Responsible operator

Caruna is Finland’s largest electricity distribution company. The electricity network is part of every society’s critical infrastructure. We keep improving our network in a responsible way, to ensure a reliable supply of electricity to our customers and the entire society.

  • During 2017, we continued to make extensive investments into our network and enhanced the reliability of our electricity supply by increasing underground cabling to protect the network from adverse weather conditions.
  • We defined our best ways to support UN’s Sustainable Development Goals through our own operations.
  • Caruna’s strategy and management system were reformed, and the changes took effect in September 2017.
  • Caruna’s net sales in 2017 were EUR 426 million.
  • Tomi Yli-Kyyny started as Caruna’s new CEO on 1 May 2017.

Caruna in brief

Caruna is Finland’s largest electricity distribution company, with a 21% share of the Finnish electricity distribution market. We provide power to 670,000 private and corporate customers in South, Southwest, West and North Finland, and in the city of Joensuu. Our electricity network is over 85,000 kilometres long and would stretch twice around the earth.

We strive to meet our customer’s expectations and, first and foremost, to secure an undisturbed supply of electricity. We improve and develop our networks continuously and are set to invest EUR 200 million a year over a decade to improve the reliability of our electricity supply. Our vision is a million satisfied customers.

We have 276 own members of staff and we directly employ some 2,000 more people in our projects around Finland. Our head offices are in Espoo, Finland.

Caruna is owned by Finnish employment pension companies Keva (12.5%) and Elo (7.5%), as well as international infrastructure investors First State Investments (40%) and OMERS Infrastructure (40%). Our operations are tightly regulated, and the Finnish Energy Authority is in charge of monitoring the power supply trade in Finland.

Corporate structure

Caruna Networks Oy is the parent company of Caruna Networks Group (“Caruna”). The parent company of Caruna Networks Oy is Suomi Power BV, domiciled in The Netherlands. Caruna Networks Oy is the owner of the two other companies in the Group, Caruna Oy and Caruna Espoo Oy.

Caruna Oy and Caruna Espoo Oy conduct regional and distribution network activities in their own electricity networks under a network licence granted by the Energy Authority. Caruna Oy is responsible for electricity distribution in its networks areas in the regions of Uusimaa, Häme, Southwest Finland, Satakunta, South Ostrobothnia, Ostrobothnia, North Ostrobothnia and Lapland. The network in Lapland is mainly located in the countryside, while Caruna Espoo Oy operates in an urban environment in the cities of Espoo, Kauniainen, Kirkkonummi and Joensuu.

Caruna Oy and Caruna Espoo Oy are separate companies with separate pricing policies, because factors such as local network conditions affect the price of electricity distribution.

Up to 31 December 2017, the Group also comprised Caruna Networks Sähkönsiirto Oy and Caruna Networks Espoo Oy. Caruna Networks Oy owned both Caruna Networks Sähkönsiirto Oy and Caruna Networks Espoo Oy, which, in turn, owned both Caruna Oy and Caruna Espoo Oy. The company structure was streamlined at the end of 2017, and from 1 January 2018, Caruna Networks Espoo Oy and Caruna Networks Sähkönsiirto Oy were merged into Caruna Networks Oy.

Financial key figures

From the CEO

For Caruna, 2017 was a year of many changes. We renewed our vision, values, strategy and organisation. Our new values remind us that we work for the benefit of our customers and the Finnish society. Our vision, “A million satisfied customers”, defines our essence: we seek to serve our growing customer base even better than before. We can provide the best customer experience by guaranteeing uninterrupted electricity distribution, every day of the year.

For Caruna, 2017 was a year of many changes. We renewed our vision, values, strategy and organisation.

Last year, we enhanced the customer experience in many ways: we improved our electricity network, updated our customer management and invoicing system, increased the online customer service options and improved the flow of information in our projects. We changed our own organisation, taking into account the geographical distribution of our customers across urban areas and the countryside to ensure that our geographical network improvement projects can better serve them. In 2018, we will reform our online customer service.

We have also renewed our management system to ensure that our new strategy and the key projects implementing it will progress without difficulty.

In the main, we are happy with the results we achieved in 2017. We made our financial targets, moved more than 6,000 kilometres of electricity network underground to make it safe from adverse weather conditions, and renewed our ICT and customer management systems.

