11
Operations breakdown
BUSINESS PROFILE
Transmission tariff blueprint
Scope of business operations
Romania
Regulated electricity transmission
Natural monopoly
TRANSELECTRICA
Generation Transmission Distribution End users
Regulated utility (regulated prices)
Pure network company - fully
unbundled from generation and sale of
electricity (not active on the market side)
Defensive business model
Stable and predictable cash-flow
General profile
Transelectrica SACompany under two-tier management system
Romanian Electricity Transmission Network Operator
We lead the power
Transmission Network Extension in the East of Europe
Bucharest, 21 October 2014
Carmen Neagu
Chairman of the Supervisory Board
22
Operations breakdown
BUSINESS PROFILE
Transmission tariff blueprint
Scope of business operations
Romania
Regulated electricity transmission
Natural monopoly
TRANSELECTRICA
Generation Transmission Distribution End users
Regulated utility (regulated prices)
Pure network company - fully
unbundled from generation and sale of
electricity (not active on the market side)
Defensive business model
Stable and predictable cash-flow
General profile
3
Ownership Structure
IPO
Strategic long-term governmental shareholding
• Strategic company holding a key position within a strategic economic sector
• Controlling equity interest to be closely held by the government
• No plans for further reduction of government’s equity share
No special powers retained by the Government in the company bylaws
Transelectrica shareholder structure evolution
since incorporation
76%
24%
2006IPO
Statul Român Alți acționari
59%
41%
2014Prezent
Statul Român Alți acționari
100
%
2000înființare
Statul Român
20002006
IPO 2014
State State Others State Others
4
Supervisory Board In office since May-2013 (appointed by shareholders)
7 seats, 4-years terms
4-year administration plan approved by shareholders (Sep 2013)
Executive Board In office since Sep-2013 (appointed by the Supervisory Board)
5 seats, 4-years terms
Two-tier management system in place as set by the corporate governance ordinance*
(Gov. Ordinance 109/2011 implementing corporate governance at state-owned companies)
• Transelectrica’s management: fully professionally appointed, based on EOG 109/2011.
• Recruitment was carried out by well-known independent executive search firm.
• Both Management Board and Supervisory Board are for 4 year mandates, and are remunerated based on
performance criteria (EBITDA, Total Shareholder Return, Total Investment and Network Downtime).
Corporate Governance
New management system
55
Highlights
Two-tier management. 4-years plan
Management strategy:
• to develop financial management performance at a high level of quality and professionalism;
• continuous improvement of operational management performance to enhance service quality
and increase safety in long-term functioning of the Romanian Energy System within a safe,
solid and innovative Company;
Focus areas:
• Investment: Capex ▲
• Funding sources: debt capital markets, international financial institutions
Expected results:
• Regulated Asset Base (RAB) ▲
• Cost efficiency: OPEX ▼
• Funding mix: diversified sources, predictable costs, extended maturity profile
i
ii
iii
4-year Management/Administration Plan
66
Significant investment volumes ahead
Leu 2.2 billion Capex in the next 4 years
Leu 0.55 billion average annual CapEx
Main investment focus:
Renewal of existing aged grid assets
40% of total planned Capex
4-year Management/Administration Plan
Expected results:
• OPEX ▼(cost efficiency due shift I Capex vs maintenance)
• Regulated Asset Base (RAB) ▲ (strong tariff driver)
• Cross-border volumes ▲(enhanced cross-border interconnectivity enables regional market
integration and fosters cross-border trading as Romania enjoys both extra generation capacity and
relatively lower energy prices)
source: Translectrica source: Translectrica
Capital Expenditure Plan
495 523575
622
2014 2015 2016 2017
Capex plan(Leu m)
34%
2%
23%1%
21%
3%
10%6%
Replacement and upgrade of existing grid
Reinforcement of exisitng grid to prevent futurecongestionsRES integration in Dobrogea
RES integration elsewhere (other regions)
Cross-border capacity increase
Dispatching central platform + Metering system
Protection of critical infrastructure
Other
Investment focus areas10-year grid development plan (2014-2023)
Percentage breakdown of total planned Capex
77
Romania: a nodal point in electric power interconnection
Between RGCE (ENTSO-E Regional Group Continental
Europe) and other zones (still outside) ENTSO-E
(Moldova, Ukraine, Turkey)i
Between different regions of congestions management
within ENTSO-E:
- Central East Europe
- South East Europe
ii
Between UE and non-UE countries within ENTSO-E –
