations listed below are published

These activities are regulated by the Commission for Electricity

on the date of approval of these consolidated financial state-

and Gas Regulation (CREG).

ments but are not yet effective and the group didn’t opt for

Please refer to the chapter on Regulatory framework and tariffs for further details.

2. Significant accounting policies for financial reporting under IFRS

an early adoption. The Group does not expect any major impact on the Group’s financial statements in the period of their initial application: IAS 27: Consolidated and separate financial statements cost of an investment in a subsidiary, jointly controlled entity or associate. Amendment to IFRS 2: Share-based payment - Vesting conditions and cancellations. IFRS 3: Business combinations.

(a) Statement of compliance The consolidated financial statements for the year ending 31 December 2008 presented in this annual report were prepared under the supervision of the board of directors and established by the board of directors on 19 February 2009 subject to the shareholders’ approval of the statutory non-consolidated financial statements at the annual general meeting due to take place on 12 May 2009. In accordance with Belgian legislation, the consolidated financial statements will also be presented to Group shareholders at the annual general meeting. The consolidated financial statements are not subject to change unless they are modified following a decision taken by the shareholders concerning the statutory non-consolidated financial statements that has an impact on the consolidated financial statements.

74  Elia — Annual Report 2008

IFRS 8: Operating Segments. Revision IAS 1: Presentation of financial statements. Revision IAS 23: Borrowing costs. Amendment to IAS 27: Consolidated and separate financial statements. Amendments to IAS 32 & IAS 1: Amendments to IAS 32: Financial instruments: presentation and IAS 1 Presentation of financial statements – Puttable instruments and obligations arising on liquidation. IFRIC 13: Customer Loyalty Programmes.


(b) Basis of preparation The financial statements are presented in  million euros, rounded off to the nearest hundred thousand, unless stated otherwise. The financial statements have been prepared on a historical-cost basis, except for the derivative financial instruments, which are estimated at fair value. Non-current assets and assets groups held for sale are valued at the lowest of carrying amount and fair value less cost to sell. The preparation of financial statements in accordance with IFRS requires management to make judgements, estimates and assumptions that could affect the reported amounts of assets and liabilities and revenue and expenses. The estimates and underlying assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgements regarding the carrying amounts of assets and liabilities. Actual results could differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision only affects this period, or in the period in which the estimate is revised and future periods, if the revision affects both current and future periods. Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised

sessing control, potential voting rights that are currently exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. (ii) Associated companies Associated companies are those companies in which the company has significant influence, but not control, over the financial and operating policies. The consolidated financial statements include the Group’s share of the total recognised profits and losses of associated companies on the basis of the equity method, from the date that significant influence commences until the date that significant influence ceases. When the Group’s share of the losses exceeds its interest in an associated company, the Group’s carrying amount is reduced to nil and further losses are not recognised except to the extent that the Group has incurred legal or constructive obligations or has made payments on behalf of an associated company. (iii) Elimination of intra-Group transactions Intra-Group balances and any unrealised gains or losses or revenue and expenses arising from intra-Group transactions are eliminated when preparing the consolidated financial statements. Unrealised gains from transactions with associated companies are eliminated to the extent of the Group’s interest in the entity. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence for impairment.

in the consolidated financial statements is included in the fol-

(d) Foreign currencies

lowing notes:

Transactions in foreign currencies are converted into euro at

Note 4.3 – Depreciations, impairment and amortisation,

the foreign exchange rate prevailing on the date of the trans-

changes in provisions.

action. Monetary assets and liabilities denominated in foreign

Note 6 – Income taxes.

currencies on the balance sheet date are converted into euro

Note 8 – Intangible assets.

at the foreign exchange rate prevailing on that date. Foreign

Note 11 – Other fixed financial assets.

exchange differences arising on conversion are recognised in

Note 12 – Inventories.

profit or loss.

Note 18 – Provisions.

Non-monetary assets and liabilities denominated in foreign

Note 23 – Financial instruments.

currencies that are valued in terms of historical cost are con-

The accounting policies set out below have been applied con-

verted at the exchange rate prevailing on the date of the

sistently for all the periods presented in this financial report.

transaction.

They have been applied by all Group entities.

(e) Derivative financial instruments (c) Basis of consolidation

The Group sometimes uses derivative financial instruments

(i) Subsidiaries

to hedge its exposure to foreign exchange and interest rate

A subsidiary is an entity that is controlled by the company. Control means that the company has the power to, directly or indirectly, govern the financial and operating policies of an entity so as to obtain benefits from its activities. In as-

risks arising from operating, financing and investment activities. In accordance with its treasury policy the Group neither holds nor issues derivative financial instruments for trading purposes.

Elia — Annual Report 2008  75


However, derivatives that do not qualify for hedge accounting are accounted for as instruments held for trading purposes. Derivative financial instruments are recognised initially at fair value. Any gain or loss resulting from changes in the fair value is immediately accounted through the income statement. Where, however, derivative financial instruments qualify for hedge accounting, reflection of any resultant gain or loss depends on the nature of the item being hedged (see accounting policy f). The fair value of interest rate swaps is the estimated amount that the Group would receive or pay to terminate the swap on the balance sheet date, taking credit worthiness into account the current interest rates and the current credit worthiness of the swap counterparties. The fair value of forward exchange contracts is their quoted market price on the balance sheet date, i.e. the present value of the quoted forward price.

(g) Property, plant and equipment (i) Owned assets Items of property, plant and equipment are stated at cost price (including the directly allocated costs but excluding financing costs) less accumulated depreciation and impairment losses (see accounting policy m). The cost price of self-produced assets comprises the cost of materials, of direct labour and, where relevant, of the initial estimate of the costs of dismantling and removing the assets and restoring the site where the assets were located. If parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment. (ii) Leased assets Leases under the terms of which the Group assumes virtually all the risks and rewards of ownership are classified as finance

(f) Derivatives used as hedging

leases. Fixed assets used by way of a finance lease are stated

instruments

at an amount equal to the lower of fair value and the present

(i) Cash-flow hedges

lease, less accumulated depreciation (see below) and impair-

Changes in the fair value of the derivative hedging instrument

ment losses (see accounting policy m). Lease payments are

designated as a cash flow hedge are recognised directly in

accounted for as described in accounting policy u.

equity to the extent that the hedge is effective. To the extent

(iii) Subsequent costs

that the hedge is ineffective, changes in fair value are recognised in profit or loss.

value of the minimum lease payments at the inception of the

The Group recognises in the carrying amount of an item of property, plant and equipment the cost price of replacing part

If the hedging instrument no longer meets the criteria for

of such an item when that cost is incurred if it is probable that

hedge accounting, expires or is sold, terminated or exercised,

the future economic benefits embodied in the item will flow

the hedge accounting is discontinued prospectively. The cu-

to the Group and the cost price of the item can be assessed

mulative gain or loss previously recognised in equity remains

reliably. All other costs are recognised in profit or loss as and

there until the forecast transaction occurs. When the hedged

when they are incurred.

item is a non-financial asset, the amount recognised in equity is transferred to the carrying amount of the asset when it is

(iv) Depreciation

justified. In other cases the amount recognised in equity is

Depreciation is recognised in profit or loss on a straight-

transferred to profit or loss in the same period that the hedge

line basis over the estimated useful life of each component

item affects profit or loss.

of an item of property, plant and equipment. Land is not

When a derivative or hedge relationship terminates, cumulative gains or losses still remain in equity provided that the

depreciated. The applied depreciation percentages are as follows:

hedged transaction is still expected to occur. If the hedged

Administrative buildings

transaction is no longer expected to take place, the cumula-

Industrial buildings

3.00%

tive unrealised gain or loss is removed from equity and is

Overhead lines

2.00%

immediately recognised in profit or loss.

2.00%

Underground cables

2.00%

(ii) Hedging of monetary assets and liabilities

Substations (facilities & machines)

3.00%

Hedge accounting is not applied to derivative instruments

Remote control

10.00%

that economically hedge monetary assets and liabilities de-

Dispatching

10.00%

nominated in foreign currencies. Changes in the fair value

Other property, plants and equipment

20.00%

of such derivatives are recognised in profit or loss of foreign

Vehicles

20.00%

currency gains and losses.

Tools and office furniture

10.00%

Hardware

33.00%

76  Elia — Annual Report 2008


Depreciation methods, remaining useful lives, and residual

Expenditure for research activities undertaken with the pros-

values of the property, plant and equipment are reassessed

pect of developing software within the Group is recognised in

annually and are prospectively adjusted as the occasion

profit or loss as expenditure as incurred. Expenditure for the

arises.

development phase of software developed within the Group

(v) Derecognition An asset is no longer recognised on the balance sheet when the asset is subject to disposal or when no future economic benefits are expected from its use or disposal. Gains or losses arising from the derecognition of the asset on the balance sheet (which is determined as the difference between the net disposal proceeds and the carrying amount of the asset) are included in profit or loss during the year in which the asset was derecognised from the balance sheet.

is capitalised if: costs can be measured reliably ; the software is technically and commercially feasible and future economics are probable; the Group intends - and has sufficient resources - to complete the development; the Group intends to use the software. The capitalised expenditure includes cost of material, direct labour costs and overhead costs that are directly attributable

(h) Intangible assets (i) Business combinations and goodwill Goodwill is determined as the excess of the cost of an acquisition over the Group’s interest in the net fair value of the identifiable assets and (contingent) liabilities of the acquired subsidiary or associate at the date of acquisition. All business combinations are accounted for by applying the purchase method. Goodwill represents amounts arising on the acquisition of subsidiaries and associated companies. In the case of acquisitions that have occurred since 1 January 2004, goodwill represents the difference between the cost of the acquisition and the net fair value of the acquired identifiable assets, liabilities and contingent liabilities of the acquiree.

to preparing the software for its use. Other costs are recognised in profit or loss as incurred. (iii) Subsequent expenditure Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in profit or loss as expenditure as incurred. (iv) Amortisation Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful life of intangible assets, unless the useful life is indefinite. Goodwill and intangible assets are tested systematically for impairment on each balance sheet date. Software is amortised from the date it is available for use. The estimated useful lives are as follows:

In the case of acquisitions that occurred before the above date (i.e. Elia Asset) goodwill is included on the basis of the

Licences

5 years

assumed cost price, which is equal to the value allocated un-

Internally developed software

5 years

der the previously applied Be GAAP*. The classification and accounting treatment of business combinations that occurred before 1 January 2004 was not reconsidered when preparing the Group’s opening IFRS balance sheet at 1 January 2004. Goodwill is stated at cost price less accumulated impairment

Depreciation methods, remaining useful lives, and residual values of intangible assets are reassessed annually and are prospectively adjusted as the occasion arises.

losses.

(i) Investments

Goodwill is allocated to cash-generating units and is not am-

Each type of investment is recognised on the date of the

ortised but tested annually for impairment (see accounting

transaction.

policy m). In the case of associated companies, the carrying

(i) Investments in equity securities

amount of goodwill is included in the carrying amount of the investment in the associated company.

Investments in equity securities are undertakings in which the Group does not have significant influence or control.

Negative goodwill arising on an acquisition is recognised di-

This is generally evidenced by ownership of less than 20%

rectly in profit or loss.

of the voting rights. Such investments are designated as

(ii) Software

available-for-sale financial assets which are at initial recog-

Software licences acquired by the Group are stated at cost price less accumulated amortisation (see below) and impairment losses (see accounting policy m).

nition measured at fair value unless the fair value cannot be reliably determined in which case they are measured at cost. Subsequent changes in fair value, except those related to impairment losses and foreign exchange gains and losses

* Be GAAP = Belgian GAAP (generally accepted accounting principles)

Elia — Annual Report 2008  77


which are recognized in profit or loss, are recognized directly in equity. On disposal of an investment, the cumulative gain or loss previously recognized directly in equity is recognized in profit or loss. (ii) Investments in debt instruments

(l) Cash and cash equivalents Cash and cash equivalents comprise cash balances, cash balances and deposits that can be withdrawn on demand. Overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a

Investments in debt securities classified as trading or as being

component of cash and cash equivalents for the purpose of

available-for-sale are carried at fair value, with any resulting

the cash-flow statement.

gain or loss respectively recognized in profit or loss or directly in equity. Fair value of these investments is determined as the quoted bid price at the balance sheet date. Impairment

(m) Impairment

charges and foreign exchange gains and losses are recog-

The carrying amount of the Group’s assets, excluding inven-

nized in profit or loss. Investments in debt securities classified

tories (see accounting policy k) and deferred taxes (see ac-

as held to maturity are measured at amortized cost.

counting policy v), are reviewed on each assets balance sheet

(iii) Other investments Other investments held by the Group are classified as available-for-sale and are carried at fair value, with any resulting gain or loss recognized directly in equity. Impairment charges are recognized in profit or loss (see accounting policy m).

(j) Trade and other receivables (i) Construction work in progress Construction work in progress is stated at cost price plus

date to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the asset is estimated (see accounting policy m(i)). The recoverable amount of goodwill and intangible assets with an indefinite useful life and intangible assets that are not yet available for use is estimated on each balance sheet date. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in profit or loss.

profit based on progress made to date, less a provision for

Recognised impairment losses relating to cash-generating

foreseeable losses and less progress billing. The cost price

units are allocated first to reduce the carrying amount of any

comprises all expenditure directly related to specific projects,

goodwill allocated to cash-generating units and then to re-

plus an allocation of fixed and variable overheads incurred

duce the carrying amount of the other assets in the unit on a

during the Group’s contract activities based on normal operat-

pro-rata basis.

ing capacity. (ii) Lease receivables Receivables from financial lease contracts are stated at an amount equal to the present value of the future net lease payments at the inception of the contract. The values of the receivables are reduced during the course of the lease contract by the amount of the lease payments associated with the reimbursement of the principle amount. (iii) Trade and other receivables Trade and other receivables are stated at amortised cost.

(k) Inventories

After recognition of impairment losses, the depreciation costs for the asset will be adjusted for future periods in order to post the revised carrying amount of the asset throughout its remaining useful life. (i) Calculation of recoverable amount The recoverable amount of intangible assets and property, plant and equipment is determined as the higher of their fair value less costs to sell or value in use. In assessing value in use the expected future cash flows are discounted to their present value using a pre-tax discount rate that reflects both the current market assessment of the time value of money and the risks specific to the asset. The Group’s assets do not generate cash flow that is inde-

Inventories (spare parts) are stated at the lower of cost price

pendent from other assets and the recoverable amount is

and net realisable value. Net realisable value is the estimated

therefore determined for the cash-generating unit (i.e. the

selling price less the estimated costs of completion and selling

entire high-voltage network) to which the asset belongs. This

expenses. The cost of inventories is based on the weighted-

is also the level at which the Group administers its goodwill

average-cost-price method. The cost includes the expenditure

and receives the economic advantages of acquired goodwill.

incurred in acquiring the inventories, and the direct costs of bringing them to their location and condition. Write-offs of inventories net realisable value are recognised in the period in which the write-off occurred.