Safety is our primary concern. In 2017, we did not reach our occupational safety targets concerning our subcontractors. To address this situation, we launched an action plan to improve subcontractor safety. We will continue our efforts in 2018 to make sure that everybody who works in electricity network building and maintenance will get home safely.

Efficient and reliable operations are dependent on how well we know our supply chain. In 2018, in addition to the normal assessments and audits, we will also carry out a responsibility assessment of all key suppliers.

The electricity network we are building now will serve the Finnish society for the next 40 to 50 years. We are using sustainable and responsibly sourced materials. We are dismantling the old network and ensure that the materials are recycled and reused.

We enable individual citizens to contribute to climate change mitigation by producing energy by environmentally-friendly means.

The global megatrends, such as climate change, urbanisation and digitalisation, also affect the energy sector.  Severe weather fluctuations challenge electricity network companies to act quicker and more efficiently in moving the electricity networks underground, safe from adverse conditions. Legislators chose the right approach when they decided to impose requirements on the reliability of network operations. Society and businesses cannot operate, nor can citizens live their daily lives, without a well-functioning electricity network.

In the next few years, we will need new kinds of operating models in the energy sector, for example to adjust the spikes in electricity consumption. We plan and build our electricity network so that it will be compatible with decentralised generation of renewable energy – by doing so, we enable individual citizens to contribute to climate change mitigation by producing energy by environmentally-friendly means. At the end of 2017, we already had 2,340 producers of solar power in our network.

We also need new kinds of collaboration that bring together a wider range of actors. Our objective is to cause minimum damage to customers, landowners, residents and the environment while ensuring financially efficient operation. We are building the future together, joining our forces with telecommunication companies, municipalities and other partners. It makes sense to all parties that when a trench is dug in the street, more than one cable can be laid at the same time.

Cross-boundary collaboration is also required to achieve the UN’s Sustainable Development Goals (SDGs) by 2030. In late 2017, we carried out a process to select three of the 17 goals that our operations have the most significant impact on and that we are committed to promoting. We will particularly promote the supply of affordable and clean energy, sustainable industry, innovation and infrastructure, and sustainable cities and communities. Caruna’s strategic priorities are directly connected to these three goals.

I wish to extend my thanks to all our employees for their great effort and productivity. We continue working together to ensure Caruna’s success. I would also like to thank our partners as we carry out our mission together, building a reliable, safe and responsible electricity network for Finland. Finally, my warm thanks to our customers – we’re doing this for you.

In Espoo, March 2018

Tomi Yli-Kyyny
CEO
Caruna

Main events during 2017

JANUARY-MARCH

  • Throughout the year, we continued to carry out network improvement projects in all our network areas, aimed at enhancing the reliability of supply. We installed more of our cabling underground where it is protected from storms and other extreme weather conditions that can cause power cuts, cleared trees growing near powerlines and improved our networks by means of various technical solutions.
  • We also increased joint infrastructure construction projects with municipalities and teleoperators.
  • We organised a briefing event for our customers’ electrical contractors and another event on safety and quality issues related to the construction of electricity networks for our subcontractors.

APRIL-JUNE

  • We investigated our customers’ wishes and expectations to enable us develop our pricing options, products and services.
  • In Southwest Finland and Satakunta regions, we started to plan our third project to continue to renew our electricity network and improve the reliability of supply. After competitive tendering, we signed three-year agreements on network improvement work to carry out with Netel, TLT-Group and Vertek.
  • Tomi Yli-Kyyny started as Caruna’s new CEO on 1 May 2017.
  • A total of 19 summer employees worked at Caruna over the summer.

JULY-SEPTEMBER

  • We started to plan a new 110-kV powerline between Ranua and Pudasjärvi, aimed at improving the reliability of electricity supply.
  • In August, the Kiira storm damaged our network and caused powercuts to our customers in the region of Uusimaa.
  • We renewed our customer management and invoicing systems.
  • Caruna was awarded the ISO 55001 certificate acknowledging the quality of our work in managing our network.
  • We updated our strategy and renewed our organisation and management team.

