Annual Report The Energy of Togetherness

Transcription

1 Annual Report 2013 The Energy of Togetherness

2 k Group information

3 The Energy of Together- NESS The energy turnaround is a project spanning generations, with far-reaching technical, economic and social consequences. Increasing quantities of electricity are being generated from renewable sources. EWE is investing in wind farms at sea and on land, is improving its network in order to safely manage the increasing quantities of electricity from volatile feed-in sources, and more. Increasingly, private individuals and local authority politicians are becoming active participants in the energy market, wanting to play a role in determining the future of energy supply. EWE has responded to this wish for participation and supports the people and local authorities in the region to realise their ideas, involving them in operative decisions and investing with them in the future of energy.

4 EWE Group key figures EUR million Change Sales 1 8, , % Operating EBITDA % Operating EBIT % EBIT % Result for the period % Cash paid for investments (total) % Cash flow from operating activities % Balance sheet total 10, , % Share capital % Shareholders equity 2, , % Borrowings 3, , % ROCE 2 in % Equity ratio in % Net financial position 3, , % Gearing ratio Employees (average) 9,162 9, % 1 Previous year s sales adjusted following reclassifications 2 The Return on Capital Employed (ROCE) expresses operating EBIT in relation to capital employed 3 The gearing ratio is the ratio of net financial position to operating EBITDA The accounting methods applied may result in rounding differences of + / - one unit (euro, per cent, etc.). Cover To communicate with one another and to shape the energy turnaround together this is what the title of this year s annual report is intended to express. Read about the ways in which EWE is promoting a more intensive dialogue with the people in the region.

5 EWE Group and business areas EWE GROUP* CENTRAL DIVISIONS / CONSOLIDATION GENERATION INFRASTRUCTURE SALES AND TRADING FOREIGN BUSINESS AND IT EWE AG swb AG EWE swb ISIS GmbH VNG Verbundnetz Gas AG ** EWE ERNEUERBARE ENERGIEN GmbH EWE Offshore Service & Solutions GmbH EWE GASSPEICHER GMBH swb Erzeugung GmbH & Co. KG swb CREA GmbH swb Entsorgung GmbH & Co. KG Offshore Windpark RIFFGAT GmbH & Co. KG DOTI Deutsche Offshore- Testfeld- und Infrastruktur-GmbH & Co. KG ** Gemeinschaftskraftwerk Bremen GmbH & Co. KG ** MVR Müllverwertung Rugenberger Damm GmbH & Co. KG ** EWE NETZ GmbH EWE WASSER GmbH EWE IMMOBILIEN GmbH swb Netze GmbH & Co. KG swb Netze Bremerhaven GmbH & Co. KG Gastransport Nord GmbH Hansewasser Ver- und Entsorgung-GmbH ** EWE VERTRIEB GmbH EWE TEL GmbH EWE TRADING GmbH swb Vertrieb Bremen GmbH swb Vertrieb Bremerhaven GmbH & Co. KG swb Services GmbH & Co. KG htp GmbH ** EWE Turkey Holding A. Ş. EWE Polska Sp. z o. o. BTC Business Technology Consulting AG k Group information * Excerpt of the group organisational chart ** associated company EWE regions Oldenburg Bremen Hanover Berlin Międzyrzecz Poznań POLAND Warsaw Lublin GERMANY Wrocław Kraków Istanbul Germany: EWE head office Poland and Turkey: Residence of the holding company Bursa TURKEY Ankara Kayseri

6 2 EWE ANNUAL REPORT 2013 together we DECIDE 12 together we TALK 16 together we JOIN 8 The Energy of Togetherness Our objective: To enter into a dialogue with the people of the region and shape the energy turnaround together. 8 together we JOIN 12 together we DECIDE 16 together we TALK 22 together we CREATE 26 together we THINK 30 ESSAY by Prof. Dr. Nanz Financial report Management 4 Letter from the Board of Management 34 Group review Supervisory Board report 38 Investor Relations 40 Corporate social responsibility 44 Group management report 45 Basic information about the Group 57 Current situation of the EWE Group 67 Supplementary report 67 EWE AG situation report 70 Primary characteristics of the accounting-related internal control system (Section 289 para. 5 and Section 315 para. 2 no. 5 of the German Commercial Code HGB) 71 Risk and opportunity report 78 Outlook