78  Elia — Annual Report 2008

(ii) Reversals of impairment An impairment loss in respect of goodwill is not reversed. Impairment loss on other assets is reversed if there have


been changes in the estimates used to determine the recov-

Actuarial gains and losses are immediately recognised as li-

erable amount.

abilities and do not affect the income statement, but are im-

An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

mediately recognised in equity. The amount charged in profit or loss consists of current service cost, interest costs, the expected return on any plan assets and the past service cost. Where the calculation results in a benefit to the Group, the recognised asset is limited to the balance of past service costs

(n) Share capital (i) Transaction costs Transaction costs in respect of the issuing of capital are deducted from the capital received.

and the present value of any future refunds from the plan or reductions in future contributions to the plan. (iii) Other long-term employee benefits The Group’s net obligation in respect of long-term service benefits, other than pension plans, is assessed on an annual

(ii) Dividends

basis by accredited actuaries. The net obligation is calculated

Dividends are recognised as a liability in the period in which

by using the projected unit credit method and is the amount

they are declared.

of future benefit that employees have earned in return for their service in the current and previous periods. The obliga-

(o) Interest-bearing loans

tion is discounted to its present value and the fair value of any related assets is deducted. The discount rate is the yield as at

Interest-bearing loans are recognised initially at fair value

the balance sheet date on high-quality bonds having maturity

less related transaction costs. Subsequent to initial recogni-

dates approximate to the terms of the Group’s obligations.

tion, interest-bearing loans are stated at amortised cost price with any difference between cost price and redemption value being recognised in profit or loss over the period of the loans on an effective interest basis.

(iv) Short-term employee benefits Short-term employee benefits are measured on an undiscounted basis and are expensed as the related service is provided.

(p) Employee benefits

A liability is recognised as for the amount expected to be paid

(i) Defined contribution plans

the Group has a legal or constructive obligation to pay this

Obligations related to contributions to defined-contribution

amount as a result of the past service provided by the em-

pension plans are recognised as an expense in profit or loss

ployee and the obligation can be estimated reliably.

out under a short-term cash bonus or profit sharing plans if

as incurred. (ii) Defined benefit plans

(q) Provisions

For defined benefit plans, the pension expenses are assessed

A provision is recognised in the balance sheet when the Group

on an annual basis by accredited actuaries separately for each

has a current legal or constructive obligation as a result of

plan by using the projected unit credit method.

a past event and it is probable that an outflow of economic

The estimated future benefit that employees have earned in return for their service in the current and prior periods is discounted to determine its present value, and the fair value of any plan assets is deducted. The discount rate is the interest rate as at the balance sheet date on high-quality bonds which have maturity dates approximate to the terms of the Group’s

benefits - of which a reliable estimate can be made - will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessment of the time value of money and, where appropriate, of the risks specific to the liability.

obligations. When the benefits of a plan are improved, the

If the Group expects to receive compensation for some or all

portion of the increased benefit relating to past service by

of the provisions, for example pursuant to an insurance con-

employees is recognised as an expense in profit or loss on a

tract, the compensation is only included as a separate asset if

straight-line basis over the average period until the benefits

it is virtually certain that the compensation will be awarded.

become vested. To the extent that the benefits are vested

The cost connected to a provision is included in profit or loss

immediately, the expense is recognised immediately in profit

net of any compensation.

or loss.

The total estimated cost of dismantling and disposal of an as-

All actuarial gains and losses as at 1 January 2004, the date of

set are, if applicable, recognised as property, plant and equip-

transition to IFRS, were recognised in the opening reserves.

ment and depreciated over the asset’s entire useful life.

Elia — Annual Report 2008  79


The total estimated cost of dismantling and of disposal of the asset, is posted as provisions for the discounted current value. If the amount is discounted, the increase of the provision due to expiring of time is classified as finance expenses.

(iii) Financing income and expenses Finance costs comprise interest payable on borrowings, calculated using the effective interest rate method, foreign exchange losses, gains on currency hedging instruments offsetting currency losses, results on interest rate hedging instruments,

(r) Trade and other payables Trade and other payables are stated at cost price.

(s) Capital subsidies

losses on hedging instruments that are not part of a hedge accounting relationship, losses on financial assets classified as trading, impairment losses on available-for-sale financial assets as well as any losses from hedge ineffectiveness. All interest and other costs incurred in connection with bor-

Capital subsidies are related to property, plant and equipment

rowings or financial transactions are expensed as incurred as

and are presented under other liabilities. The subsidies are

part of finance costs.

only recognised in the balance sheet when there is reasonable assurance that the amounts will be received and are expensed on a systematic basis over the expected useful life of the underlying asset.

(t) Revenue Income is recognized when it is probable that the economic

Net finance expenses comprise interest on loans, calculated using the effective interest rate method and foreign exchange gains and losses. Interest income is recognised in profit or loss as it accrues using the effective interest rate method. The interest expense component of the finance lease payments is recognised in profit or loss using the effective interest rate method.

benefits associated with the transaction will flow to the company and the income can be measured reliably. (i) Goods sold and services rendered

(v) Income taxes Income taxes comprise current and deferred tax. Income tax

Revenue from services and the sale of goods is recognised in

expense is recognised in profit or loss, except to the extent

profit or loss when the significant risks and rewards of owner-

that it relates to items recognised directly in equity.

ship have been transferred to the buyer. (ii) Construction work in progress As soon as the outcome of a construction contract can be estimated reliably, contract revenue and expenses are recog-

Current tax is the expected tax payable on taxable income of the year, using tax rates enacted or substantially enacted on the balance sheet date, and any adjustments to tax payable in respect of previous years.

nised in profit or loss in proportion to the stage of completion

Deferred tax is recognised using the balance sheet method,

of the contract. An expected loss on a contract is immediately

providing for temporary differences between the carrying

recognised in profit or loss.

amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred

(u) Expenses

tax is not recognised for the following temporary differences:

(i) Operating lease payments

that is not a business combination and that affects neither

Payments made under operating leases are recognised in prof-

accounting nor taxable profit, and differences relating to in-

it or loss on a straight-line basis over the term of the lease.

vestment in subsidiaries and jointly controlled entities to the

Lease incentives received to conclude the leasing agreement

extent that it is probable that they will not reverse in the

are recognised in profit or loss as an integral part of the total

foreseeable future.

lease expenses.

In addition, deferred tax is not recognised for taxable tempo-

(ii) Finance lease payments

rary differences arising from initial recognition of goodwill.

Payments made under finance lease payments are appor-

Deferred tax is measured at the tax rates that are expected

tioned between the financing charges and the reduction of

to be applied to the temporary differences when they reverse,

the outstanding liability. The financing charges are allocated

based on the laws that have been enacted or substantively

to each period of the total lease term so as to produce a con-

enacted by the reporting date. Deferred tax assets and liabili-

stant periodic rate of interest over the remaining balance of

ties are offset if there is a legally enforceable right to offset

the liability.

current tax liabilities and assets, and they relate to income

the initial recognition of assets or liabilities in a transaction

taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle

80  Elia — Annual Report 2008


current tax liabilities and assets on a net basis or their tax assets and liabilities will be realise simultaneously. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend.

(w) Segment reporting A segment is a clearly distinguishable component of the Group that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment) and which is subject to risks and rewards that are different from those of other segments. The company does not use segment reporting since the Group is a company that generates revenue from one activity, i.e. its role as the federal electricity transmission system operator in Belgium. Furthermore, the Group only operates in one geographical area (Belgium) where there are no differences between the Regions as regards risks and returns.

Elia — Annual Report 2008  81


3. Revenue (in million €) Grid connection revenue Grid use revenue

2008

2007

32.7

32.3

510.9

406.7

Revenues from the reversal of surpluses from previous years (decision by the regulator)

20.9

85.6

Ancillary services revenue

113.4

129.0

International revenue

28.3

43.1

Other revenue Subtotal revenue Deviations from approved budget (settlement mechanism) Total revenue

32.9

25.1

739.1

721.8

18.2

9.9

757.3

731.7

Grid connection revenue remained stable in relation to

Ancillary services revenue decreased due to less costs

2007 figures.

for ancillary services purchased from producers. These lower

Grid use revenue rose by 25.6% due to the introduction of

purchase costs are passed on in full to customers.

fixed multiannual tariffs for the period 2008-2011. As a result

International revenue dropped by 34.3% compared with

the amount charged for each MWh transported is greater than

2007 as a result of less congestion on the interconnections

actual cost at the start of the period and less than actual cost

with neighbouring countries. Revenue from explicit annual

at the end of the period. Nonetheless, Elia’s transmission tar-

and monthly auctions fell by €10.2 million and revenue from

iffs are amongst the five lowest in Europe, according to the

implicit daily auctions via Belpex by €2 million. Compensation

latest tariff study conducted by the association of European

revenue for international electricity flows over the European

Transmission System Operators (ETSO).

grid fell by €2.7  million. Thanks to market coupling of the

Another factor is the impact of reversals of surpluses from previous periods, which were significantly lower than in

Belgian, French and Dutch electricity markets, wholesale prices in these three countries have converged substantially.

previous years (-75.6%).

(in million €)

2008

2007

19.2

29.4

7.7

9.7

ETSO

1.2

3.9

Sale of auxiliary energy

0.2

0.1

28.3

43.1

2008

2007

1.2

3.9

Explicit auctioning Implicit auctioning ( trilateral market coupling)

Total international revenue

The ETSO mechanism* affects not only international revenue, but also services and other goods. Its influence is shown by the table below:

(in million €) Sales ETSO (recognised as revenue) Costs ETSO (recognised as expense) Net profit/loss ETSO (+ revenue/- expense)

(1.9)

0.4

(0.7)

4.3

* ETSO mechanism: European Transmission System Operators (ETSO), to which Elia belongs, has created a compensation mechanism (the ‘Inter-TSO Compensation’ (ITC) mechanism) providing all the participants with compensation for losses incurred as the result of unprogrammed transit flows (loop flows) on their grid.

82  Elia — Annual Report 2008


Apart from exceptional items, other operating revenue re-

ment received for late commissioning (€2.3  million) and

mained unchanged from 2007. The difference of €7.8 million

€2.7 million in passed-on service costs relating to a number

is largely owing to the fact that the net amount of retirement

of European projects (CASC-CWE, Coreso, Belpex).

provisions to be recovered from future tariffs was €7.4 million less in 2008 than in 2007. Furthermore, in 2008 €4.9 million of moratorium interest (on tax claim) was deducted from other operating revenue to be returned to future tariffs. However, the latter amount was offset by a one-off compensation pay-

(in million €)

2008

2007

16.2

15.8

Bonus previous year

0.0

2.7

Optimal use of assets

9.8

9.4

Services and technical expertise

3.2

3.0

(5.6)

(13.0)

3.4

2.7

Own production

Changes in current assets related to application of IAS 19 Belpex activities Other Total other revenue

5.9

4.5

32.9

25.1

The section “Deviations from approved budget for non-con-

year 2007), partially offset by lower-than-budgeted operating

trollable items” refers to the tariff deficit for 2008 that can be

expenses (€10.6 million).

recovered in the next tariff period 2012-2015. The tariff deficit of €18.2  million is mainly the result of lower-than-budg-

The table below provides information about the ‘settlement mechanism’:

eted international revenue (€23.8  million) and higher-thanbudgeted profit (€8.8  million, including bonus for financial

(in million €)

2008

2007

Sources 1. Source of differences in the financial year Surplus revenue from grid access Surplus in international revenue Surplus in other revenue Total difference at the end of the financial year Amount saved on budget for purchase of ancillary services Amount saved on budget for sundry operating charges Amount saved on budget for financial expenses

1.4

2.7

(23.8)

(10.9)

2.4

3.0

(20.0)

(5.2)

6.4

8.6

(10.1)

(9.9)

2.2

2.3

(1.5)

1.0

Readjustment Bonus/malus decision 2005 and 2006

0.0

(9.4)

Total adjustment of regulated profit

6.2

3.7

(15.3)

(9.9)

Total difference in operating charges

Total difference revenue 2. CREG decision Allocation of 50% of the 2005 bonus to Elia

(2.9)

0.0

Total impact of the CREG decision

(2.9)

0.0

(18.2)

(9.9)

Total of differences in results

CREG’s final decision on 29 May 2008 concerning the balance

CREG’s decision (€12.8 million) included a bonus of €5.9 mil-

for the 2007 settlement mechanism resulted in the allocation

lion for 2007, 50% of which (i.e. €2.9 million before tax) was

of €12.8 million to be recovered in the next tariff period 2012

granted to Elia in 2008. The remaining 50%, or €2.9 million,

and following.

will be deducted from tariffs in the next tariff period 2012 and following.

Elia — Annual Report 2008  83


4. Operating expenses 4.1. Cost of materials, services and other goods (in million €)

2008

2007

Purchase of ancillary services

135.0

138.9

6.8

8.6

Raw materials, consumables and goods for resale Services and other goods (excl. purchase of ancillary services) Total

146.9

142.1

288.7

289.6

Notwithstanding rising electricity prices, there was a 2.8%

as CWE and CASC-CWE) and a rise in works for third parties

drop in the purchase of ancillary services thanks to good

were the main factors driving the 1.9% increase. The costs

day-to-day management of purchased goods and an ef-

for these projects were largely charged to the other project

ficient procurement policy. The other items – “services and

participants and the projects’ principals.

other goods”, and “raw materials and consumables” - rose by €3  million. Active participation in European initiatives (such

4.2. Personnel expenses 2008

2007

Wages

(in million €)

77.9

76.1

Social security contributions

22.8

21.5

Contribution to defined benefit plans and other liabilities

15.2

14.3

Other personnel liabilities

(0.5)

(1.8)

Share-based payment with reduction

0.1

0.7

Other personnel cost

3.3

3.2

Total Full time equivalents average Personnel expenses rose by 4.2%, mainly because of high inflation during 2008. For further details about the contribution to defined benefit plans and other liabilities, see Note 17. See Note 22 for more information about share based payment with reduction.