Regional South Group – East European (Directive
72/2009 si Regulation 714/2009 – still not legally
implemented)
iii
Coupling Project of 4 Markets: 4M-MC
• The project performs the coupling by price of the Day Ahead
Markets from Czech-Slovakia-Hungary + Romania
• Members:
Transmission and System Operators from
CZ-SK-HU-RO (TSOs) & Power Exchanges (PXs)
and National Regulatory Authorities (NRAs)
• Observers: TSO & PX & NRA from Poland
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99
Transelectrica’s challenges facing alignment requirements with
2030 policy framework for climate and energy
Development of interconnection capacity to avoid internal/regional congestion
Improving adequacy of the transmission grid (full compliance with ENTSO-E
standards)
Modernization of SE zone Grid & OHL network for evacuation of electricity,
diminishing regional congestions, integrate renewable generation (mainly wind)
and new generation capacities (nuclear Cernavoda 3,4)
High/Heavy investment requirement
Investment challenge ahead 1/2
1010
VarnaDobrudja
TURKEY
Paşakoy
Tihau
Stuparei
IaşiMariselu
SERBIA
Stupina
Gadalin
Mintia
Retezat
Tariverde
Medgidia S
Isaccea
Munteni
Smardan
Constanta
Oradea
Suceava
CHEAP Tarnita Lapustesti
Centrale pe combustibili fosili
Centrale eoliene
Pancevo
LEA 400kV
LEA 220kV
LEA 400 kV utilizata la 220 kV
Rahman
Retehnologizare - prima perioada
Linii noi (> 1000 km)
Crestere capacitate
Fluxuri de putere
Volum mare de CEE
CNE Cernavoda
Cresterea capacitatii de interconexiune
Retehnologizare - a doua perioada
OHL 400kV Gadalin – Suceava, OHL 400 kV
Suceava – Balti, Iasi – Ungheni – Straseni,
OHL 400 kV Resita – Pancevo, internal south-
western route linking Portile de Fier with Arad
Investment highlights 2014-2017
Investment challenge ahead 2/2
Capital Expenditure Plan
Cross-border capacity increase & completion
of the 400kV ring
OHL 400 kV Cernavoda – Gura Ialomitei –
Stalpu – Brasov, OHL 400 kV Smardan –
Gutinas
RES integration & relief of associated
congestions
Integrated power-system dispatching platform,
enhanced metering system and remotely-
controlled equipment in substations
Further development of Transelectrica’s
dispatching capabilities
Modernization programme for substations:
400/110kV/MT Tulcea Vest, 110kV/220/MT
Campia Turzii, 400/110kV/MT Domnesti,
400/110kV Medgidia, 400kV Isaccea,
110kV/MT Suceava etc
Refurbishment and upgrade of existing grid
facilities
1111
11
HU
UA
RS
BG
MD
BG1
BG2
BG3
RS1
RS2
RO-RSCluster
RS1: New cross-border line between
Resita (RO) and Pancevo (RS)
Start: 2014
Completion: 2015/2016
RS2: 3-segment internal route
linking Portile de Fier (RO-RS
interconnection point) with Arad (RO-
HU interconnection point)
Start: 2014 (phase 1) 2018 (phase
2)
Completion: 2017 (phase 1) 2023
(phase 2)
RO-BGcluster
BG1: Internal line between
Cernavoda and Stalpu
Start: 2015
Completion: 2019
BG2: Internal line between
Gutinas and Smardan
Start: 2016
Completion: 2020
BG3: Internal line between
Gadalin and Suceava
Start: 2017
Completion: 2021
PCIs (Projects of Common Interest at EU level)
2 Capex clusters assigned PCI status by EC
PCI benefits
Fast permitting
Regulatory incentives (WACC
premium)
EU financial assistance*
*provided further additional criteria are met (PCI
status alone does not guarantee access to EU funds)
Capex plan: projects in EU’s top priority list
Incentivized Capex (return premium*) *conditions to be met for a WACC uplift are yet to be defined by the Regulator
1212
Ia
şi
SERBIA
TRANSBALKAN
CORRIDOR
Minti
a
Retez
atIsacce
a
Munteni
Smarda
n
Oradea
Suceava
CHEAP Tarnita Lapustesti
CENTRAL & WESTERN
EUROPE
TURKEY
New line/
Upgrade/ uprate
Power Flows
High
penetration of
wind plants
new lines to
strengthen the
transmission and
interconnection
capacity consolidate the grid for
all generation facilities in
the area (renewables
and nuclear)
- facilitates power
exchanges
- ~400 km, 800 MW,
500 kV
new lines &
network
upgrade
to strengthen
interconnection
capacity
Romanian Transmission Grid Map
1313
Investments of National Interest
Investment needs Romania 2014-2017
Other projects of national interest in
course of project preparation and
financing opportunities (partnership
schemes):
Increase of interconnection
capacity program with Republic of
Moldova
Undersea cable HVDC Romania
–Turkey
Connection to the Electricity
Transmission Network of CHEAP
Tarnita-Lapustesti - pumped
storage hydro power plant
The 400 kV ring of Bucharest
1414
TRANSELECTRICA S.A.
www.transelectrica.ro
Stock: ISIN ROTSELACNOR9, Bloomberg TEL RO, Reuters ROTEL.BX
Bond: ISIN ROTSELDBC013
Post: 2-4 Olteni, Bucharest 3, Romania
Carmen NEAGU
Chairman of the Supervisory Board
E-mail: [email protected]
Phone: +40 213035611
Fax: +40 213035610
Contact
1515
THANK YOU!
www.transelectrica.ro