November 27, 2021

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Want answers about Statkraft’s electrical speculation – E24

After the billion dollar mark in the third quarter, SV’s Lars Haltbrekken will ask Statkraft to show what the company is already earning from short-term speculation in the electricity market.

– Stranger: SV’s Lars Haltbrekken wonders why Statkraft isn’t showing more openness about its electricity market speculation.

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I intend to challenge the Secretary of Commerce and Industry on this question, and ask whether it should be Statcraft’s job to engage in such speculation. I don’t think so, says Lars Haltbriken for E24.

He is a parliamentary representative for SV and a member of the Committee on Energy and Environment.

Haltbrekken reacted to Statkraft’s lack of transparency around the “market operations” business area, which lost up to NOK 4 billion in the third quarter.

The division is responsible for hedging parts of Statkraft’s future production in long-term contracts, but also makes short-term “beat the market” trading.

Statkraft explains the third-quarter billion-dollar bill with “market turmoil,” but it won’t say how much the loss might be due to derailed bets.

It’s strange that Statkraft won’t document it. We’re talking about community property, says Haltbriken.

He is now preparing a written question for Trade and Industry Minister Jean-Christian Vistre on the issue.

I would also like to ask the Minister to ensure that Statkraft documents any gains and losses from this business, Haltbrekken says.

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Statkraft traders got a bonus after a ‘strong’ start to the year – and now the gains are completely wiped out

Doubts about the positive contribution over time

As E24 wrote on November 4, “strong” results in market operations led to success bonuses for employees after the first half of the year.

Bonuses were also highlighted as a contributing factor, along with an increase in full-time employees, with Statkraft’s total wage costs increasing by NOK 313 million in the first half of the year, equivalent to 14% growth measured in the same period last year.

Now all the winnings that led to the rewards appearing have evaporated.

“For our business, we have a real loss in the third quarter that offsets the gains from the first half of 2021,” company press call Lars Magnus G√ľnther told E24 after the third-quarter report was submitted.

When the market price of electricity rises sharply in a short time, as happened in the third quarter, the value of Statkraft’s long-term contracts secured by a fixed price of electricity falls. Then reductions must be made in the accounts, and therefore it is not unexpected that market operations will be in the red during the period.

However, consultant and authority expert Halvor Hodevik responded to the fact that results from other activities and speculative activities are not reported separately, as the Petroleum Fund does for its active management.

– In this way, one can get an indication of whether the work over time contributes positively to the outcome. Hoddevik told the E24 recently that I doubt this is the case.

Earnings Pricing for Capacity: Statkraft and CEO Christian Renning Tonsen.

More shares than the competition

E24 asked Statkraft’s chairman, Thorhild Widvey, to find out what basis the company believes speculative business creates value, and why the results are not separately reported.

Widvey sent questions to Statkraft management.

Refer to Management: Statkraft Chairman Thorhild Widvey.

Market activities over time have created significant value for Statkraft. After a very weak third quarter for these activities, due to significant market volatility, the core operating profit of this business is minus two billion crowns so far this year, says Gunther at Statkraft for E24.

He pointed out that the same company achieved operating profits of 2.5 billion in 2020 and 3.1 billion in 2019.

– Also in the years preceding that, the activity gave noticeable positive results as shown by the annual reports. History shows that our marketing activities create value over time, which is also why we do these activities, says Gunther.

However, the figures that document that the speculative part of the business is value creation, the company does not want to share with the outside world.

We already provide more insight into our marketing activities than many of our competitors. Gunther says the split between the different activities has not been reported by us or our competitors.

Despite record losses in market operations, Statkraft’s third-quarter profit was NOK 5 billion, up NOK 3.1 billion over the same period last year.

Read also

Electricity price hike: Statcraft with five billion profits

The reason for the sharp rise in energy prices is due to the sharp rise in energy prices in Europe and the high production of Norwegian hydroelectricity during this period.

Haltbrekken also warned that he would ask written questions to the Minister of Trade and Industry, that he would answer Parliament first, says Camilla Petersen, Director of Communications at the Ministry of Trade and Industry, on E24.

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