84  Elia — Annual Report 2008

118.8

114.0

1,213.0

1,213.2


4.3. D  epreciations, impairment and amortisation, changes in provisions (in million €) Depreciation of property, plant and equipment Depreciation of intangible assets Total of depreciation

2008

2007

91.0

89.5

4.5

2.9

95.5

92.4

Impairment of inventories and trade receivables

0.4

0.5

Total of impairment

0.4

0.5

(0.6)

0.9

Environmental provisions

Provisions for litigation

0.9

0.0

Other provisions

0.0

0.0

Total of provisions Total

0.3

0.9

96.2

93.8

Depreciations in property, plant and equipment assets in-

lines. The turnover of these strategic items is very low, and

creased by €3.1 million due to a rise in the acquisition value

the amount written off for these materials is €0.4 million.

of tangible and intangible assets. A brief content-based description of the property, plant and equipment, intangible assets and amounts written off is pro-

No amounts were written off for trade debtors. A detailed description of provisions is provided in Note 18.

vided in Notes 7 and 8. The inventory consists of consumables and strategic items required for repairing high-voltage substations, cables and

4.4. Other operating expenses (in million €) Taxes other than income tax

2008

2007

12.6

12.3

Net loss on disposal/sale of property, plant and equipment

3.1

2.8

Bonus-malus settlement of previous year

0.0

4.5

15.7

19.6

Total In 2008, Elia did not incur any additional costs as a result of

The deviation under ‘Bonus-malus settlement of previous

the application of the settlement mechanism (bonus-malus

year’ for 2007 is due to the application of the settlement

settlement for the previous year) for 2007, which is mainly

mechanism as described in the chapter Regulatory framework

due to a reduction of operating costs by €3.9 million.

and tariffs.

Elia — Annual Report 2008  85


5. Finance income and expenses Recognised in profit and loss (in million €)

2008

2007

Finance income

8.3

3.7

Interest income on investment trust, bank deposits, cash and cash equivalents

2.5

3.2

Net change in fair value of investment trust

0.9

0.5

4.9

0.0

Finance expenses

Other financial income

117.6

107.7

Interest expense

120.9

107.1

(3.7)

0.2

0.4

0.4

(109.3)

(104.0)

Interest income or expense on derivatives Other financial costs Net finance expense

Finance income increased by €4.6 million due to the recogni-

terest income or expense resulting from the associated de-

tion of €4.9 million in moratorium interest on a €93.8 million

rivatives. The €9.9 million increase is primarily due to rising

tax assessment (paid, but contested) relating to the tax file

interest rates on loans with variable rates of interest and use

(see Note 6).

of additional short-term loans. See Note 15 for more details.

The interest expenses amounted to €117.2 million and mainly

Net finance expenses, i.e. expenses minus income, rose by

included interest expenses on financial liabilities and the in-

5.1%.

Recognised directly in equity (in million €)

2008

2007

Net changes in fair value of interest rate swaps

(29.8)

7.8

Finance income/expenses directly recognised in equity

(29.8)

7.8

Recognised in: Hedging reserve

(29.8)

7.8

The hedging reserve is discussed in detail in Note 23.

86  Elia — Annual Report 2008


6. Income taxes Recognised in profit and loss The consolidated income statement includes the following taxes:

(in million €) Due income tax expenses Adjustments prior years Total income tax expenses

2008

2007

20.2

28.9

0.0

0.7

20.2

29.6

Origination and settlement of temporary differences

7.0

3.3

Total deferred tax

7.0

3.3

27.2

32.9

Total income tax recognised in income statement

Reconciliation of the effective tax rate The reconciliation of the effective tax rate in profit or loss with the statutory tax rate can be summarised as follows:

(in million €)

2008

2007

Profit after tax

101.4

77.8

Share of profit of equity accounted investees Profit for the period Income tax expenses Profit before tax Income tax using the domestic corporation tax rate Effect of the foreign tax rate

33.99%

2.0

0.0

103.4

77.8

27.2

32.9

130.6

110.7

44.4

33.99%

37.6

(0.1)

(0.1)

1.4

1.6

Other tax free income mainly related to intercompany dividend

0.9

0.3

Adjustments prior years

0.0

0.7

Expenses not deductible

Recognition unrecognised tax losses Use of notional interest

0.0

(0.1)

(19.1)

(6.7)

Other

(0.3)

(0.4)

Total income tax expenses in income statement

27.2

32.9

Notwithstanding an 18.0% rise in income before tax, income

lion, plus an administrative charge of 10%. Having consulted

tax decreased by 17.3% as the result of a fiscal ruling ob-

its tax advisor and CREG and given that similar tariff sur-

tained in December 2007. This ruling relates to transfer pric-

pluses accounted for by other companies in the sector were

ing between Elia System Operator and Elia Asset and resultes

not taxed, Elia management has decided to file a complaint.

in an increase of the notional interest deduction. This drop in

The complaint was rejected by the tax authorities. Elia is now

taxes will be used to reduce tariffs and will therefore benefit

going through judicial channels to claim back the full amount,

all the consumers.

including moratorium interest. In 2008, the tax authorities

Pursuant to a tax audit of Elia System Operator SA for 2004, Elia received a tax assessment in early 2008 in view of taxation of the remaining tariff surpluses as at 31 December 2004. The income taxes paid total to an amount of €85.3 mil-

made a similar decision on the increase of tariff surpluses in 2005. Elia received a tax assessment of €9.8 million, plus a 10% administrative increase, and decided to file a complaint about this in analogy with the 2004 file.

Elia — Annual Report 2008  87


The tariff surpluses that led to the additional assessment will

automatically be offset by ‘recoverable taxes’ on the refund

be systematically settled into tariffs over the years to come

given to consumers in 2005, 2006 and 2007 and subsequent

(refund to consumers), meaning that this is a matter of a tim-

periods. In this way the basic amount of the corporate income

ing difference between a surplus generated in the past and a

tax can be recovered in full. If a balance is still outstanding, it

refund in the subsequent years. If Elia’s complaint is rejected,

will be settled using the tariff mechanism.

the corporate income tax paid on the remaining surpluses will

Income taxes recognised directly in equity (in million €)

2008

Derivatives Actuarial gains (losses) on employee benefits Total Deferred taxes are discussed in Note 21 (movements in de-

2007

10.2

(2.7)

6.1

(2.6)

16.3

(5.3)

temporary differences during the financial year).

ferred tax assets and liabilities as a result of movements in

7. Property, plant and equipment (in million €)

2008

2007

High-voltage substations and transformers

1,141.1

1,084.7

Lines and cables

762.5

765.6

Land on which substations, lines and cables are located

70.6

59.8

Facilities used for network operation

31.5

30.7

Administrative buildings, furnishings and vehicles Total property, plant and equipment

54.7

52.4

2,060.4

1,993.2

The capital expenditures of €161.3 million in 2008 are mainly

Property, plant and equipment under construction totalled

related to the construction of high-voltage substations, laying

€149.3  million as at 31  December  2008, compared to

of underground cables, building of overhead lines and install-

€160.5  million as at 31  December 2007 and are presented

ing of phase shifters. The most important projects are dis-

in the table below. In 2008, €135.6 million of property, plant

cussed in more detail in the activity report.

and equipment under construction were commissioned and transferred to assets in use.

(in million €)

2008

2007

High-voltage substations and transformers

107.2

125.9

Lines and cables

30.4

26.8

7.3

7.3

Facilities used for network operation Administrative buildings, furnishings and vehicles Total property, plant and equipment under construction

Other liabilities relating to new investments are described in Note 25.

88  Elia — Annual Report 2008

4.4

0.5

149.3

160.5


Changes in the period (in million €)

Land and buildings

Machinery and equipment

Furniture and vehicles

Other tangible assets

Assets under construction

Total

102.1

3,616.1

116.5

10.0

181.9

4 026.6

Acquisition value Balance at 1 January 2007 Other acquisition

4.6

13.1

3.5

0.6

120.7

142.5

(0.3)

(18.9)

(1.0)

0.0

0.0

(20.2)

Transfers from one heading to another

15.1

127.0

0.0

0.0

(142.1)

0.0

Balance at 31 December 2007

121.5

3,737.3

119.0

10.6

160.5

4,148.9

Balance at 1 January 2008

121.5

3,737.3

119.0

10.6

160.5

4,148.9

Other acquisition

11.0

23.0

2.9

0.0

124.4

161.3

Disposals

Disposals

(0.6)

(17.4)

(0.7)

0.0

0.0

(18.7)

Transfers from one heading to another

0.2

135.6

0.0

0.0

(135.6)

0.2

Balance at 31 December 2008

132.1

3,878.5

121.2

10.6

149.3

4,291.7

(19.0)

(1,948.1)

(109.0)

(7.2)

0.0

(2,083.3)

Depreciation of the period

(1.0)

(84.4)

(2.3)

(1.8)

0.0

(89.5)

Acquisitions from third parties

0.0

0.0

0.0

0.0

0.0

0.0

Written down and disposals

0.0

16.1

1.0

0.0

0.0

17.1

Transfers from one heading to another

0.0

0.0

0.0

0.0

0.0

0.0

Balance at 31 December 2007

(20.0)

(2,016.4)

(110.3)

(9.0)

0.0

(2,155.7)

Balance at 1 January 2008

(20.0)

(2,016.4)

(110.3)

(9.0)

0.0

(2,155.7)

Depreciation and impairment Balance at 1 January 2007

Depreciation of the period

(1.2)

(86.0)

(3.3)

(0.5)

0.0

(91.0)

Acquisitions from third parties

0.0

0.0

0.0

0.0

0.0

0.0

Written down and disposals

0.5

14.3

0.7

0.0

0.0

15.5

Transfers from one heading to another

0.0

(0.3)

0.3

(0.1)

0.0

(0.1)

Balance at 31 December 2008

(20.7)

(2,088.4)

(112.6)

(9.6)

0.0

(2,231.3)

Book value At 1 January 2007

83.1

1,668.0

7.5

2.8

181.9

1,943.3

At 31 January 2007

101.5

1,720.9

8.7

1.6

160.5

1,993.2

At 1 January 2008

101.5

1,720.9

8.7

1.6

160.5

1,993.2

At 31 January 2008

111.4

1,790.1

8.6

1.0

149.3

2,060.4

Elia — Annual Report 2008  89


8. Intangible assets (in million €)

Goodwill

Software

Total

1,707.8

13.5

1,721.3

Acquisition cost Balance at 1 January 2007

0.0

7.3

7.3

Acquired, others - own construction capitalised

Obtained by business combinations

1,707.8

20.8

1,728.6

Balance at 1 January 2008

1,707.8

20.8

1,728.6

Acquired, others - own construction capitalised

0.0

9.1

9.1

Disposals

0.0

(0.3)

(0.3)

1,707.8

29.6

1,737.4

Balance at 1 January 2007

0.0

(2.9)

(2.9)

Depreciations

0.0

(3.0)

(3.0)

Balance at 31 December 2007

0.0

(5.9)

(5.9)

Balance at 1 January 2008

0.0

(5.9)

(5.9)

Depreciations

0.0

(4.5)

(4.5)

Balance at 31 December 2008

0.0

(10.4)

(10.4)

Balance at 31 December 2008

Depreciation and amounts written off

Book value At 1 January 2007

1,707.8

10.6

1,718.3

At 31 December 2007

1,707.8

14.9

1,722.7

At 1 January 2008

1,707.8

14.9

1,722.7

At 31 December 2008

1,707.8

19.2

1,727.0

The goodwill of €1,707.8  million is related to the following past transactions :

(in million €) Acquisition of participations in Elia Asset by Elia System Operator - 2002

2008

2007

1,700.1

1,700.1

7.7

7.7

1,707.8

1,707.8

Acquisition of participations in Elia Engineering by Elia Asset - 2004 Total Intangible assets consists of two items: goodwill and software. Software comprises both IT applications developed by the company for operating the grid and software for Elia’s normal business operations. Increase for internally-developed

software was €9.1 million in 2008. See Note 4.3 for the impact of depreciations in intangible assets on profit or loss.

Impairment test for cash-generating units containing goodwill The goodwill generated by the acquisition of Elia Asset SA by

fied as one cash-generating unit for the impairment test, since

Elia System Operator SA in 2002 and the goodwill generated

the income and expenses were generated by one activity.

by the acquisition of Elia Engineering SA in 2004 were classi-

90  Elia — Annual Report 2008


The impairment test was conducted by an independent organisation and was based on four valuation methods:

4. Market valuation based on Elia’s share price. Future cash flows and dividends were discounted on the basis

1. Discounting of future cash flows.

of financial prospects approved by the management for the

2. Discounting of future dividends.

period 2008-2011 (new regulation mechanism), accompanied

3. Comparison between previously mentioned impairment

by an extrapolation to 2018 based on assumptions included in

methods and those used by some comparable Western

the strategic plan for 2007-2015 and applying discount rates

European listed companies, such as Fluxys, Terna, National

of between 5.89% and 7.67%. The independent analysis did

Grid, Red Electrica España, Enagas, Snam Rete Gas.

not result in accounting an impairment loss on goodwill in 2008.

9. Trade and other receivables 2008

2007

Tax receivables

98.7

0.0

Total

98.7

0.0

(in million €)

Long-term receivables consist of the basic amount of tax

first come before the court in 2011, they have been qualified

receivable (€93.8  million) and the moratorium interest

as a long-term receivable. A detailed description can be found

(€4.9  million) that the group could recover. These amounts

in Note 6.

only relate to the tax audit of 2004 and since the dispute will

10. Equity accounted investees Investments in associated companies 2008

2007

At 1 January

8.1

0.5

Acquisition of subsidiary/ decrease in participation

0.0

7.6

Share of (loss)/profit

2.0

0.0

At 31 December 2008

10.1

8.1

(in million €)

Summary of financial data on equity accounted investees, not corrected for the group’s ownership percentage:

Name

Assets

Liabilities

Revenues

Profit/(loss)

% interest held

H.G.R.T. S.A.S.

33.1

33.1

0.0

(0.1)

24.5 %

Total

33.1

33.1

0.0

(0.1)

2007

2008 H.G.R.T. S.A.S.

39.3

39.3

6.6

6.3

Total

39.3

39.3

6.6

6.3

24.5 %

Elia — Annual Report 2008  91


11. Other financial assets (in million €)

2008

2007

Immediately claimable deposits

17.2

16.8

Others

0.5

0.0

Total

17.7

16.8

This section covers investments classified at fair value for

The group’s stakes in the companies CASC-CWE SA and

which the changes in fair value are being recognised in profit

CORESO SA, both of which were established in 2008, are re-

or loss. A profit of €0.4 million was entered during the 2008

cognised at cost price in the section ‘Other’.

financial year. The risk profile of these investments is discussed in Note 23.

12. Inventories (in million €)

2008

2007

Raw materials and consumables

23.6

22.7

Impairment

(9.9)

(9.5)

Total

13.7

13.2

The warehouse primarily stores replacement and spare parts

came to €7.8  million, which resulted in a total net impact

for Elia’s maintenance and repairs of high-voltage substa-

on the consolidated income statement was €6.8 million (see

tions, overhead lines and underground cables. The total value

Note 4.1). Impairment recognised in profit or loss, totalled

of the inventories is in line with value of 2007.