7 TABLE OF CONTENTS 3 together we CREATE 22 together we THINK 26 ESSAY BY PROF. DR. NANZ Consolidated financial statements 84 Income statement for the EWE Group 85 Statement of comprehensive income for the EWE Group 86 Balance sheet for the EWE Group 88 Statement of changes in shareholders equity 90 Cash flow statement for the EWE Group 91 Notes to the consolidated financial statements of EWE AG 181 Confirmation by the legal representatives 182 Auditor s report 183 Financial statements of the EWE AG Balance sheet for EWE AG 185 Income statement for EWE AG 186 Service 186 Glossary 188 List of abbreviations 189 Index 190 Financial calendar 190 Imprint Five-year financial summary EWE Group

8 4 EWE ANNUAL REPORT 2013 Letter from the Board of Management EWE can look back on a successful year. Following the Group s return to profitability in 2012, we are once again able to present positive results for This brings us a step closer to meeting our objectives and to meeting the expectations of our shareholders; it does not mean, however, that we take the current trends for granted. On the contrary we continue to work intensively on our success and are keeping our eye on the business as a whole, namely its structures, our core processes, progress in meeting business objectives. We are convinced that these efforts will be beneficial to EWE s future. Rebuilding Europe s energy systems presents us with major challenges, but it also creates major opportunities which we want to use to the benefit of our stakeholders. Let us look first at the business numbers. We have maintained sales and the operating result at levels generally comparable with the previous year. Achieving this despite the continued high level of competition and the difficult political and regulatory environment that continues to prevail in the energy sector is particular testament to the performance of our staff. We would like to take this opportunity to thank them for their efforts on the company s behalf. Success in foreign markets means that the EWE Group has sold more natural gas in 2013 than in any year in its history. At the same time we have been able to take important steps towards restructuring the Group s portfolio in Germany. In the past year we have laid the foundation for the Group s future strategy, with focus, concentrated growth, sustainability and local roots being the core elements. Our reporting for the 2013 financial year is based for the first time on the new management structure along the energy value chain. In generation, we are following parallel strategies. We are focused on operating modern and efficient conventional coal and gas power plants. We market much of the electricity and heat generated from these sources directly to large customers. At the same time, we are continuing to expand our renewable energies activities. We will place particular emphasis on the growth of the onshore wind business in the coming years. The introduction of obligatory direct marketing for electricity from renewable production sources is an important step towards integrating renewable energies in the energy market. For many years EWE has been supporting the operators of wind farms and solar generation facilities, helping them to market their electricity in all regions. We are continuing to work on marketing services using the knowledge gained in this way. We continue to consider the situation on the gas market as difficult. Since the USA has increased its focus on cheaper sources of shale gas, and China has concentrated on cheap coal alternatives, an excess market capacity has developed which has, amongst other things, led to a fall in demand for storage capacity. EWE, with around 1.9 billion cubic

9 MANAGEMENT 5 LETTER FROM THE BOARD OF MANAGEMENT THE ENERGY OF TOGETHERNESS GROUP REVIEW 2013 SUPERVISORY BOARD REPORT INVESTOR RELATIONS CORPORATE SOCIAL RESPONSIBILITY The EWE AG Board of Management: Nikolaus Behr, Matthias Brückmann, Dr. Werner Brinker, Dr. Heiko Sanders, Dr. Torsten Köhne metres of process gas storage capacity, is one of Germany s largest storage operators. A new marketing strategy is therefore designed to ensure acceptable levels of utilisation for the Group's storage capacity. The strategic sale of smaller E & P activities to competitors in 2013 was based on these same considerations. The operation of a high performance and highly efficient network infrastructure has always been one of EWE s core activities. The key question regarding the restructuring of the energy supply system is how intelligent electricity networks can be used to integrate the continual growth in the number of local and volatile feed-in sources of wind and solar plants. The intelligent redesign of the network infrastructure will enable this to be done at reasonable cost while maintaining security of supply. This task cannot be solved in isolation. EWE favours network regulatory solutions, for example the reduction of the obligation to draw on renewable energy sources, which can contribute to the overall achievement of the energy turnaround. We began field tests in spring We are also treading new ground with our network participation model. At the current time, local authorities in Lower Saxony hold a 1.6 per cent share in EWE NETZ. Further subscription rounds are planned for 2014 and 2018.

