Reykjavík Energy Finances to Strengthen Reykjaví

Reykjavík, 2017-10-20 16:41 CEST (GLOBE NEWSWIRE) -- The finances of Reykjavík Energy (Orkuveita Reykjavíkur; OR) and its subsidiaries – Veitur Utilities, ON Power and Reykjavík Fibre Network – will continue to strengthen in next years, according to the Group’s consolidated Financial Forecast approved by OR’s Board of Directors today. Operation results will improve and estimated income tax for years 2018 through 2023 will amount to ISK 21 billion and the Company’s owners – The City of Reykjavík, The Township of Akranes, and the Municipality of Borgarbyggd – will receive dividends to the amount of ISK 15 billion.

Tariffs for electricity distribution will decrease but, in general, tariff changes are forecast to be in line with inflation for the period. Possibilities of long-term lowering tariffs will be explored.

Good grip on operations

Operation expenses have been kept under strict control in recent years and have decreased in real terms. Furthermore, operation expenses decrease in nominal terms between years 2017 and 2018. This has allowed the company to service its debt considerably. This continues and net down-payments of loans in years 2017 through 2023 are expected to be ISK 40 billion.

Renovation of utility systems

Veitur Utilities are responsible for the OR Group’s largest investments. The company’s water works, geothermal heating systems, electric grid, and sewerages, serve from one-half to two-thirds of the population of Iceland. Renewal of hot- and potable water mains are among the largest projects. Various equipment in the electric grid and sub-stations will be renewed as well as older parts of the sewage system. Veitur Utilities’ project of constructing new sewerages for communities in West-Iceland are, for the most part, completed with considerable environmental improvements for the respective communities.

Investment in knowledge

ON Power – that owns and operates two geothermal and on hydro power plants - foresees various investments. Among them in steam wells and in R&D projects related to the sequestration of CO2 and H2S, known as Gas into rock.

ON Power’s Geothermal industrial park by the Hellisheidi Geothermal Power Plant will be under development during the forecast period. ON Power will contribute to The Icelandic Deep Drilling Project in the forecast period by drilling a deep geothermal well with the aim of plugging into a more productive part of the geothermal resource. Earlier such wells, drilled by The National Power Company and HS Orka, have produced promising results and valuable data.

Part of The City of Reykjavík’s Budget

This forecast is made in accordance with OR’s implementation of strategic forecasting through the Beyond Budgeting method. That involves simplifying traditional budget work and forecasts are updated more frequently. The method involves an increased number of managers and other employees in the financial work, who base their decisions on documented policies and clear goals.

OR’s Financial Forecast for year 2018 and long-term forecast for 2019-2023 will now be integrated into the consolidated budget of the City of Reykjavík City.

         Contact:          Bjarni Bjarnason          CEO          +354 5166100