€0.4  million for 2008 and is included under ‘Impairment of

In 2008, the inventory increased by €0.9 million compared to

inventories and trade receivables’ in Note 4.3.

the previous year and purchasing for materials/consumables

13. Trade and other receivables (in million €)

2008

Projects for third parties Other amounts receivables and advance payments Levies

2007

1.8

0.9

221.4

153.7

0.0

2.8

10.3

4.4

Other

7.3

5.0

Deferred charges and accrued income

6.1

4.4

246.9

171.2

VAT, other taxes

Total

The fluctuation in trade and other receivables (€75.7 million)

In 2007, €2.8 million in levies was receivable, while in 2008,

was mainly due to a rise in receivables of €67.7 million on fa-

the amount for levies reflects a credit balance (see Note 19).

vourable balance relating to market coupling with France and

The €5.9 million increase under VAT, other taxes is due to an

the Netherlands and an increase in ‘invoices to be issued’.

increase in recoverable VAT.

92  Elia — Annual Report 2008


Trade debtors (in million €)

2008

2007

Not past due

181.9

135.9

Past due 0 - 30 days

35.8

13.3

Past due 31 - 60 days

3.0

3.5

Past due 61 days - one year

0.0

0.3

More than one year

0.0

0.0

220.7

153.0

0.7

0.7

221.4

153.7

Total (excl. Impairment) Trade and other receivable for which an impairment loss was recognised Total Trade and other receivables are recorded without taking into

ditional impairment losses were accounted for and the total

account receivables which have been impaired. Receivables

impairment of trade debtors is €3.4 million.

impaired are mostly past due over one year. In 2008 no ad-

(in million €)

Bad debtors

Balance at 1 January 2007

4.0

Impairment losses

Remaining balance

(3.3)

0.7

Changes during the year

0.1

(0.1)

0.0

Balance at 31 December 2007

4.1

(3.4)

0.7

Balance at 1 January 2008

4.1

(3.4)

0.7

Changes during the year

0.0

0.0

0.0

Balance at 31 December 2008

4.1

(3.4)

0.7

14. Cash and cash equivalents (in million €) Balance at bank

2008

2007

3.5

1.7

Immediately claimable deposits

23.8

31.8

Total

27.3

33.5

Short-term deposits are invested for periods of a few days,

Group’s interest rate risk and the sensitivity analysis for fi-

depending on the Group’s immediate cash requirements and

nancial assets and liabilities are discussed in Note 23.

report interest in accordance with the interest rates for the short-term deposits. The interest rate of interest-bearing investments at the balance sheet date varies from 2% to 2.5%. The investments were due to mature in the first week of 2009.

For the purposes of the consolidated cash flow statement, ‘cash and cash equivalents’ comprises the real balance at bank and immediately claimable deposits (as listed above) minus credits on current account. The Group did not make use of credits on current account on 31 December 2008. The

Bank accounts earn interest in line with the variable rates

amount listed in the consolidated balance sheet and the con-

of interest on the basis of daily bank deposit interest. The

solidated cash flow statement match those shown above.

Elia — Annual Report 2008  93


15. Shareholders’ equity Reconciliation of movements in capital and reserve (in million €)

Share capital

Share premium

Hedging reserve

Other reserves

Legal reserves

Retained earnings

Total

Minority interests

Total equity

1,196.9

8.5

(1.5)

0.0

14.6

81.2

1,299.7

1.1

1,300.8

Valuation towards the fair value of derivatives (after tax)

0.0

0.0

5.1

0.0

0.0

5.1

0.0

5.1

Actuarial gains (losses) related to employee benefits (after tax)

0.0

0.0

0.0

12.8

0.0

0.0

12.8

0.0

12.8

- Total income (expenses) recognised directly in equity (after tax)

0.0

0.0

5.1

12.8

0.0

0.0

17.9

0.0

17.9

- T otal recognised income and expenses

0.0

0.0

5.1

12.8

0.0

77.6

95.5

0.2

95.7

Balance at 1 January 2007

- Increase reserves

0.0

0.0

0.0

3.0

(3.0)

0.0

0.0

0.0

- Shares issued

4.2

0.0

0.0

0.0

0.0

4.2

0.0

4.2

- Issuance costs

0.6

0.0

0.0

0.0

0.0

0.6

0.0

0.6

- Dividends to equity holders

0.0

0.0

0.0

0.0

(61.3)

(61.3)

0.0

(61.3)

1,201.7

8.5

3.6

12.8

17.6

94.5

1,338.6

1.3

1,339.9

Share capital

Share premium

Hedging reserve

Other reserves

Legal reserves

Retained earnings

Total

Minority interests

Total equity

1,201.7

8.5

3.6

12.8

17.6

94.5

1,338.6

1.3

1,339.9

Valuation towards the fair value of derivatives (after tax)

0.0

0.0

(19.7)

0.0

0.0

(19.7)

0.0

(19.7)

Actuarial gains (losses) related to employee benefits (after tax)

0.0

0.0

0.0

(11.9)

0.0

0.0

(11.9)

0.0

(11.9)

- Total income (expenses) recognised directly in equity (after tax)

0.0

0.0

(19.7)

(11.9)

0.0

0.0

(31.6)

0.0

(31.6)

- T otal recognised income and expenses

0.0

0.0

(19.7)

(11.9)

0.0

103.1

71.4

0.3

71.7

- Increase reserves

0.0

0.0

0.0

3.4

(3.4)

0.0

0.0

0.0

- Shares issued

0.4

0.0

0.0

0.0

0.0

0.4

0.0

0.4

- Issuance costs

0.1

0.0

0.0

0.0

0.0

0.1

0.0

0.1

- Dividends to equity holders

0.0

0.0

0.0

0.0

(62.5)

(62.5)

0.0

(62.5)

Balance at 31 December 2008

1,202.1

8.5

(16.0)

21.0

131.6

1,348.1

1.6

1,349.7

Balance at 31 December 2007

(in million €)

Balance at 1 January 2008

94  Elia — Annual Report 2008

0.9


Share capital and share premium Ordinary shares Number of shares Outstanding on 1 January Issued against cash payment Outstanding on 31 December - paid In 2008, the Elia Group once more gave its personnel the opportunity to subscribe to a capital increase, this time for

2008

2007

48,061,695

47,898,052

15,254

163,643

48,076,949

48,061,695

Dividend

a tax bracket limited to 29 shares per employee. As a result,

After the balance sheet date, the board of directors puts for-

a total of €0.4  million was underwritten (see Notes 4.2 and

ward the dividend proposal stated below.

22), meaning the number of shares outstanding rose from 48,061,695 to 48,076,949 (shares without nominal value).

(in million €)

The capital of Elia System Operator SA totalled €1.2 billion as

Per ordinary share entitled to dividend

at 31 December 2008.

2008

2007

1.37

1.30

Reserves

On 13 May 2008, the shareholders approved a gross divi-

In accordance with Belgian legislation, 5% of the parent com-

or €1.105 per share with VVPR strip, after the deduction of

pany’s statutory net profit must be transferred to a legal re-

25% Belgian withholding tax), giving a total gross dividend

serve each year until the legal reserve represents 10% of the

of €62.5 million.

capital. On 31 December 2008 and 31 December 2007, the Group’s legal reserve totalled €21.0  million and €17.6  million respectively. This reserve is only available for distribution in case of liquidation. The board of directors can propose the payment of a dividend to shareholders up to a maximum of the available reserves and the profit carried forward from previous financial years for the parent company, including the profit from the financial year closed. Shareholders must approve the dividend payment during the annual general meeting for shareholders.

dend of €1.30 per share (€0.975 per share without VVPR strip

This year, the board of directors meeting of 19 February 2009 proposed a gross dividend per share of €1.37. This dividend is subject to approval by shareholders at the annual general meeting on 12 May 2009 and was not included as a liability in the consolidated financial statements for the Elia Group prepared under IFRS. The total dividend will, on the basis of the number of shares issued on 19 February 2009, total €65.9  million. All the shares issued before 1 January 2009 entitle the holders to dividends (including the dividend for 2008).

Hedging reserve

The group’s profit includes the fair remuneration as described

The hedging reserve comprises the effective portion of the

neration for the amounts that are removed from the Regulated

cumulative net change in fair value of cash-flow hedging in-

Asset Based for the decommissioning of fixed assets. This

struments in respect of hedged transactions that have not

resulted in a net profit of €15.0  million for 2008. The new

yet occurred.

regulatory framework specifies that this amount cannot be

in the chapter ‘Regulatory framework and tariffs’ and remu-

distributed to the shareholders but must be posted in the reserve. The board of directors’ meeting of 19 February 2009 will suggest to the annual general meeting that this amount be allocated to the legal Reserve. The amount had not yet been posted to the reserve on 31 December 2008.

Elia — Annual Report 2008  95


16. Interest-bearing loans and borrowings Elia manages its liabilities and general financing strategy

date on which they are taken out increased by a predefined

through a combination of short and long-term liabilities or

margin.

hedges them by use of interest rate swaps. The Group finances its daily working capital requirement, if necessary, via various confirmed or non-confirmed credit lines and uses

A global overview of loans (long- and short-term borrowings) and interest payable is provided below:

Commercial Paper. Medium-term loans usually have an interest rate that is based on the inter-bank interest rate on the

(in million €) (Book value) long term borrowings* Accrued Interests

2008

2007

1,552.9

2,190.3

40.6

39.8

1,593.5

2,230.1

Current portion of long term borrowings

637.7

0.0

Short term borrowings

161.9

0.0

Subtotal long term borrowings

Short term borrowings branch Belpex

4.5

0.0

Accrued Interests

0.2

0.0

Subtotal short term borrowings Total

804.3

0.0

2,397.8

2,230.1

*Total non-current liabilities: €2,190.6 million €

Interest-bearing loans (in million €) (Book value)

2008

2007

Shareholders' loan tranche A

495.8

495.8

Shareholders' loan tranche B3

387.7

387.7

Other shareholders loans

0.0

0.0

250.0

250.0

Eurobond issues *

997.1

996.8

European Investment Bank

60.0

60.0

2,190.6

2,190.3

(637.7)

0.0

1,552.9

2,190.3

Financial institutions

Total Current portion of long term borrowings Total long term borrowings *Actual book value of Eurobond issue consisting of two tranches, with an aggregate nominal value of €1,000 million.

96  Elia — Annual Report 2008


The following table provides an overview of the maturity dates and conditions of the loans:

Current proportion of the interest (in million €)

Maturity

Amount

Shareholders Loan tranche A

2022

495.8

Shareholders Loan tranche B3

2009

387.7

Eurobond issues*

2014

498.6

Eurobond issues*

2019

498.5

Financial institution

2009

250.0

5.07%

European Investment Bank

2016

40.0

4.27%

European Investment Bank

2017

20.0

4.79%

4.79%

100.00%

0.00%

73.17 %

26.83 %

73.17 %

26.83 %

Total

Interest rate before hedging

Interest rate after hedging

Fixed

6.18%

4.96%

100.00%

0.00%

5.67%

5.55%

12.90%

87.10%

4.75%

4.75%

100.00%

0.00%

5.25%

5.25%

100.00%

0.00%

5.07%

0.00%

100.00%

4.27%

100.00%

0.00%

2,190.6

Current portion of long term borrowings

(637.7)

Total long term borrowings

1,552.9

Variable

*Actual book value of Eurobond issue consisting of two tranches, with an aggregate nominal value of €1,000 million.

The following table provides an overview of the actual amounts

differences in amounts are attributable to the issuing below

of the loans outstanding at year-end by maturity bucket. The

par of the Eurobond.

(in million €)

Face value

Less then 1 year

1-2 years

2-5 years

More than 5 years

Shareholders Loan tranche A

495.8

0.0

0.0

0.0

495.8

Shareholders Loan tranche B3

387.7

387.7

0.0

0.0

0.0

Eurobond issues

997.1

0.0

0.0

498.6

498.4

250.0

250.0

0.0

0.0

0.0

40.0

0.0

0.0

0.0

40.0

Financial institution European Investment Bank 2016 European Investment Bank 2017 Total

20.0

0.0

0.0

0.0

20.0

2,190.6

637.7

0.0

498.6

1 054.2

Elia — Annual Report 2008  97


Short-term loans and credit line facilities Amount (in million €)

Confirmed credit line

Maturity

Average basic interest

used

not used

15/09/2009

150.0

Euribor + 0.25 %

100.0

50.0

-

80.0

Euribor + marge when concluding the deal

0.0

80.0

03/2009

250.0

Euribor + marge when concluding the deal

61.9

188.1

Uncommitted credit line facility Belgian dematerialised treasury notes

Available amount

Total

480.0

161.9

318.1

The interest-bearing loans have been issued in euro to avoid all

nanced by drawing €100 million on a committed credit facility

financial exchange rate risks and totalled €2,190.6 million.

of €150  million and using €61.9  million obtained from the

The payment of €93.8  million to the tax authorities and re-

Programme for Belgian Treasury Bills.

current temporary requirements for working capital were fi-

17. Employee benefits Elia Group employees are entitled to a number of benefit

The amounts are paid to Elgabel, Pensiobel and to the insur-

plans, as described below:

ance company Contassur. The three entities work together as the pension fund for the gas and electricity sector.

Defined-benefit pension plan 1. By virtue of a collective agreement of 2 May 1952, staff

Early retirement

receive specific benefits, called pension supplements, un-

If certain conditions are met, employees may leave Elia be-

der which, as retired persons, they are entitled (following

fore they are 60 years old.

a full career) to overall funds equal to 75% of their annual income, in line with their statutory pension. The supplements are partially revertible to the widow or widower and,

Other employee benefits

where necessary, can be supplemented by orphan benefit.

In addition to the pension arrangements described above,

If the individual dies while at work, the additional survivors’

employee benefits also include other non-statutory benefits,

supplements are paid to the beneficiaries.

such as:

The benefits granted are linked to Elia’s operating result. There is neither an external pension fund, nor group insur-

a ‘jubilee’ premium paid to workers who have been with the company for 25, 30 and 35 years;

ance for these liabilities, which means that no reserves are

cover of medical costs and hospitalisation;

constituted with third parties.

reductions on gas and electricity bills.

2. Defined-benefit pension plan Active staff hired from 1 January 1993 until 31 December 2001 and all managerial/executive staff hired prior to 1 May 1999 is granted the same guarantees via a defined-benefit pension, which is funded by individual and employer contributions as set out in the Belgian law on supplementary pensions. Staff employed prior to 1993 has since been given the option of signing up to the plan, and more than 90% of the active staff members were participating by 1997.

98  Elia — Annual Report 2008


Other provisions Other benefits consist of a provision for restructuring, which provides for future expenses for career breaks and time credits.