10 6 EWE ANNUAL REPORT 2013 Dr. Werner Brinker Chief Executive Officer Member of the Board, Infrastructure Dr. Werner Brinker. He began his career at EWE in He was initially responsible for gas purchasing. After some years with other energy suppliers he returned to EWE AG in 1996, joining the Board of Management as Board member with responsibility for technology. Nikolaus Behr Member of the Board, Human Resources Nikolaus Behr is on the Board of Management of EWE AG since August He has held various managerial positions in the EWE Group s Network and Controlling departments, and was most recently responsible for the commercial operations of EWE NETZ GmbH. Matthias Brückmann Member of the Board, Sales Matthias Brückmann is on the Board of Management since 1 July Prior to joining EWE, Brückmann was a member of the board of MVV Energie AG. Before, he held management positions at MVV Energie AG, the BFE Institute for Energy and Environ - ment and the Enertec Energie und Technik GmbH. The market conditions for energy and telecommunications services continue to be challenging. Today, competition in the electricity and gas markets is fully established in every sense. The end-customer telecommunications business has always been a competitive one. The combination of energy and telecommunications defines EWE s sales business. We will focus even more on an integrated energy and telecommunications offering in future, as we are convinced that this combination offers optimal market opportunities. The combination of these two sales channels into a single segment underlines this objective. An example for innovative products in this segment is our new house storage system, which enables users to produce their own electricity to cover a large proportion of their annual energy requirements. This product was launched in spring and has generated good results since then. With our product portfolio, our know-how and our regional roots, we consider ourselves to be well prepared for the challenges we will face in the future. We are part of a sector which has to overcome and actively manage significant changes. Experience shows that precisely such phases can result in positive changes, when new approaches are taken and real partnerships are formed. This is why this year s annual report is entitled The Energy of Togetherness. More and more people want to play an active part in the energy market and want to participate in shaping energy supply. EWE has responded to this wish for participation and supports the people and local authorities in the region in the realisation of their ideas, involving them in company decisions and investing with them in the future of energy, for example with locally owned wind farms, network participation models, or invitations to take part in customer advisory committees.

11 MANAGEMENT 7 LETTER FROM THE BOARD OF MANAGEMENT THE ENERGY OF TOGETHERNESS GROUP REVIEW 2013 SUPERVISORY BOARD REPORT INVESTOR RELATIONS CORPORATE SOCIAL RESPONSIBILITY Dr. Torsten Köhne Member of the Board, Power Generation Dr. Torsten Köhne is on the Board of Management since Dr. Torsten Köhne also chairs the Board of swb AG, on which he has been since Prior to joining swb, Dr. Köhne worked for a Bremen-based business law firm. Dr. Heiko Sanders Member of the Board, Finance Dr. Heiko Sanders is on the Board of Management since He worked in various leading positions for EWE. From 2010 on, he was a Member of the Board of Management of EWE ENERGIE AG. Before joining EWE he worked for an accountancy firm. Ladies and gentlemen, we also have major plans for We expect that we will have to suffer a slight decline in our results due to the political and regulatory effects on the energy market. At the beginning of the year we launched a scheme to increase the EWE Group's income in order to counter this trend. We have set ourselves the target of a renewed significant reduction of costs, initiating various efficiency projects and making amendments to existing projects. Of course, it would be nice if we could say that the hardest part of this process was behind us, but this is not the case even though we do look to the future with optimism. We have identified our future growth opportunities and our challenges and aligned our strategies to ensure that EWE continues to be a strong and important business in our region. Our customers, staff and shareholders can count on that. April 2014 Board of Management Dr. Werner Brinker Nikolaus Behr Matthias Brückmann Dr. Torsten Köhne Dr. Heiko Sanders

