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FINANCES

The most important financial goals of TVO in 2018 comprised achievement of the budgeted production costs and the electricity supply volume specified in the plans. The most important indicators of economic responsibility are presented in the financial statements of 2018.

TVO operates according to the cost price principle, and produces electricity to its shareholders at cost price. The shareholders cover all of TVO’s operating costs and, in return, receive electricity pro-rata to their respective shareholding. They consume the electricity themselves or sell it on to third parties. The cost price model allows electricity companies and electricity consumers of different sizes to participate in major investments, such as those required for nuclear power, and take advantage of the benefits of large-scale production. TVO’s shareholders include 132 municipalities, which means that the benefits of stable costs and predictability based on cost-price electricity are enjoyed across Finland. Due to the cost price principle, conventional financial indicators cannot be applied to TVO, as they were created for comparing profit-making companies. Indicators that are important to TVO and the shareholders include the amount of electricity produced and the load factors of the plant units.

Steady production, power increases and modernization projects

The year 2018 was overall a good production year for the Olkiluoto nuclear power plant of TVO. Olkiluoto 1 achieved a production result of 6.74 TWh (billion kilowatt hours). The production result of Olkiluoto 2 (OL2) was 7.32 TWh. The total electricity production of the whole power plant was 14.06 TWh in 2018. The combined load factor of the plant units was 91.1 percent.

TVO makes investments to improve the availability, profitability, and safety of its nuclear power plant.

In 2018, TVO's investments totalled EUR 177 million.

Financing complies with plans

TVO's financing situation has developed according to plans, with the Company using a versatile mix of financing sources. In addition to international capital markets, the Company obtains long-term funding from banks and other financial institutions. In terms of obtaining capital market financing, credit ratings play an important role. TVO holds good ratings from two international credit rating agencies, among others.

Financing ensures TVO's solvency under all circumstances. TVO's basic principle is to raise about three quarters of the funding required for investments from the financial markets, and about one quarter comes from the shareholders. TVO prefers long-term financing arrangements and financing is always sought for the Company, not for individual projects.

The investments made by TVO are large-scale and their financing arrangements require strong trust. While major projects are in progress, it is important to maintain the trust of investors. From the point of view of investors, the electricity production of OL1 and OL2 is very valuable, as the plant units have been generating electricity for 40 years with high load factors and most of the original investments have already been amortized.

TVO's shareholders, banks and investors strongly trust the operations of TVO. This has been reflected by e.g. shareholder loan commitments made for the completion of the OL3 project, major credit facilities and successful bond issues.

Investors