Overview of employee obligations (in million €)

Defined benefit plans

2008

2007

87.5

82.6

Early retirement plan

12.0

17.2

Other employee benefits

42.0

42.1

Subtotal

141.5

141.9

Others (restructuring)

1.2

1.7

Total provisions for employee benefits

142.7

143.6

(in million €)

2008

2007

Change in benefit obligation (258.8)

(322.4)

Service Cost

Defined benefit obligation at the beginning of the period

(5.6)

(6.7)

Interest Cost

(12.0)

(11.5)

(0.5)

(0.7)

0.0

(7.2)

Gains (losses) on curtailments or settlements of plans

0.0

29.5

Special termination benefits

(1.3)

(1.2)

Contributions from plan participants Gains (losses) on changes of plans

Actuarial gains (losses) on long term benefits

1.6

6.6

Actuarial gains (losses)

9.2

24.2

Benefits paid Defined benefit obligation at the end of the period

27.4

30.6

(240.0)

(258.8)

116.9

143.1

Changes in plan assets Fair value of plan assets at beginning of the period Expected (not actual) return on plan assets Company contributions

6.0

5.5

29.8

18.3

Plan participants contributions

0.5

0.7

Gains (losses) on curtailments or settlements

0.0

(15.3)

Actuarial gains (losses)

0.0

0.0

Actuarial gains (losses) on long term benefits

(27.3)

(4.8)

Benefits paid

(27.4)

(30.6)

Fair value of plan assets at end of period

98.5

116.9

(141.5)

(141.9)

Funded status Funded status of the plan Unrecognized actuarial gains (losses)

0.0

0.0

Net amount recognized accrued / prepaid

(141.5)

(141.9)

Net amount recognized (accrued)

(142.1)

(145.8)

Net amount recognized (prepaid)

0.6

3.9

Elia — Annual Report 2008  99


Net periodic pension cost Service Cost

(5.6)

(6.7)

Interest Cost

(12.0)

(11.5)

Plan participants contributions

(0.5)

(0.7)

Expected return on plan assets

6.0

5.5

Amortization of actuarial net gains (losses)

0.0

0.0

Gains (losses) on changes of plans

0.0

(7.2)

Special termination benefits

(1.3)

(1.2)

Gains (losses) on curtailments or settlements

0.0

14.2

Actuarial gains (losses) on long term benefits

1.6

6.6

(11.8)

(1.0)

Net periodic benefit cost

Minimum liability adjustment (Accrued) prepaid benefit cost

(141.5)

(141.9)

(Accrued) benefit cost

(142.1)

(145.8)

0.6

3.9

2008

2007

(7.6)

0.0

Prepaid benefit cost

Actuarial gains and losses recognised directly in equity (in million €) Cumulative amount at 1 January Recognised in the period Cumulative amount at 31 December

(18.1)

(7.6)

(25.7)

(7.6)

2008

2007

Actuarial assumptions (in million €) Inflation rate

2.20 %

1.90 %

Interest rate (not including inflation)

3.00 %

3.00 %

Salary increase rate (not including inflation)

2.00 %

2.00 %

Yield rate on deposits (not including inflation)

3.70 %

3.40 %

Interest appreciation rate (not including inflation)

0.00 %

0.00 %

Length of future services (years) Rate of increase of health benefits (retirement and current)

17.0

17.0

1.00 %

1.00 %

2008

2007

Detail plan assets Equity instruments Bonds

27.91 %

31.91 %

44.53 %

42.94 %

Property

8.75 %

8.63 %

Other (cash included)

18.81 %

16.52 %

100.00 %

100.00 %

Total plan assets

100  Elia — Annual Report 2008


Inclusion in future tariffs

reasonable expenses and will therefore be passed on in future

Elia has specific obligations as regards employee benefits and

parties, in accordance with IFRS principles (IAS 19), it will

similar commitments. In accordance with a study report is-

be classified as an asset item. The amount is included under

sued by CREG, it is virtually certain that some of the employ-

other current liabilities (see Note 20).

tariffs. Since this amount can be recovered by Elia from third

ee benefits total of €72.6 million will be accepted by CREG as

18. Provisions (in million €)

Environment

Litigations

Total

Balance at 1 January 2007

9.5

4.5

14.0

During financial year: increase in provisions

0.1

2.6

2.7

During financial year: usage of provisions

(0.1)

(0.1)

(0.2)

During financial year: reversals of provisions

(0.1)

(1.6)

(1.7)

Balance at 31 December 2007

9.4

5.4

14.8

Long term portion

0.0

5.4

5.4

Short term portion

9.4

0.0

9.4

Balance at 1 January 2008

9.4

5.4

14.8

During financial year: increase in provisions During financial year: usage of provisions During financial year: reversals of provisions Balance at 31 December 2008

1.2

0.8

2.0

(0.3)

(0.1)

(0.4)

0.0

(1.4)

(1.4)

10.3

4.7

15.0

Long term portion

0.0

4.7

4.7

Short term portion

10.3

0.0

10.3

The provision for the environment comprises obligations

The ‘soil decree’ was approved by the Walloon Parliament in

based on estimates for decontaminating sites in the Flemish

December 2008 and was published on 18 February 2009. The

Region, where, in addition to a decontamination obligation,

decree will enter into force three months after its publication,

Elia also bears ultimate responsibility for decontamination

with the exception of Article 21*, which will only enter into

costs under previous ownership transfers. Estimates include

force after 18 months. As this development has not brought

costs for setting up the decontamination project, monitoring

about any actual change in the legal framework, it is impossi-

and the actual decontamination costs. There were no signifi-

ble to make a reliable estimate of any future decontamination

cant changes in 2008.

costs. Elia visited all sites for preventive screening and carried

For sites located in the Brussels Capital Region, Elia has already preventively screened 23 sites. Of these, two are being studied further. At present the results have not led to the

out 5 soil analyses in 2008. This screening, which is compliant with the current legal obligation, did not suggest there was any reason to introduce an environmental provision.

posting of additional provisions.The purchase of a site with

The provision for litigation is based on the management’s best

a strategic location for Elia could only go ahead if a IBGE/

estimate of charges that Elia would have to pay as a result of

BIM approved decontamination plan was made available. Elia

cases in which legal proceedings have been instituted against

worked with the seller to draw up a rehabilitation plan and

Elia by a third party or in which Elia is involved in a legal

made itself responsible for decontamination by paying a bank

dispute.

guarantee. This led to an additional provision of €0.5 million

The expected timing of the related cash outflow depends on

being posted.

the progress and duration of the associated procedures. The changes in provisions are discussed in Note 4.3.

* Art. 21 makes it compulsory to have a study carried out when applying for permission to perform a non-risky activity if this is due to take place on a site where a risky activity is performed.

Elia — Annual Report 2008  101


19. Trade and other payables (in million €)

2008

2007

Trade debts

229.4

169.6

2.4

6.5

VAT, other taxes

23.4

21.0

Dividend

Remuneration and social security

1.7

0.6

Levies

9.0

0.0

Other

7.0

3.4

Accruals and deferred income Total

8.8

3.7

281.7

204.8

The €59.8  million increase in trade debts is mainly a con-

The Group’s foreign currency exchange rate risk and liquid-

sequence of open balances linked to the market coupling

ity risk relating to trade and other payables are discussed in

mechanism.

Note 23.

At the end of 2008, levies are €9 million in credit while in 2007, there was a debit balance of €2.8 million (see Note 13).

20. Other current liabilities (in million €)

2008

2007

Balance settlement mechanism

7.1

35.6

Total other current liabilities

7.1

35.6

2008

2007

Detailed status of the settlement mechanism (in million €) Balance financial year 2004

71.3

Balance financial year 2006

52.4

Balance financial year 2007

(9.9)

To be refunded to the tariffs of period 2009-2011

102.9

Balance period 2007 and period, 2008 to be recovered through the tariffs period to be determinated

(28.1)

Discount future tariffs

74.8

Moratorium interest on income tax - period 2008 Amount receivable as a result of the application of IAS 19 Balance settlement mechanism

102  Elia — Annual Report 2008

113.8

4.9 (72.6)

(78.2)

7.1

35.6


A detailed description of this mechanism can be found in the

Moratorium interest of €4.9 million, related to the tax file, has

chapter Regulatory framework and tariffs.

been posted under this section and in view that this amount

On 31 December 2008, the other current liabilities totalled €7.1 million and included the remaining balance of €74.8 million from the settlement mechanism, which is still being agreed with the regulator, and various entries linked to the

will also be settled in the tariffs once it has been obtained. The sum of €72.6  million that resulted in receivables under the application of IAS 19 is also recognised as other current liabilities.

regulatory mechanism. The amount listed under ‘Discount fu-

€20.9 million of the remaining balance at the end of 2007

ture tariffs’ included €102.9 million to be reimbursed into the

(€113.8 million) has been included in the 2008 income state-

tariffs in the 2009-2011 period and €28.1 million that will be

ment as ‘income’ (see ‘revenues from the reversal of sur-

settled in tariffs in the next tariff period (2012-2015).

pluses from previous years’ in Note 3).

21. Deferred tax assets and liabilities Unrecognised deferred tax assets For the following items no deferred taxes are recognised in the balance sheet.

2008

2007

Notional interest reduction

(in € million)

92.1

78.2

Not recognised tax asset (-) / liability

92.1

78.2

The notional interest deduction, if not used, expires after 7

because it is unlikely that in the future there will be taxable

years. For these differences no tax assets were recognised

profit that the Group can use for realising these assets.

Recognised deferred tax assets and liabilities Assets (in € million)

2008

Liabilities 2007

Property, plant and equipment

0.4

0.2

Intangible fixed assets

(6.1)

(4.3)

Inventories

(0.9)

(0.9)

7.9

(2.3)

46.9

46.8

Interest-bearing loans and other non-current financial liabilities Employee benefits Provisions

2008

2007

0.3

0.3

Other items

(24.3)

(26.1)

(6.5)

(5.3)

Net tax asset (-) / liability

24.2

13.7

(6.5)

(5.3)

Changes in deferred tax assets and liabilities resulting from movements in temporary differences during the financial year The Group chose to reflect the net amount of the deferred

mechanism and ultimately tax assets or liabilities regarding

tax assets and liabilities for the Belgian companies, given

to the tax authority will only be settled and realised by the

that those companies achieve their results using a ‘cost plus’

parent company.

Elia — Annual Report 2008  103


(in million €)

1 January 2007

Recognised in income statement

(0.2)

0.4

0.2

Intangible fixed assets

(3.1)

(1.2)

(4.3)

Inventories

(0.9)

0.0

(0.9)

0.2

0.1

(2.6)

(2.3)

55.6

(6.2)

(2.6)

46.8

Tangible fixed assets

Interest bearing loans and other long term financial liabilities Employee benefits Provisions

31 December 2007

(0.1)

0.3

0.2

(34.8)

3.4

(31.4)

16.7

(3.2)

(5.2)

8.4

1 Januari 2008

Recognised in income statement

Recognised in equity

31 December 2008

Other items Total

(in million €)

Recognised in equity

Tangible fixed assets

0.2

0.2

0.4

Intangible fixed assets

(4.3)

(1.8)

(6.1) (0.9)

Inventories

(0.9)

0.0

Interest bearing loans and other long term financial liabilities

(2.3)

0.0

10.2

7.9

Employee benefits

46.8

(6.0)

6.1

46.9

Provisions Other items Total

0.3

0.0

0.3

(31.4)

0.6

(30.8)

8.4

(7.0)

16.3

17.7

Effect of changes in temporary differences during the financial year Changes in temporary differences during the year are reflected in profit or loss as income tax expense (also see Note 6).

22. Share-based payments Discounted share purchase plans The Group offered its staff discounted share purchase plans

one month before the decision was €27.89. After applying a

in June 2008. The capital increase was the result of the 2007

16.7% discount, the price amounted to €23.24 per share (see

plan. In 2008, this was limited to a tax bracket of a maximum

Notes 4.2 and 15).

of 29 shares per employee. The average price throughout

23. Financial instruments Risks Exposure to credit, market, capital structure and liquidity

defining risk management strategies, reporting to manage-

risks arises in the normal course of the Group’s business.

ment, the Internal Audit & Risk Management department per-

The Group aims to identify each risk and set out strategies to control their economic impact on the Group’s results. In addition to its routine tasks, such as monitoring the risk analysis,

104  Elia — Annual Report 2008

formed a supplementary in-depth analysis of the risks the Group may face as a result of the financial crisis that emerged in September 2008 and in view of its effects in other sectors.


The potential impact for each risk factor is described below. The regulatory framework in which Elia is operating restricts

Credit risk

their effects on profit or loss considerably (see the chapter on

Credit risk is the risk that one of the parties to a contract fails

Regulatory framework and tariffs). The results of increased

to meet its obligations as regards the financial instrument,

interest rates, credit risk, etc. can be settled in the tariffs, in

thereby resulting in a potential loss for the counterparty.

accordance with the applicable legislation.

The management has put a credit policy in place and the

Certain strategies to control these risks make use of deriva-

exposure to counterparty credit risk is continually moni-

tive financial instruments: instruments whose value is derived

tored. Consequently for certain contracts appropriate bank

from one or more underlying assets, reference prices or in-

guarantees must be requested from the counterparty of the

dices. The derivative instruments create rights and commit-

contract.

ments which transfer all or some of the financial risks to other

On the balance sheet date there were no significant concen-

parties to the contract.

trations of credit risks. The maximum credit risk is the carrying amount of each financial asset, including derivative financial instruments.

(in million €)

2008

2007

Loans and receivables

221.4

153.0

Cash and cash equivalents

27.3

33.5

Balance at bank

17.7

16.8

Interest rate swaps used for hedging Assets Liabilities Total

0.0

5.5

(24.3)

0.0

242.1

208.8

Market risk

for sale as well as investments made in defined-benefit plans.

Market risk is the risk that changes in market prices, raw

monitoring of the situation regarding plan assets in pen-

material prices and salary indexation will affect the Group’s

sion funds and stated that the decrease in these funds, after

results.

benchmarking, was lower than the normal market situation.

The impact in changes in raw material prices on ‘controllable

In anticipation of possible consequences, Elia decided to pay

costs’, as defined in the new regulatory mechanism, could

a supplement with a view to limiting deficits. Further details of

have a very restricted effect (see regulatory framework) on

this can be found in the Employee benefits section.

the Group’s income statement. The Group has taken a series

The Group had investments available for sale – these are in

of precautions to limit the potential impact on the income

line with the investment strategy and have a very low risk

statement.

profile. This gave rise to a €0.4 million increase in the value of

As a result of the financial crisis, Elia performed additional

the funds during the financial year.

Currency risk The Group is not exposed to any significant currency risk,

Interest risk

neither from transactions nor from exchanging foreign cur-

Hedging

rencies into euro, since it has no foreign investments or activities and less than 1% of its costs are expressed in currencies other than the euro.

Investment risk Share risk is the name given to the risks faced by the Group

The objective of the Group’s policy is to ensure that between 40% and 70% of the interest rate risk on loans are based on a fixed interest rate. The Group has undertaken interest rate swaps in euro in order to achieve a good balance within the Group’s policy between the exposure to a fixed interest rate and a variable interest rate.

as the result of holding major investments that are available

Elia — Annual Report 2008  105


In accordance with the hedge accounting rules of IAS 39, all derivative financial instruments are accepted as cash-flow hedges and valued at fair value. Consequently, the portion of the gain or loss on the derivative financial instrument that can be considered an effective hedge is reflected directly in equity (hedging reserves).