12 8 EWE ANNUAL REPORT 2013 PARTICIPATION MODEL WIND together we JOIN EWE enables citizens to participate in new wind farms and thereby increase the value creation and local acceptance of the energy turnaround. The company plans to install up to 80 megawatts of wind power by 2015 up to 20 megawatts can be acquired by inhabitants, local authorities and landowners. With EWE, local authorities have an experienced partner when it comes to constructing and managing wind farms. Beyond this, the company s participation concept ensures that local people can also profit from the Cooperation with an experienced regional partner such as EWE presents a good opportunity to grasp forward-looking opportunities in a secure and professional manner. 01 Heiner Lauxtermann, mayor of Zetel local authority use of the wind energy generated. EWE was a pioneer with its investment in wind power turbines as far back as the 1980s, although at that time the plants were of modest scale and performance. The objective was less focused on generating income from the electricity sold, but rather on gaining experience with unpredictable feed-in wind electricity. This should ensure a technological advantage for the task of integrating volatile wind energy in the network. Today, the company has modern wind power facilities on land with a combined nominal performance of 150 megawatts enough to provide power to around 100,000 households. In addition, we generate power with two further wind farms at sea. The many years of technical and commercial know-how gained also benefit the local authorities and residents who have invested in EWE s wind farms. These activities are concentrated in a subsidiary whose employees manage the wind farm projects from their early concept stages through the planning, approval, construction and final commissioning stages. The significant majority of the electricity generated by EWE s own wind farms 01 Heiner Lauxtermann, mayor of Zetel local authority 02 EWE is currently investing 40 million each year in joint wind farm projects with local authorities, local people, and landowners.

13 THE ENERGY OF TOGETHERNESS 9 PARTICIPATION MODEL WIND 02

14 10 EWE ANNUAL REPORT 2013 PARTICIPATION MODEL WIND The two 3 megawatts plants in the Spolsen wind farm are 150 metres tall. 05 The Spolsen wind farm has been feeding in electricity to the network since November 2013, new wind farm projects in other communities are underway. is marketed under the Renewable Energy Act (EEG) via electricity exchanges or to major customers such as Deutsche Bahn, enabling the network to offer environmentally friendly transport services to its customers. There is continuing political pressure to market environmentally friendly electricity, so that the experience gained in this field is of growing importance. Take part and play a role In cooperation with local authorities, residents and landowners, EWE is currently investing up to 40 million annually in the construction of new wind farms. Dr. Torsten Köhne, member of the EWE Board of Management with responsibility for generation, explains: The success of the energy turnaround depends to no small extent on acceptance by the population of the fundamental changes that it necessitates. For this reason, we want to shape the energy turnaround together with local people, and offer them the opportunity to participate in it. The circumstances differ from project to project, and accordingly the investment model is tailored by EWE to suit individual project needs. Much is possible from joint project development, in which the commercial risks and opportunities are spread equally, through to a secure interest-bearing investment in a completed project, for example in the form of a loan. Investment possibilities for different target groups such as local authorities, residents and landowners can be combined within a single project. In this way, interested parties with large investment funds as well as those with smaller budgets can be offered opportunities to participate in wind farm projects in the region. Planning well underway The first EWE wind farm with local authority investment has been generating electricity since November It is located close to Spolsen in the District of Friesland, and consists of two 3 megawatt plants. The Zetel local authority and the landowner each hold 30 per cent