OCTOBER-DECEMBER

  • We continued to take active part in the development of a flexible and customer-oriented electricity system by the smart grid group of the Ministry of Employment and the Economy. The ministry published an interim report of this work in October.
  • Heavy snowfall in October and December caused powercuts in our network areas in South, Southwest and West Finland.
  • In Uusimaa and Häme regions, we started to plan our third project to continue to renew our electricity network and improve the reliability of supply. We initiated a competitive tendering process to select contractors to carry out network improvement work.
  • We assigned our annual Caruna Safety Award to Lounais-Suomen Verkonrakennus Oy, Robert Norrgård from Netel and to Juha Kaltiokumpu from Voimatel.
  • We ran a competition for secondary school pupils, looking for the best energy system concepts for the future. 38 schools took part and the best entries were rewarded.
  • The increasing popularity of small-scale production of electricity became more evident within Caruna’s network areas. The number of solar power systems connected to our network nearly doubled by the end of the year, compared to the previous year.

Case: Innovation challenge to teenagers

How will energy be used and generated a hundred years from now? Is renewable energy the answer to future challenges in energy production, or will personal energy consumption be measured more and more accurately?

Caruna invited 14–16-year-old teenagers to envision the future of the energy sector in an innovation competition organised in honour of Finland’s centenary celebration. The consequent teenagers’ think tank generated videos, pieces of writing, paintings and board games, poems and even a rap song about energy. Based on these creative and inspiring works, renewable natural resources, eco-friendliness and new technologies still in development will be major assets in future energy production.

Ida Mehtätalo and Neemi Sinko from the Joensuu Steiner school reflected on their own role as energy consumers in a bold and broadminded way. Their video examines the causes behind climate change and gives practical tips for energy saving.

“The students’ entries we received display admirable open-mindedness and creativity which we adults can learn a lot from. The teenagers who took part in the competition are clearly very well informed about energy matters and demand ecological solutions for the growing energy requirements of today’s society. The solutions and ideas they have presented offer us great inspiration as we continue to develop our business operations in line with our new strategy,” says Head of Communications Henna Tuominen from Caruna.

The aim in organising this competition was to increase environmental and energy consciousness and spread the feel-good energy in Caruna’s network area. A total of 38 schools from all over Finland participated in the contest, from Espoo to Oulu and from Kurikka to Joensuu. None of the finalists left empty-handed, as the winner of every school was rewarded with a prize of 100 euros.

“I want to thank Caruna for making a contest like this possible. It’s just fantastic to see the achievements and innovations students are capable of. It was invigorating for us teachers too to see the results. Although choosing the winner among numerous superb works was anything but easy,” says physics and chemistry teacher Suvi-Päivi Malvikko from Harjunrinne upper level comprehensive school in Riihimäki.

Finnish electricity market

Electricity production and transmission

Electricity is produced by power plants operated by nuclear, hydro or wind power, or various fuels. Approximately 120 companies and over 400 power plants produce electricity in Finland.

The main grid and distribution networks transmit the electricity from power plants to private homes and other users. Fingrid Oyj is in charge of the transmission of electricity over the national main grid. The main grid transmits electricity from producers to electricity distributors and industrial companies, and electricity distributors distribute electricity to homes and businesses over medium and low voltage distribution networks.

Electricity distribution in short

Regulation of electricity distribution

The Finnish electricity distribution market is strictly regulated and monitored. The purpose of the Finnish Electricity Market Act is to ensure the reliability of supply, competitive prices and effective and equal service practices to end users.

As an electricity distributor, Caruna operates under network licences granted by the Energy Authority. The Energy Authority monitors the operations of electricity distributors and defines an allowed reasonable rate of return for the distribution of electricity. Electricity distributors then use this value as a basis for their distribution prices.

All electricity network trade in Finland is regulated by the Electricity Market Act. It is based on the premise that electricity networks constitute a market place for producers and users, that, on equal and reasonable terms, offers services to all electricity trade parties, both suppliers and buyers. Network operators, such as Caruna, are required to utilise, develop and maintain their networks in accordance with the needs of the electricity market, and thus secure the functionality and reliability of the electricity distribution system for their part. Network operators are also required to offer customers a network connection and supply electricity on equal and reasonable terms.

Data management is likewise an important element of all electricity market activities. Caruna is under a specific, statutory obligation to remain impartial and to share all necessary data between all market parties but, on the other hand, also required to comply with the regulations on handling personal information. These regulations specify that consumers are always entitled to manage any information concerning them.