Sensitivity analysis In its management of the interest rate risk, the Group endeavours to limit the effect of short-term fluctuations on the Group result. Changes in the interest rates will not affect the consolidated result in the short and long term as Elia operates within a regulatory framework where the consequences

Interest rate swaps have an interest rate varying from 4.05% to 4.41%. As at 31 December 2008 the Group held hedging instruments with a contracted reference value of €545.8 million. The net fair value of the swaps as at 31 December 2008 totalled €24.3 million and was entirely composed of liabilities.

Derivative financial instruments Under IFRS, derivative financial instruments are accounted for at fair value. Fair value The summary below shows the fair values and carrying

The amounts are included as derivatives at fair value. As at 31 December 2008 no financial expenses resulting from ineffective cash-flow hedges are included in profit or loss.

(in million €)

of fluctuations in financial expenses are recovered in tariffs.

amounts of derivative financial instruments. As the IRS converts variable interest into fixed interest, the carrying amount of the loan is equal to the fair value.

Carrying amount

Fair value

2008

Carrying amount

2008

Fair value

2007

2007

(5.5)

(5.5)

Interest rate swaps Assets Liabilities

24.3

24.3

545.8

545.8

545.8

545.8

570.1

570.1

540.3

540.3

Liabilities Loans Total

The following table shows the contractual maturities of the financial derivatives:

Carrying amount

Expected cash flows

6 mths or less

6-12 mths

1-2 years

2-5 years

> 5 years

5.5

(14.2)

(1.4)

(1.4)

(2.6)

(5.1)

(3.7)

5.5

(14.2)

(1.4)

(1.4)

(2.6)

(5.1)

(3.7)

Balance at 31 December 2007

5.5

(14.2)

(1.4)

(1.4)

(2.6)

(5.1)

(3.7)

Interest rate swaps

(24.3)

(35.8)

(3.3)

(3.3)

(5.2)

(13.1)

(10.9)

(35.8)

(3.3)

(3.3)

(5.2)

(13.1)

(10.9)

(35.8)

(3.3)

(3.3)

(5.2)

(13.1)

(10.9)

(in million €) Interest rate swaps Assets Liabilities

Assets Liabilities Balance at 31 December 2008

106  Elia — Annual Report 2008

(24.3) (24.3)


Liquidity risk

Estimate of fair value Derivatives Brokers’ statements are used for interest rate swaps. The statements are controlled using valuation models or techniques based on discounted cash flows.

Liquidity risk is the risk that the Group may not be able to meet its financial obligations. The Group limits this risk by constantly monitoring cash flows and ensuring that there are always sufficient credit line facilities available.

Interest bearing loans

In September 2008, the Group obtained an additional cred-

The fair value is calculated on the basis of the discounted

it line facility for €150  million, of which it used €100  mil-

future redemptions and interest payments.

lion. It also made use of Commercial Paper to the value of

Finance lease obligations

€61.9 million.

The fair value is estimated at the present value of future

Elia will have to refinance a shareholder loan of €387.7 million

cash flows, discounted against the interest rate for uniform

in September 2009. Furthermore, a number of current bank

lease contracts. The estimated fair value reflects interest rate

debts are due to mature. Elia concluded some new bank loans

changes.

in 2009 to refinance this. Elia is also looking into different opportunities on the capital market with a view to issuing a bond

Trade and other receivables/trade liabilities and other items

loan later in the year.

payable For receivables and liabilities due within one year the nominal value is deemed to reflect the fair value. All other receivables

For an overview of the credit line facilities available, see Note 16.

and liabilities are discounted in order to determine the fair value.

(in million €)

Carrying amount

Expected cash flows

6 mths or less

6-12 mths

1-2 years

2-5 years

> 5 years

Non-derivative financial liabilities 996.8

(1,449.7)

(50.1)

0.0

(50.0)

(150.1)

(1,199.5)

Unsecured financial bank loans and other loans

Unsecured bond issues

1,193.5

(1,318.1)

(32.9)

(33.7)

(298.7)

(97.4)

(855.4)

Trade and other payables

204.8

(204.8)

(204.8)

Derivative financial liabilities Interest rate swaps used for hedging

(5.5)

14.2

1.4

1.4

2.6

5.1

3.7

Of which cash flow hedges

(5.5)

14.2

1.4

1.4

2.6

5.1

3.7

2,389.6

(2,958.4)

(286.4)

(32.3)

(346.1)

(242.4)

(2,051.2)

998.2

(1,399.6)

(50.0)

0.0

(50.0)

(150.1)

(1,149.5)

Unsecured financial bank loans and other loans

1,355.4

(1,685.1)

(438.8)

(403.0)

(23.9)

(71.6)

(747.8)

Trade and other payables

281.7

(281.7)

(281.7)

Balance at 31 December 2007

Non-derivative financial liabilities Unsecured bond issues

Derivative financial liabilities Interest rate swaps used for hedging

24.3

(35.8)

(3.3)

(3.3)

(5.2)

(13.1)

(10.9)

Of which cash flow hedges

24.3

(35.8)

(3.3)

(3.3)

(5.2)

(13.1)

(10.9)

2,659.6

(3,402.2)

(773.8)

(406.3)

(79.1)

(234.8)

(1,908.2)

Balance at 31 December 2008

Elia — Annual Report 2008  107


Capital structure Elia constantly monitors its capital structure, which is a combination of debts and equity. Its main objective regarding the capital structure of regulated activities is to achieve the structure imposed by law: one-third equity and two-thirds debt capital. For the other companies the main objective is to max-

ment to reserve a part of the profit resulting from including the goodwill, caused by decommissioning property, plant en equipment, into the tariff. Reserving this part of the profit as equity boosts the company’s self-financing capacity considerably, enabling it to finance the investments needed for carrying out its tasks.

imise shareholder value while at the same time retaining the

The Group gives its employees the chance to subscribe to

desired financial flexibility.

capital increases that are exclusively reserved for them. For

The company’s dividend policy involves optimising dividend

more details on the capital increase, see Note 22.

payments while still bearing in mind that there is a require-

24. Operating lease contracts Leases as lessee The Group has operating leases for some office buildings. The

In addition the Group has contracts for leasing cars, IT equip-

leases normally have a term of nine years, with the possibility

ment and other items with an average lease period of three

of renewing the lease thereafter.

years.

(in million €)

< 1 an

1–5 ans

> 5 ans

Buildings

3.5

14.0

10.5

Cars, IT equipment and others

4.3

6.1

0.0

Total at 31 December 2007

7.8

20.1

10.5

Buildings

3.6

15.3

8.1

Cars, IT equipment and others

4.6

6.1

0.0

Total at 31 December 2008

8.2

21.4

8.1

The following expenses related to leasing buildings and other lease contracts were included in profit or loss for the financial year 2008:

(in million €)

2008

2007

3.6

3.2

Cars, IT equipment and others

4.1

4.0

Total

7.7

7.2

Buildings

108  Elia — Annual Report 2008


Leases as lessor The Group hires out sites and high-voltage pylons to telecom-

The future minimum lease payments in respect to the lease

munications operators on the basis of operating leases. The

contracts are as follows:

relevant lease contracts have a term of at least nine years.

(in million €)

<1 year

1–5 year

>5 years

Telecom

9.0

37.6

40.1

Total at 31 December 2007

9.0

37.6

40.1

Telecom

9.6

39.9

50.7

Total at 31 December 2008

9.6

39.9

50.7

The following revenues were included in profit or loss for 2008 in the section ‘Optimal use of assets’ (see Note 3):

(in million €)

2008

2007

Telecom

9.8

9.4

Total

9.8

9.4

25. Investments and other liabilities As at 31 December 2008, Elia had investment liabilities total-

perty, plant and equipment to further extend its grid.

ling €125.2  million for the purchase and installation of pro-

26. Contingent liabilities and uncertainties Settlement mechanism A calculation of the amount is given in the chapter Regulatory

Cumulative basis it could be argued that the public has made

framework and tariffs.

an advance payment (has received an advance) for its future

Application of IFRS

use of the network. As such, the surplus (deficit) is not a

Elia now operates under a ‘cost plus with incentive for greater efficiency’ system in a regulated context which states that Elia tariffs must make it possible to realise total revenue consisting of:

commission for a future loss (recovery) of income but instead a passive debt (receivable) to (with regard to) consumers. On the basis of the Electricity Act, Elia believes that the surplus (deficit) does not represent an item of revenue (cost). Consequently, Elia booked this net amount as at 31 December

- a reasonable return on invested capital; and

2008 in the IFRS financial statements as income to be car-

- all costs that are not unreasonable incurred by Elia.

ried forward, which reflects the reduction in future tariffs that

Since the tariffs are based on estimated figures, there is al-

must be approved by the regulator.

ways a difference between the tariffs that are actually charged

Following the same logic, Elia also decided to post certain

and the tariffs that should have been charged to cover all

pension expenses as recoverable costs since the federal regu-

reasonable costs of the system operator and to provide share-

lator deemed such expenses to be reasonable charges. Elia is

holders with a reasonable profit margin on their investment.

convinced that it can compensate for these expenses in future

If the applied tariffs result in a surplus or a deficit at the end

tariffs and consequently they were booked as an asset.

of the year, this means that the tariffs charged to consumers/the general public could have been respectively lower or higher (and vice versa). Based on IAS 18, Elia is convinced that a surplus or deficit arising from the settlement mechanism must not be classified as revenue or an expense, or as an item under equity.

Elia — Annual Report 2008  109


For the purpose of presentation of the consolidated financial

At present, there are no specific IFRS guidelines on the calcu-

statements, both the ‘income to be carried forward’ and the

lation of the settlement mechanism in a regulated context.

‘recoverable costs’ arising from the pension obligations are converted to their net values, which means that only a net debt is displayed.

If the calculation turns out not to be in accordance with future IFRS guidelines, Elia’s results and shareholders’ equity will have to be adjusted.

27. Disclosure about related parties Transactions with directors Remuneration policy for directors was agreed upon at the

other members were €282,974.75 (€147,926.84 for Elia

general meeting of shareholders. Total remuneration paid to

System Operator SA and €135,047.92 for Elia Asset SA).

the 12 Elia directors in 2008 was €500,316 (€250,158 for Elia System Operator SA and €250,158 for Elia Asset SA), including indexing. Directors do not receive any other benefits in kind, stock options, special loans or advances.

Transactions with members of the management committee Basic and variable remuneration In 2008, remuneration for the chairman of the management committee, which is paid by Elia System Operator SA, totalled €488,351.69, of which 29.37% was variable pay. Remuneration paid by Elia to the other members of the management committee in 2008 totalled €1,545,679.60 (€801,357.11 for Elia System Operator SA and €744,322.49 for Elia Asset

Other benefits awarded to members of the Management Committee, such as guaranteed income in the event of longterm illness or an accident, health-care and hospitalisation insurance, invalidity insurance, life insurance, tariff benefits and provision of a company car are in line with the regulations applying to company managers. There was no stock option plan for the Elia management committee in 2008. Shares The chairman of the management committee of Elia System Operator SA holds 4,360 shares in Elia System Operator SA. The other members of the management committee hold a total of 13,730 shares. Elia has yet to implement a long-term share allotment policy.

SA), of which 21.66% was variable pay.

Associated companies

A total of €2,034,031.29 was therefore paid to members of the

In the 2008 and 2007 financial years, there were no transac-

management committee in 2008.

tions between Elia and HGRT.

Other remuneration The costs of contributions to the extralegal pension fund for the service period 2008 - which are covered by Elia System Operator SA - totalled €90,773.61 for the chairman of the management committee, whilst total contributions for the

28. Group entities Fully consolidated participations Elia System Operator SA has direct and indirect control of the subsidiaries listed hereafter.

110  Elia — Annual Report 2008


Name

Country established

Headquarter

Enterprise number

Average staff

Stake

2008

2007

%

%

Elia Asset SA

Belgium

Bd de l’Empereur 20 1000 Bruxelles

0475.028.202

809.1

99.99

99.99

Elia Engineering SA

Belgium

Bd de l’Empereur 20 1000 Bruxelles

0471.869.861

184.2

100.00

100.00

Belpex SA

Belgium

Bd de l’Impératrice 66 1000 Bruxelles

0874.978.602

5

60.00

60.00

Elia Re SA

Luxembourg

-

100.00

100.00

Rue de Merl 65 2146 Luxembourg

-

All the entities keep their accounts in euro and have the same closing date as Elia System Operator SA.

Associated companies accounted for using the equity method Name

Country established

Headquarter

Enterprise number

Stake

2008 H.G.R.T. S.A.S. (Holding de Gestionnaires de Réseaux de Transport)

France

1 Terrasse Bellini 92919 La Défense Cedex

438.262.800 RCS Nanterre

2007

%

%

24.50

22.17

Other participations The companies CASC-CWE SA and CORESO SA, both of which were founded in 2008, are recognised at cost price under financial assets (see Note 11).

Name

Country established

Headquarter

Enterprise number

Stake

2008 Coreso SA CASC-CWE SA

Belgium Luxembourg

Avenue de Cortenbergh 71 1040 Bruxelles 2 Rue de Bitbourg 1273 Luxembourg-Hamm

2007

%

%

0808.569.630

50.00

0.00

B142.282 Luxembourg

14.29

0.00

29. Business combinations The consolidation scope of Elia was expanded with the es-

Operator was one of the initiators and founders of those com-

tablishment of CASC-CWE and Coreso, where Elia System

panies (See Note 28).

Elia — Annual Report 2008  111


30. Basic earnings per share The basic earnings per share are calculated by dividing the

the weighted average number of ordinary shares during the

net profit of €103.1 million (2007: €77.6 million) from the

year (48,073,230).

year which can be paid out to holders of ordinary shares by

Weighted average number of ordinary shares Issued ordinary shares on January 1

2008

2007

48,061,695

47,898,052

Impact of the shares issued in June 2007

83,391

Impact of the shares issued in March 2008

11,535

Weighted average number of shares on December 31

Diluted earnings per share Diluted earnings per share are calculated by dividing the net profit from the year to be paid out to the holders of ordinary shares by the weighted average number of ordinary shares outstanding, corrected for potential dilution.

48,073,230

47,981,443

Share capital and reserves per share Share capital and reserves per share totalled €28.0 per share on 31 December 2008, compared to a value of €27.9 per share at the end of 2007.

The diluted profit is equal to the ordinary profit per share.

31. Reclassification After consulting with the auditors, it was decided to reclas-

Interest payable on loans”: from 2008, this is included in the

sify sections with a view to increasing comparability and

section on “Loans and other financial liabilities” (previously

transparency:

included under “Other debts” (2007 - €39.9 million)).

Investments available for sale”: from 2008, this is included in the section on “Fixed financial assets” (previously included under “Cash and cash equivalents” (2007 - €16.8 million).