15 THE ENERGY OF TOGETHERNESS 11 PARTICIPATION MODEL WIND shares, while EWE holds a 40 per cent share. We have set out our stall to generate more environmentally friendly energy together with the people of the region, and to improve the quality of life as a result, said Klaus Gerken, the project manager. At the opening cer emony, Heiner Lauxtermann, the mayor of Zetel, said: Coopera tion with an experienced regional partner such as EWE presents a good opportunity to grasp forwardlooking opportunities in a secure and professional manner. In addition to profiting from the earnings of the wind farm, the local authorities also benefit from additional local trade taxes generated, since the wind farm operating company is also located in the community. Further wind farm projects are well underway in Köhlen (District of Cuxhaven), Hatten (District of Oldenburg), Bakum (District of Vechta) and in the borough of Tuchen in Breydin (District of Barnim, Brandenburg). In all the projects local wishes and conditions are taken into account in preparing the local investment concept. In Hatten, for example, it is planned that eight plants will be constructed in 2015, of which it is expected that two will be purchased by the landowners and one will be acquired by residents. Wind power continues to offer enormous potential in terms of environmentally friendly electricity generation, said EWE Chief Executive Officer Dr. Werner Brinker, but in order to actually tap into this potential, it is necessary to involve local people to a much higher degree. Our investment offer is intended to make a concrete contribution to increasing and maintaining the acceptance of wind power in the region. 05

16 12 EWE ANNUAL REPORT 2013 NETWORK PARTICIPATION MODEL together we DECIDE The cities and local authorities are EWE s partners in expanding electricity and gas networks for the energy turnaround. They can participate in a share of the EWE network company and have an influence on significant decisions made by the company. A guaranteed 4.75 per cent is paid on participating shareholdings. The electricity networks are the backbone of the energy turnaround. EWE maintains approximately 82,000 km of electricity cables in northwest Lower Saxony. The natural gas networks are also increasingly important, as these enable the ready distribution of natural gas and biogas for the production of electricity and heat at all times. Approximately 70 per cent of the electricity transported through the EWE electricity network already originates from renewable energy sources and the upward trend continues. The proportion of electricity produced decentrally in smaller generation plants continues to increase at the expense of production in central power plants. In technical terms, the structural changes require the networks to be modified. Socially, they allow increasing levels of participation for everyone who wants to actively shape and carry the change forward the local authorities and the people of the region. 01 We see our investment in the network company primarily as an element of local community purpose oriented towards the general good of the community. The network is an important element of infrastructure, and EWE is a proven community partner which is 74 per cent publicly owned. When approving an investment, it was not only financial aspects that played a role, but also the fact that we, together with other local authorities, can exercise influence over the structure and condition of local energy networks as well as the measures taken to expand and improve them. We are convinced of the good quality and the high value of the network; both are reflected in the continued low level of interruption and out ages in the EWE supply region. Tobias Gerdesmeyer, mayor of the town of Lohne

17 THE ENERGY OF TOGETHERNESS 13 NETWORK PARTICIPATION MODEL Tobias Gerdesmeyer, mayor of the town of Lohne 02 Markus Honnigfort, mayor of the town of Haren (Ems) The opportunity for local authorities to manage their own electricity and gas networks is seen in many places as a chance to increase their influence locally and to participate in determining the pace of the energy turnaround. In addition, profits from the network business should provide a new source of income. But city and local authority councils also recognise that operating the networks is a complicated business. Operating networks is not a risk-free business, as it requires high levels of investment in operations and in development. The operating costs need to fall in line with the revenue path set out by the German Federal Network Agency. Security of supply is also a risk area. On the other hand, the local authorities know from their many years of experience that EWE is a partner that guarantees a uniquely high level of security of supply by European standards. In addition, EWE has shown that it can operate its network reliably and with low levels of downtime despite increasing feed-in levels from renewable energy sources an important location advantage for industry in the region. Shaping the future of energy together The future income from our investment will be provided to a trust which supports community projects in education, art and environmental protection, or which are connected to regional traditions in Haren. This idea received the support of the city council. I see the investment as a secure, long-term and attractive opportunity to build up capital in the trust from the guaranteed interest payments. The income from the trust capital will be available to generations after us. In addition I hope we can set an example; if other companies and citizens participate, the city trust can become a citizen s trust, which will not only help many of its citizens but will also be supported by many of its citizens. Markus Honnigfort, mayor of the town of Haren (Ems) This is why, in May 2013, EWE offered the cities and local authorities of the EWE region the opportunity to invest in a total 25.1 per cent shareholding in EWE NETZ GmbH, the network operator for Ems / Weser / Elbe, Brandenburg and Rügen. For the local authorities this is much more than an attractive investment opportunity. As well as their investment they obtain full shareholders participation rights from determining the basic commercial policies through to strategic and organisational issues. With 4.75 per cent interest guaranteed until 2028, the investment is also financially attractive. By the end of 2013, 64 cities and local authorities had decided to participate in EWE NETZ GmbH