The Electricity Market Act was amended in 2013, with the aim to improve the security of electricity supply.

The Electricity Market Act was amended in 2013, with the aim to improve the security of electricity supply. The Act specifies that service interruptions caused by storms or snowfall must not exceed six hours in urban areas or 36 hours in any other areas.

All electricity network operators are required to improve their reliability of supply to ensure that outages do not exceed the time limits defined in the Act after 2028. For Caruna, this means significant investments into improving our reliability of supply, for instance, by replacing overhead lines with cables underground and by increasing network automation. Additional investments are also necessary because aging network structures need to be renovated.

Read more about Caruna’s network improvement programme and network renovation principles.

Monitoring of electricity distribution prices

The Energy Authority monitors electricity distributors’ revenues in four-year regulatory periods. If the revenue from any regulatory period exceeds the limit of reasonable return defined by the Energy Authority, the company accrues overincome. If, on the other hand, the revenues realised during a period remain below this limit, the company accrues underincome.

Caruna defines its electricity distribution prices by estimating its revenues and expenses.

Caruna defines its electricity distribution prices by estimating its revenues and expenses. Several factors influence the amount of expenses, such as the inflation, interest rates and weather conditions, for instance, and the estimates are therefore rarely realised precisely as they are.

Should the amount of collected electricity distribution fees remain below the predicted level, Caruna may charge more distribution fees during the following four-year period. If, however, the customers have been overcharged for electricity, Caruna credits the excess to customers during the following period.

Electricity networks in the future

We always strive to develop our services to respond better to our customers’ expectations and society’s changing needs. New technologies, such as energy reserves and wide-scale decentralised energy production, are going to change the tasks and business models of electricity distribution system operators in the future.

Smart meters are a good example of changes brought about by new technologies. We installed these meters for all of our customers in 2014.

Smart meters are a good example of changes brought about by new technologies. We installed these meters for all of our customers by the end of 2014, and they allow the customers to purchase electrical power by the hour and monitor their consumption at Caruna’s energy reporting service.

The smart grid working group set up by the Ministry of Economic Affairs and Employment is looking for ways to improve the opportunities for customers to get involved. The working group intends to guide electricity network design and construction work to a direction that allows private homes get more actively involved in the electrical power market by selling the electricity they generate with their small-scale production equipment, for instance.

Caruna’s role in the working group is to act as a technical advisor and provider of services and solutions that answer the customers’ needs. The working group will present their guidelines for the future of the entire Finnish electricity grid in an official report in the autumn 2018. The Ministry published an interim report of this work in October 2017.

In addition to planning for the future, Caruna is building a strong foundation for future energy markets, thanks to our network improvement projects already underway. Our current network construction principles enable a large-scale and cost-effective connection of renewable energy sources to our network. Smart meters also offer our customers the opportunity to sell on any electricity they produce but do not need for their own use.

Corporate responsibility

For Caruna, responsibility and sustainability mean that we are trustworthy and accountable to our customers, partners and owners, for the benefit of the Finnish society, and that safety and the environment always come first in all our operations.

Good corporate citizenship is one of the three priorities in Caruna’s strategy.

Good corporate citizenship is one of the three priorities in Caruna’s strategy, updated in 2017. Caruna’s operations are based on customer-oriented and efficient core business, aiming to improve our reliability of supply and to strengthen our customer-oriented approach in all operations and processes. Our third strategic priority, growth and new services, is our way to get involved in building the Finnish society of the future.

Read more about Caruna’s strategy.

In 2015, we outlined the most significant impact factors of our operations, defined our key sustainability themes and set goals for our corporate responsibility.

  • Our goal is to be Finland’s most responsible electricity distributor, able to generate added value to its customers, owners and society at large.
  • We provide a reliable electricity network for a safe and environmentally responsible distribution of electricity.
  • We realise our vision by conducting our work ethically and taking the long-term view, together with our partners.

Key corporate responsibility themes

We defined the main impacts of our business in accordance with the Global Reporting Initiative (GRI) G4 materiality analysis guidelines in 2015. Along this analysis process, we outlined the core focus areas of our corporate responsibility and GRI G4 aspects.

Read more about the materiality analysis process in the GRI and data section.