From 2008 “Other current assets” are classified under “Trade and other receivables” (2007 - €4.4 million). From 2008 “Other current liabilities” (2007 - €3,7) are reported as “Trade and other payables”.

32. Non-audit tasks carried out by the auditors In addition to standard audit tasks, Elia also asked the auditors Klynveld Peat Marwick Goerdeler Company Auditors, represented by Alexis Palm, and Ernst & Young Company Auditors, represented by Jacques Vandernoot, to carry out the following tasks:

A total of €167,150 was recorded for these tasks. Ernst & Young Tax Consultants advised Elia System Operator SA, Elia Asset and Elia Engineering and Belpex on various topics, providing for example advice and support with regard to the tax audit and the legal ruling and recurring advice about

IFRS : additional activities and consultancy

VAT and corporate income taxes. A total of €81,606 was in-

Capital increase

voiced for these services.

Declaration of levies Declaration of decommissioning of fixed assets Various consultancy tasks

112  Elia — Annual Report 2008

Ernst & Young Consultants also performed some tasks to support the internal audit department. The cost of this was €37,336.


Description of the risks and uncer tainties facing the company Risk management

to Belgian linear bonds (OLOs) and by the analysis of the

In coordination with the company’s management and ex-

ble and non-controllable costs.

ecutives, the internal Audit & Enterprise Risk Management Department, which works under the supervision of the Audit Committee, has identified and classified the risks to which Elia may be exposed. Its work resulted in the following overview of major risks and uncertainties.

1. R  egulatory and income risks International Despite the fact that Elia proactively anticipates European legislation, new directives and regulations awaiting transposition into Belgian law may entail uncertainties. Elia is a European leader when it comes to the components of the European Commission’s draft ‘third package’ of directives aimed at developing a single electricity and gas market, particularly as regards the independence and impartiality of management. Elia is also one of the founder members of ENTSO-E, which was set up in December 2008 and brings together 42 transmission system operators from 34 countries, including the EU countries. Amongst other things, ENTSO-E will perform the role of the European Network of Transmission System

regulator regarding any cross-subsidising between controlla-

On the other hand, Elia’s turnover also depends on the energy transported on the grid, and is therefore directly impacted by the level of business activity of its customers. The slowdown in business among industrial customers and the decline in consumption by residential customers are therefore risks to Elia’s activity. Any deficit resulting from these factors will be offset when the tariffs for the next regulatory period (20122015) are set, since the tariffs are supposed to remain the same throughout the period 2008-2011.

Regional The regulatory framework entails risks at regional level too. For instance, contradictions between the various regulations, including the grid codes, can hinder the exercise of the company’s activities. The further development of and changes to these regulations may also impact the company’s liability in the event of a power outage on the grid or – in the context of state reform – the division of powers between federal and regional authorities, including the power to approve the transmission tariffs.

2. Operational risks

Operators provided for in the third package.

National

Security of supply In the criteria for operational and investment planning, Elia

The legal framework was established when the first European

factors in an adequate level of reserve capacity and seeks out

electricity directive was transposed by the Belgian Electricity

the most efficient and cost-effective way of contracting the

Act of 29 April 1999.

availability of such reserves.

The company’s net profit is largely determined by the legally

At national level and within a European framework, Elia

prescribed fair remuneration.

analyses how the increasing number of renewable energy

As of 1 January 2008, the regulation mechanism applying to Elia contains an ’incentive’ component and involves a multiyear tariff (see page 116). This form of regulation includes several changes with respect to the preliminary approval of the multi-year tariffs by CREG and the determination by the Crown of an efficiency improvement factor for controllable cost components. Elia’s result will therefore be influenced annually, either positively or negatively, by its ability to achieve and/or exceed the efficiency improvement factor, by changes

production units (which are by nature unpredictable) can be integrated into the system without compromising security of supply. The growing number of cogeneration and renewableenergy units connected in distribution systems and the future connection of large offshore wind farms create new challenges for operational grid management and will necessitate the development of grid infrastructure. The developments required for existing and future connections, changing trends in offtake and the enhancement of interconnection capacity are

Elia — Annual Report 2008  113


dependent on securing a large number of permits and approvals from local, regional, national and international authorities.

Risks of legal disputes

The need to obtain such approvals and permits within certain

Although the company operates in such a way as to mini-

timeframes represents a risk to the timely implementation of

mise the risk of legal disputes, it does nonetheless become

these projects.

involved in such disputes. Where necessary, the appropriate

It should be stressed that these approvals and permits can be contested in courts with the relevant jurisdiction. This may affect the maintenance and upkeep of the infrastructure in question.

Power outages With an average interruption time (AIT) of well under 0.001%,

provisions are laid aside for this.

Safety and welfare Elia System Operator SA operates facilities that may cause significant harm to the natural or human environment or for which accidents or external attacks may have serious consequences.

Elia’s high-voltage grid is one of the most reliable in Europe.

Regarding electricity transmission facilities, persons working

Nonetheless, as in any other electricity system, incidents

in or near this type of facility may be exposed, in the event of

may occur on the grid which temporarily interrupt electricity

an accident, error or negligence, to the risk of electrocution.

transmission and/or distribution. In most instances, these in-

The safety and welfare of individuals (both Elia staff and third

cidents have no impact on consumers’ power supply because

parties) is a key priority and a daily preoccupation for Elia

the grid’s meshed structure means that connected grid users

and considerable resources are deployed to safeguard it. Each

can be reached in a number of different ways. In extreme

year, safety actions are planned and implemented based on

cases, the electricity system may suffer a local or widespread

developments in safety figures.

outage (known as a blackout). Such outages may be caused by natural phenomena, unforeseen incidents or operational problems, either in Belgium or abroad. Elia regularly holds crisis drills so that it is ready to deal with the most unexpected and extreme situations. The general terms and conditions of its standard contracts limit the company’s liability to a reasonable level while its insurance policy is designed to offset the financial repercussions of these risks.

IT risks Defects in the IT network and IT systems used to manage the electricity system may harm the latter’s performance. Elia takes appropriate measures to back up and improve the IT network and associated IT systems, and to establish the appropriate Disaster Recovery Plans, but major shortcomings in components in the IT network and IT systems are impossible to rule out. When defects do occur, every effort is made to minimise their impact.

Environmental risk Elia’s results may be affected by outgoings needed to keep up with environmental legislation, including costs associated with implementing preventive or corrective measures or settling third-party claims. The company’s environmental policy is developed and monitored in such a way as to manage these risks. Where Elia is in any way liable for decontamination, the appropriate provisions are set aside. However, future amendments to laws or regulations may mean that Elia has to set aside additional provisions.

114  Elia — Annual Report 2008

Risks associated with inefficient internal control mechanisms Internal processes can all impact the company’s results in some way. The multi-year tariff mechanism requires year-onyear increases in internal efficiency. It is therefore essential that internal processes are monitored and kept under proper control. This is overseen by the Audit Committee, which controls and monitors the work of the Internal Audit & Enterprise Risk Management Department.


3. Financial risks Interest risk

4. N  ew business developments Elia strives to anticipate new opportunities relating to its core

A change in interest rates can impact on financial charges

businesses, both inside and outside the regulated framework.

passed on in a subsequent regulatory tariff period (or in the

The launch of new international projects abroad may cre-

same period in the event of an exceptional change in charg-

ate risks associated with foreign regulations or uncertainties

es). To minimise this, Elia’s Board of Directors has approved

linked to the business plans to be drawn up.

a financing policy that strives to achieve an optimal ratio of fixed and variable interest rates. In addition, appropriate financial instruments are used where necessary to further offset potential risks. A financing policy that seeks to bring the term of loans more

5. Contextual factors Macroeconomic risks

into line with the lifetime of assets helps to ensure a success-

The effects of the economic and financial crisis in Belgium

ful financial policy.

represent an income risk and a financial risk for Elia. These

However, Elia System Operator SA cannot guarantee total protection in the event of significant movements in interest rates.

Credit, market, capital-structure and liquidity risk In the course of its normal business activities, Elia incurs credit, market, capital-structure and liquidity risks. The Group aims to identify each and every risk and to come up with

risks are described in sections 1 and 3 of this chapter. Elia strives to achieve optimum control of such operational risks, which are linked to the fact that the Belgian grid is increasingly open to electricity flows generated and consumed in EU Member States. It does so by, amongst other things, exchanging and harmonising relevant information with other transmission system operators and installing phase shifters at the borders, enabling energy flows to be better distributed over the available interconnection capacity.

strategies to control their economic impact on the Group’s

HR risk

results.

Elia pursues an active image and recruitment policy in order

Some of the strategies used to manage these risks involve

to maintain an appropriate level of expertise and know-how in

derivative financial instruments. These are instruments that

a tight labour market. This is an ongoing challenge, bearing in

derive their value from one or more underlying assets, refer-

mind the highly specialised nature of the business.

ence prices or indices. Derivative instruments create rights and obligations that transfer financial risks, in whole or in part, between the contractually bound parties. In 2007, the group made use of interest rate swaps.

Image risk Generally speaking, circumstances may arise that have a negative impact on the company’s image. Elia has an internal

Tax audit risks

control mechanism to guarantee the confidentiality of data.

Although tax rules are applied in a spirit of accuracy and pre-

possession that could have an impact on the company’s share

cision, it may be that the company’s own interpretation differs

price.

Despite this, external parties may pass on information in their

from that of the relevant authorities during an audit. More information on the difference of opinion with the tax authorities regarding the recognition of operational surpluses can be found on page 116.

Miscellaneous Elia realises that there might be other risks of which the company is not yet aware. Some risks may seem limited today but become greater in the future. The subdivisions used give no indication of the potential consequences of the listed risks.

Elia — Annual Report 2008  115


Regulatory framework and tariffs Elia’s transmission tariffs among the lowest in Europe

The costs taken into account include the forecasted value of

Elia’s tariffs have fallen considerably in recent years, thanks to

has direct control (‘controllable costs’) and those over which

the implementation of a cost-plus system of tariff regulation,

it has no direct control (‘uncontrollable costs’).

its efforts to boost productivity and the impact of using opera-

Fair remuneration

tional surpluses. Elia’s tariffs are among the most competitive of all those charged by Europe’s transmission system operators, as was confirmed once again by the comparative study of 2007 tariffs conducted by ETSO (European Transmission System Operators). In 2008, given that the surpluses carried over from previous years were modest and taking inflation into account, the tariffs were in line with the average tariffs for the period 2004-2007. Tariffs will now remain unchanged until 2011. Information supplied by the Belgian regulator shows that at present transmission tariffs generally account for around 4% of residential consumers’ bills (including taxes and levies). Nonetheless, power transmission has a very minor bearing on final electricity prices and any increase in tariffs per unit transmitted must be assessed in terms of the overall cost-effectiveness for consumers and the Belgian economy. Better market operation, greater access to competitive wholesale electricity prices and improved security of supply, to name but a few, all have a welcome and beneficial impact on the overall electricity bill and on the Belgian economy.

Tariff regulations

the authorised fair remuneration, as well as the predicted values of various cost categories, including those over which Elia

The fair remuneration is the return on capital invested in the network. It is based on the average annual value of the regulated asset base (RAB), which is calculated annually, taking into account new investment, depreciations and changes in working capital requirements. In the context prevailing since the start of 2008, the following formula is used to calculate the fair remuneration, when consolidated capital and reserves make up more than 33% of the consolidated balance sheet total, as is the case at present: A : [33% x average RAB x [(OLO n)+(Beta x risk premium)]] plus B : [(S – 33%) x average RAB x (OLO n + 70 base points)] minus C : adjustment of excessive depreciation rates in the past, where - OLO n is the rate of Belgian ten-year linear bonds for the year in question; - S = consolidated capital and reserves/RAB, in accordance with Belgian accounting standards (Be GAAP); - Beta will, eventually, be calculated based on Elia share

Most of Elia’s income is generated from the regulated tariffs

prices, compared with the Bel20 index, over a seven-year

charged for use of the transmission system (tariff income),

period. In a transitional phase, the tariff regulations stipu-

which are approved in advance by CREG. A new tariff regu-

late using Electrabel’s Beta for the period preceding Elia’s

lation mechanism took effect on 1 January 2008, whereby

flotation on the stock exchange. The value of Beta cannot

the approved tariffs apply for a four-year period, barring ex-

be lower than 0.3.

ceptional circumstances*. CREG approved the tariffs for the period 2008-2011 in December 2007. The tariff mechanism is based on accounts stated in accordance with Belgian accounting regulations (Be GAAP). The tariffs are based on budgeted costs, less a number of sources of non-tariff income**, and on the estimated volumes of electricity taken from the grid.

* However, Elia is entitled to request an adjustment of the tariffs during the period 2008-2011, for example in the event of exceptional circumstances, the launch of a new product or a change to an existing product. ** The main non-tariff income derives from the allocation of transmission capacity at the Dutch and French borders, inter-TSO compensation as remuneration for international transit, the capitalisation of some staff costs and telecom services.

116  Elia — Annual Report 2008


Part A

Uncontrollable costs

The rate of remuneration (in %) as set by CREG for year ‘n’ is

The costs over which Elia has no direct control (‘uncontrolla-

equal to the sum of the risk-free rate, i.e. the average rate of

ble costs’) are an integral part of the costs used to determine

Belgian ten-year linear bonds and a premium for market risk

the tariffs. The tariffs are set based on forecasted values for

for shares, weighted using the applicable beta factor.

these costs.

The tariff regulations set the risk premium at 3.5%. For 2008,

On the other hand, the balances of such uncontrollable costs

the applicable beta factor is calculated based on the historic

(whether positive or negative), i.e. the difference between the

beta factor for Electrabel, compared with the Bel20 index,

actual and forecasted costs, will be established ex-post and

over a seven-year period.

their allocation will be the subject of a royal decree debated

CREG recommends that Elia’s solvency ratio (average capital and reserves/average regulated assets) should be as close to 33% as possible. This ratio (33%) is applied to Elia’s average regulated asset base (RAB) to calculate the reference for Elia’s capital and reserves. Part B If Elia’s actual capital and reserves are higher than the reference capital and reserves, the surplus amount is balanced out with a reduced rate of remuneration calculated using the following formula:[(OLO n + 70 base points)]. Part C CREG also decided that the annual fair remuneration margin should be reduced by €12.4 million (before taxes) up to and including September 2012 but limited to the first three quarters of the year, due to overly rapid depreciations before Elia System Operator was appointed system operator, which it considers to be excessive. The tariff regulations also provide for the possibility of set-

in the Council of Ministers. This could result in an increase or decrease in future tariffs Controllable costs The costs over which Elia has direct control (‘controllable costs’) are subject to an incentive regulation mechanism: in other words, they are subject to application of a productivity and efficiency improvement factor. This factor indicates the effort that Elia must make to control such costs: the authorised costs used to determine the tariffs are established following application of this factor. The productivity improvement required of Elia over the period 2008-2011 is stipulated in the Royal Decree of 18 December 2007. The amount for 2008 was €4 million. On the other hand, the balances of such controllable costs (whether positive or negative), i.e. the difference – established ex-post – between the actual and authorised costs, are in principle either added to or deducted from the fair remuneration.

ting higher remuneration rates for invested capital in order to finance projects of national or European importance. In the absence of a decree implementing this provision of the Electricity Act, this measure was not carried out in 2008.

