Tekniska verken i Linkoping AB

The Swedish government has issued an ordinance that implies lower weighted-average cost of capital (WACC) for distribution system operators (DSOs); and There is a possibility that DSOs will be able to bring forward under-recovered revenues from the past two regulatory periods, rather than just one, as at present. The lower WACC would depress prices and lower revenues for DSOs, although this would be partially offset if revenues can be recovered from two regulatory periods; this has been appealed by the regulator. The new Swedish regulatory framework displays some similarities with the German regulatory framework, which the EU Commission referred to the Court of Justice of the EU to ensure that the Electricity Directive was being correctly implemented. The stable outlook

...Swedish municipal power company (TvAB) is likely to generate stable and predictable cash in 2018. It benefits from predictable revenues in its electricity distribution business and from its natural monopoly in the district heating business. Profitability is supported by a cost-efficient fuel mix as TvAB operates a modern combined heat and power (CHP) plant. The company has a very strong link to the City of Link÷ping. Not only is TvAB 100% owned by the city through its holding company, Link÷pings Stadshus AB (##+/Stable), it also benefits from a municipality guarantee that covers new debt. TvAB's new strategy is to invest in wind generation to expand the renewable generation portfolio.This is in line with the Municipality of Link÷ping's aim to be carbon-dioxide neutral by 2025. As a result, we estimate that debt will increase to about Swedish krona (SEK) 3 billion in 2020, from about SEK2 billion at year-end 2017. Investments are expected to peak in 2019 at SEK1.6 billion. Total capex through...

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