We improve our operations and generate related reports focusing on the essential themes of corporate responsibility. We take the results of this process into account also in planning and implementing stakeholder collaboration.

We will carry out a new materiality analysis process and introduce GRI Standards into our corporate responsibility reporting during 2018.

Themes and aspects of corporate responsibility

Corporate responsibility principles

Caruna’s HSE (Health, Safety and Environment) policy describes our corporate responsibility principles:

Our products and services are safe, of a high quality and easily available.

  • Our company, all personnel and business partners adhere to the applicable laws and other regulations, best practices and sector standards.
  • We develop our electricity network by taking into account health, safety and environment concerns, both in our daily activities and long-term operations.
  • All of our employees and business partners must be provided the opportunity to work in a healthy, safe and motivating work environment.
  • Our products and services are safe, of a high quality and easily available.
  • We promote the culture of good health, safety and wellbeing in all our activities by setting goals, targets and plans of action in the spirit of continuous improvement.
  • We identify the environmental impact of our network assets and operations, and manage them carefully, and take into account the entire life-cycle of electricity networks.
  • We prevent and minimise any damage to people and the environment by systematic risk assessments.
  • We require our employees and business partners to commit to our responsible practices and common goals.
  • We collaborate with municipalities, authorities, private land-owners and other external stakeholders.
  • Our operations are characterised by openness in internal and external communications, thus creating trust among customers, business partners and other stakeholders.

Energy Efficiency Agreement

Energy efficiency is a key element of Caruna’s environmental responsibility and customer cooperation.

Energy efficiency is a key element of Caruna’s environmental responsibility and customer cooperation. We have been involved in the National Energy Efficiency Agreement and the Energy Conservation Agreement preceding it since the beginning of the agreement system in 1997. The previous agreement term expired at the end of 2016, and Caruna also acceded to the contract of the new agreement season 2017–2025.

We are committed to taking energy efficiency into account in all our internal operations and to making our own energy consumption more effective, particularly when it comes to grid losses. Our extensive network improvement programme reduces transfer and distribution losses over the network. We also reduce losses through careful network planning, choice of components and optimisation of the basic connection state.

UN’s Sustainable Development Goals

Caruna has chosen three of UN’s 17 universal sustainable development goals and made a commitment to promote these in all our operations.

UN’s Sustainable Development action plan, Agenda 2030, aims to promote the wellbeing of people, to eradicate extreme poverty, to secure the carrying capacity of Earth and the future of the environment, and to enable sustainable and peaceful global development. The energy sector plays a key role in reaching these targets and building a sustainable tomorrow but, at the same time, the solutions required by sustainable development offer the energy sector significant business opportunities.

Caruna has chosen three of UN’s 17 universal sustainable development goals (SDGs) and made a commitment to promote these in all our operations. We chose the goals on which we can have the strongest impact, and Caruna’s strategic priorities are directly connected to these three goals.

Of the UN goals, Caruna particularly commits to promoting the supply of affordable and clean energy, sustainable industry, innovation and infrastructure, and sustainable cities and communities.

 

We promote these goals by improving the reliability of our electricity network and distribution operations nationwide, mainly through our extensive network improvement programme.

We make affordable and clean energy available by enhancing the conditions required for renewable and decentralised production of energy in our electricity network. We promote sustainable industry and infrastructures, and sustainable cities and communities by means of long-term investments into our electricity network, better collaboration with municipalities and teleoperators in the construction and development of basic infrastructures, and by contributing to the security of supply on the national level.

In addition to these three, we identified the following from UN’s 17 goals as objectives we also want to promote in our operations: clean water and sanitation, decent work and economic growth, responsible consumption and production, climate action, life on land, and partnerships for the goals.

 

In addition to developing and maintaining a reliable electricity network, Caruna promotes these six goals by protecting groundwater areas, respecting biodiversity, employing roughly 2,000 professionals, providing safe and equal conditions for work, supporting energy and materials efficiency and recycling, applying responsible, sustainable and equal procurement practices, and by fostering collaboration both with energy sector operators and municipalities and cities.

Caruna will define more accurate indicators for monitoring how well we are able to reach sustainable development goals together with the update of our corporate responsibility programme in the spring of 2018.

Corporate responsibility goals

Caruna has set goals for selected corporate responsibility-related key figures for 2018, shown in the following table.