Elia — Annual Report 2008  117


Reconciliation shareholders’ equit y– net prof it: Be GAAP-IFRS The table below shows the deviations that emerge when ap-

Group’s net profit under Be GAAP valuation rules is €87.1 mil-

plying IFRS to consolidated data compiled under Be GAAP. The

lion, changing to €103.1 million under IFRS.

(in € million)

31 December 2008

31 December 2007

1,367.9

1,340.7

(2.1)

(22.1)

Shareholders’ equity Shareholders’ equity Be GAAP IFRS adjustments previous years

IFRS adjustments

Capital/ shareholder's equity

Hedging reserve IAS 32/39

IAS 19 movements recognised directly in equity

Capital/ shareholder's equity

Profit for the year

Hedging reserve IAS 32/39

IAS 19 movements recognised directly in equity

Profit for the year

Software

4.1

4.7

Elia Engineering goodwill

1.4

1.4

Hardware

(0.5)

(1.3)

Valuation inventory

(0.1)

0.0

Employee offering: amounts receivables from personnel

0.0

0.2

Long term debts

(29.8)

Employee benefits

(0.1) (18.1)

Provisions ligations

7.8

17.5

(0.2) 7.6

17.8

(2.6)

(2.3)

0.1

Deferred taxes

10.1

6.2

0.2

(5.8)

(2.7)

Elia Re consolidation

2.8

2.3

Balance future tariffs

(5.6)

(13.0)

Expenses capital increase Capital grants

0.1 (2.2)

Contracts

(0.1)

0.6

(0.6)

0.0

(0.3)

0.0

0.3

Share of profit of equity accounted investees

0.4

2.0 (2.1)

(19.7)

(11.9)

16.0

0.0 0.3

5.1

5.0

9.6

(17.7)

20.0

1,348.1

1,338.6

Profit for the period Be GAAP

87.1

68.0

IFRS adjustments

16.0

9.6

103.1

77.6

Total Shareholders’ Equity IFRS

Profit

Profit for the period IFRS

118  Elia — Annual Report 2008


Joint auditors’ repor t on the consolidated financial statements

Elia — Annual Report 2008  119


120  Elia — Annual Report 2008


Abbreviated statutory financial statements of Elia System Operator SA The next pages include excerpts from Elia System Operator

These documents are also available on Elia’s website: www.

SA’s statutory financial statements presented in accordance

elia.be and can be obtained on request from Elia System

with Belgian accounting standards.

Operator SA, Boulevard de l’Empereur 20, 1000 Brussels,

In accordance with the law on commercial companies, the complete financial statements, the annual report and the joint auditors’ report will be deposited at the National Bank

Belgium. The joint auditors have issued an unqualified opinion with explanatory paragraphs on the statutory financial statements.

of Belgium.

1. Balance sheet after appropriation (in million €)

2008

2007

3,314.6

3,314.1

ASSETS FIXED ASSETS Financial fixed asset

3,314.6

3,314.1

Affiliated company

3,306.5

3,306.0

3,306.5

3,306.0

8.1

8.1

Participating interests Other enterprises linked by participating interests Participating interests

8.1

8.1

773.3

5,64.7

Amounts receivable after more than one year

93.8

0.0

Trade debtors

93.8

0.0

Inventories and contracts in progress

2.6

1.0

Contracts in progress

2.6

1.0

Amounts receivable within one year

632.9

525.1

Trade debtors

208.0

152.0

Other amount receivable

424.9

373.1

Investments

16.0

24.6

Other term deposits

16.0

24.6

CURRENT ASSETS

Cash at bank and in hand Deferred charges and accrued income TOTAL ASSETS

2.1

1.0

25.9

13.0

4,087.9

3,878.8

Elia — Annual Report 2008  121


(in million €)

2008

2007

EQUITY AND LIABILITIES CAPITAL AND RESERVES

1,276.0

1,255.4

Capital

1,201.3

1,200.9

Issued capital

1,201.3

1,200.9

Share premium account Reserves

8.5

8.5

36.0

21.0

Legal reserve

36.0

21.0

Profit carried forward

30.2

25.0

3.9

4.0

3.9

4.0

PROVISIONS AND DEFERRED TAXES Provisions, deferred taxes

3.9

4.0

LIABILITIES

Provisions for risk and charges

2,808.0

2,619.4

Amount payable after one year

1,554.0

2,191.5

Financial debts

1,554.0

2,191.5

998.2

998.0

Unsubordinated debentures Credit institutions Other loans Amount payable within one year

60.0

310.0

495.8

883.5

1,138.1

274.1

Current portion of amounts payable after more than one year

637.7

0.0

Financial debts

161.9

0.0

161.9

0.0

Trade debts

240.9

190.8

Suppliers

240.9

190.8

Advances received on contracts in progress

5.0

1.3

Amounts payable regarding taxes, remuneration and social security costs

5.5

7.0

0.0

1.9

Credit institutions

Taxes Remuneration and social security Other amounts payable Accrued charges and deferred income TOTAL EQUITY AND LIABILITIES

122  Elia — Annual Report 2008

5.5

5.1

87.1

75.0

115.9

153.8

4,087.9

3,878.8


2. Income statement (in million €)

2008

2007

Operating income

728.5

702.7

Turnover

722.9

699.9

Increase (+), decrease (-) in inventories of finished goods, works and contracts in progress

1.6

0.4

Other operating income

4.0

2.4

(579.4)

(539.0)

(551.3)

(510.5)

(28.2)

(28.4)

0.1

(0.1)

OPERATING INCOME

149.1

163.7

Financial income

71.4

32.1

Income from financial fixed assets

52.7

15.6

Income from current assets

18.7

16.5

Financial charges

(118.1)

(107.9)

Interest and other debt charges

(117.4)

(107.4)

(0.7)

(0.5)

102.4

87.9

Extraordinary income

2.9

12.1

Other extraordinary income

2.9

12.1

Extraordinary income charges

0.0

(4.5)

Other extraordinary charges

0.0

(4.5)

PROFIT FOR THE FINANCIAL PERIOD BEFORE TAXATION

105.3

95.5

Income taxes

(19.2)

(27.9)

Income taxes

(19.2)

(27.9)

0.0

0.0

86.1

67.6

Operating charges Services and other goods Renumeration, social security costs and pensions Provisions for liabilities and charges

Other financial charges PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION

Adjustments of income taxes and write-back of provisions PROFIT FOR THE FINANCIAL PERIOD

Elia — Annual Report 2008  123


124  Elia — Annual Report 2008


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Heverlee

prévus

TIENEN

BRUSTEM

Tongeren

LIXHE

Montzen (SNCB)

BERNEAU BASSE-WAVRE

AVERNAS

Jodoigne

O

CHERTAL

Ottignies (SNCB) Saives

Hannut

BRESSOUX JUPILLE

Glatigny CORBAIS

2

le

Dy

SERAING

Aische-en-Refail

Ivoz AWIRS

Sauvenière CroixChabot

COGNELEE

Andenne

Marche-les-Dames

S -Servais AUVELAIS

Soiron Pepinster

Sambre

JEMEPPESOLVAY

tension d’exploitation inférieure à la tension de construction

70(150)

uitbatingsspanning lager dan de constructiespanning

1 2

e

Samenstellingtabel van de lijnen met meer dan 2 draadstellen: 7 8 9

2 x 150 + 1 x 70 (3 x 150) 4 x 150 1 x 150 + 2 x 70 (3 x 150)

3 x 380 (4 x 380) 3 x 70 2 x 150 (4 x 150)

10 1 x 150 + 1 x 70 (2 x 150 + 1 x 70) 11 4 x 70 12 3 x 150

1 x 150 + 3 x 70 (4 x 150) 2 x 150 + 2 x 70 (4 x 150) 2 x 150 (2 x 380 + 2 x 150)

Bevercé

che

3 x 150 (4 x 150) 3 x 150 + 1 x 70 (4 x 150) 3 x 220 1 x 380 + 2 x 150 (2 x 380 + 2 x 150)

380kV

220kV

220kV

Bronrome

150kV 70kV

2

câbles en parallèle

2

CENTRALES

CENTRALES

COO

Stephanshof

BRUME Trois-Ponts

Bomal

centrale thermique

Amel

Miécret

thermische centrale

centrale thermique en projet

Amel [Amblève]

thermische centrale in ontwerp kerncentrale

centrale nucléaire

waterkrachtcentrale pompcentrale

centrale de pompage SNCB Ou

Dinant

e

Cierreux

Marche-enFamenne MARCOURT

Hastière

Buissonville

Charneux

On

Romedenne

STATIONS

POSTES

rth

Hogne (SNCB)

windmolenpark

parc d'éoliennes

Sankt-Vith [Saint-Vith]

Soy

Ciney

ACHENE

parallele kabels

Holzw arche

Dori nne

Sommière

JAMIOLLE

1 x 220 + 2 x 70

70kV

Bütgenbach [Butgenbach]

ve

Florée

Yvoir (SNCB)

1 x 70 (4 x 150)

380kV

150kV

War

blè

Sart-Bernard (SNCB)

Warnant

13 14 15 16 17 18

ONDERGRONDSE KABELS

CABLES SOUTERRAINS

Heid-deGoreux

Comblain

Hanzinelle

EUVILLE

lijn met 2 draadstellen van verschillende spanningen

centrale hydraulique

Gerpinnes

e-Château

2 de draadstel in aanbouw of in ontwerp 150 + 70

Spa

Am

Bois-deVillers

(met referentienummer in de samenstellingstabel) in aanbouw of in ontwerp

lignes à 2 ternes de tensions différentes

3 4 5 6

G

pp

Grands-Malades

FARCIENNES

4

Tableau des compositions des lignes à plus de 2 ternes:

Vesdre

ile

Turon

H te SARTE

Wierde

MONTIGNIES

1 2

>2

er

Gileppe

s

Ve

SNCB

RIMIERE

es

Stembert e dr

2

Namur

TERGNEE

P T-RECHAIN

ROMSEE

LA TROQUE LE VAL

SNCB

FLEURUS

EUPEN W

Statte GRAMME (SNCB)

SEILLES

CHAMPION t

2 2

Wanze

S T-AMAND

LA PRAYE FOUR Y

BATTICE

1

1 2

2 e terne en construction ou en projet

GARNSTOCK

Les Plenesses

CLERMONT

TIHANGE Waret

S

Monsin

FIBER

Leuze

Gembloux

HenriChapelle

uitgerust

1

1

2 2

en construction ou en projet

Welkenraedt (SNCB)

Fooz

Meuse

Ceroux

voorzien

installés

(avec numéro de référence dans le tableau des compositions)

NMBS Landen

existants

bestaande

en projet

in ontwerp

380kV

MERCATOR

380kV

220-150kV

MOLENBEEK

220-150kV

70kV

Herbaimont

70kV

MONT-LEZ-HOUFFALIZE Le

COURS D’EAU

ss

CHOOZ

e

Forrières (SNCB)

WATERLOPEN Rivieren en kanalen

Rivières et canaux

Pondrôme

VIREUX Couvin Meuse

Herbaimont

Hatrival

Ou

VILLEROUX

r

VIANDEN S.E.O. Recogne

REVIN

MAZURES

FLEBOUR

Monceau-en-Ardennes

Sûre

Respelt

LONNY

NIEDERSTEDEM BAULER

Fays-les-Veneurs Orgeo

ois m Se

LUMES

Neufchâteau

Longlier (SNCB)

Vier

re

VESLE

ROOST TRIER Marbehan (SNCB)

Vierre

Villers-s/Semois

Chiny

HEINSCH

Bonnert

SNCB Arlon

se lle

HEISDORF

Mo

E

70kV Aantal draadstellen

>2

2

Court-S t-Et.

150kV

1 HERDEREN Borgloon

BAISY-THY

220kV

Nombre de ternes

S t-Truiden

UD

380kV

220kV 70kV

le

E E]

380kV 150kV

Dij

WOLUWE-S T-L. ST-L. WOLUWE

Uitbatingsspanning

Tension d’exploitation

ZUTENDAAL

Kersbeek

BOVENGRONDSE LIJNEN

LIGNES AERIENNES

GODSHEIDE

(NMBS)

Rivage (SNCB)

Anthisnes

SIKEL

Hasselt

1 : 500 000

Poulseur

Abée-Scry

MARCHIN

STALEN

Paalsteenstr. Halen

WIJGMAAL

H te SARTE

EISDEN

WESPELAAR

E

rthee Ourth

GRAMME

HOUTHALEN

Muizen

ZAVENTEM

Esneux

RIMIERE

Opglabbeek

TESSENDERLO

KRUISBAAN

NMBS

Les Spagnes AmpsinNeuville

OBERZIER ESSOCHEM

Langveld Grote

PUTTE

MECHELEN

0) 70 (15

CLERMONT Maaseik

AMOCO HEIST/BERG

Vesdr sdree

Ehein

VAN EYCK

MEERHOUT

LINT

Croix-Chabot

MAASBRACHT

Magotteaux

0+

Ramet

Nijlen

L

14

22

WOMMELGEM

ROMSEE

Chênée

0

OELEGEM

SERAING Ferblatil Jemeppe 17 Sclessin Profondval Ougrée LA TROQUE LE VAL IvozRamet Flémalle Sart-Tilman

S t-Huibrechts-Lille M aa s

LOMMEL

15

MERKSEM

BERTRANGE

e re

0

10

20

30 km

LATOUR

AUBANGE

ROUVROY

ESCH-SUR -ALZETTE

MONT ST.MARTIN HERSERANGE

MOULAINE 150 + 70

LANDRES

Differd. Arbed OXYLUX Belv. Arbed

BELVAL

e

S t-MARD ett

Schaal

Situation au

Alz

1 : 1 000 000

Echelle

SCHIFFLANGE

stand op

1-1-2009

Schif.

VIGY

Institut Géographique National

Nationaal Geografisch Instituut


energy on the right track

Concept and editorial staff Elia, dĂŠpartement Communication

Graphic design and coordination www.concerto.be

Photos Tobias Schlitt, Getty, net_efekt, tanakawho, robinbos, Elia

Editor Jacques Vandermeiren

Head Office Elia Boulevard de lâ&#x20AC;&#x2122;Empereur, 20 B-1000 Bruxelles T +32 2 546 70 11 F +32 2 546 70 10 www.elia.be info@elia.be

Contacts Eva Suls, tel. +32 2 546 73 78 ValÊrie Vanhemelen, tel. +32 2 546 75 11 Ce document est Êgalement disponible en français Dit document is ook beschikbaar in het Nederlands April 2009

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/annual_report_2008