In the course of 2018, we intend to review the impact of our operations within the changed operating environment, and, if necessary, update our responsibility themes. We will define a new corporate responsibility programme during the spring of 2018.

THEME INDICATOR 2017 GOAL 2017 OUTCOME 2018 GOAL
Reliability of supply SAIDI* 109 min. 123 min. 88 min.
KAH** MEUR 21.4 MEUR 27.9 MEUR 20.8
Cabling rate 48 % 45 % 51 %
Customers covered by the network compliant with the security of supply requirement, excl. holiday homes 70 % 71 % 74.4 %
Customers and the society Customer satisfaction (NPS) 10 % (new, more extensive measurement) -5.0 % 10 (new, more comprehensive measurement)
Reputation survey results Improvement from last year’s measurement Realised Improvement from last year’s measurement
Stakeholder collaboration Active stakeholder collaboration Realised Active stakeholder collaboration
Customer satisfaction regarding network improvement projects Creation of measurement method Completed and in use
Safety Injury Frequency of own personnel (TRIF***) 0 0 0
Injury Frequency of contractors (LWIF****)  8 9.2  8
Electricity-related injuries to third parties (reported to Tukes) 0 8 0
Pass rate of Caruna Card subcontract of training (new 2018 target) 100 %
HR Employee satisfaction 70 68 70
Training days 2 work days/person 3 work days/person 2 work days/person
Absences through sickness < 2.0 % 1.8 % < 2.0 %
Environment Number of oil spills  7 pcs 1 7 pcs (≥ 100kg)
Further processing of dismantled networks***** 30 % 32 % 60 %
Number of pole-mounted transformers in  groundwater areas******  520 800 250
Decrease in the number of overhead lines -3 800 km -3 200 km –3 800 km
Responsible sourcing Description of supply chain and procurement practices Upper level description completed Supply chain described on upper level, as well as procurement practices, in accordance with the Act on procurement in specialised sectors (erityisalojen hankintalaki).​ Descriptions completed
Service provider auditing Six operators audited Realised 6 audits
Pass rate for Supplier Code of Conduct course Pass rate 100%​ Course did not run******​* Assesments compeleted
Responsibility assessment of key suppliers (new 2018 goal)​ 100 %
Openness, ethical business principles and good corporate governance principles Pass rate for Caruna’s Code of Conduct online training 100 % 100% 100 %
Management systems and processes Renewal of management system and development of processes (ISO55001 certification) Completed Development and introduction of a new management model
UN’s Sustainable Development Goals Integration into Caruna’s business plan Completed More specific indicator definitions


*SAIDI = System Average Interruption Duration Index. Average duration of power supply interruptions per customer.
**KAH = Inconvenience caused by the interruption. The indicator shows the calculated inconvenience cost resulting from the interruption of supply, used to reflect the degree of inconvenience experienced by customers.
***TRIF = Total Recordable Injury Frequency. The indicator reflects the ratio of work-related injuries to Caruna’s employees, leading to absences from work or requiring medical treatment visits, in relation to working hours (incidents/million realised working hours).
****LWIF = Lost Workday Injury Frequency. The indicator reflects the ratio of work-related injuries to contractors or subcontractors, including trainees and temporary workers, while they work for Caruna or are within Caruna’s work sites, leading to a disability of at least one working day, in relation to working hours (incidents/million realised working hours).
*****Materials recycling has been outsourced to Kuusakoski Oy from August 2015. The Kuusakoski collaboration concerns new contractor agreements. The goal is to achieve a 30%-recycling rate for materials from dismantled network sections and for those ending up at Kuusakoski in 2017. For older agreements, contractors are in charge of recycling. The recycling rate is set to increase in the future as more contract agreements will be covered by Kuusakoski collaboration.
******The renewal of pole-mounted transformers in groundwater areas is progressing rapidly, and pad-mounted secondary substations have been installed in 2017 as planned. Compared to predictions, a higher number of old transformer/substation dismantling processes take place during the winter of 2018, which also means that we did not quite reach the target level for the end of 2017.
Differing from our previous estimate, we will have to renew some pole-mounted transformers in groundwater areas during 2019. These cases are areas associated with our reliability of supply investments.
*******This course did not run because we chose to focus on the importance of safety and quality in contractor training over 2017.