18 14 EWE ANNUAL REPORT 2013 NETWORK PARTICIPATION MODEL 03 Our objective is to continue the partnership with the local authorities that we have enjoyed for many years, and to give them the opportunity to shape the future of energy in their region by means of their shareholdings in EWE NETZ, said Timo Poppe, head of EWE s Infrastructure division. By means of their representation on the Supervisory Board and by attending shareholders meetings, the representatives of the local authorities can ensure their interests are represented and take an active part in decisions made by the company. Among other things they approve the business plan, are able to direct investments, and can participate in significant individual issues. Partnership and trust 03 Uwe Arndt, mayor of the Ahlerstedt local authority 04 Theodor Weber, mayor of the Grossheide local authority EWE demonstrates continuity in partnerships. With our investment in the network company we want to further consolidate our long-term, trusting relationship with EWE. Our local authority hopes to obtain better and quicker information channels as a result of its engagement, and improved opportunities to participate above all in matters which are of particular importance for our community, even with a small financial investment. For us, influencing EWE based on shareholder rights is not our primary objective; rather, we are interested in trust and proximity with our contacts at the company. Both can only continue to grow as a result of closer personal contacts. Uwe Arndt, mayor of the Ahlerstedt local authority by investing in KNN (Kommunale Netzbeteiligung Nordwest GmbH & Co. KG). KNN as a jointly- held holding company enables the local authorities to act on a joint basis, thereby making it easier for the partners to conduct their commercial activities together. Hans-Joachim Iken, Managing Director of Invoicing and Customer Service at EWE NETZ, notes that a new relationship of trust has been established between EWE and local authority politicians. We are being heard and understood once again, he said. This is not only due to the investment offer, but also due to the way in which EWE approaches local authorities with the offer. Iken emphasised that it has been created jointly in dialogue with mayors, local authorities and counsellors. In addition, partnerships are not only the result of investments and contracts, but are also based on personal trust. Our staff, who discussed the pros and cons of the investment offer in more than a thousand individual meetings with local authority politicians, live and work in the region, said Iken. They are in demand in the cities and local authorities as contact persons in all energyrelated questions. For EWE, continued partnerships with local authorities also means a wide range of investors representing local authorities of different sizes and with different financial budgets. For this reason a minimum investment of 10,000 was set, which is uniquely low for an investment of this type in Germany. EWE created an investment prospectus to ensure the highest possible level of transparency. This way, explained Guido Kühling, head of the Infrastructure Project Management department, the cities and local authorities have a reliable source of information and a basis for their decision.

19 THE ENERGY OF TOGETHERNESS 15 NETWORK PARTICIPATION MODEL The decision made by our local authority to take a more active role in energy supply matters in the future was already made before we made our investment in the network investment subsidiary KNN. We have looked for the best way to keep up the dialogue with the network operator in the region and to secure for ourselves the right to participate in the expansion of the network. With the formation of the local authority investment company, EWE has made this possible. For the renewed granting of easements to EWE, the prospect of securing sustainable and above all reliable energy supplies for our residents was decisive. That our investment can achieve good, low-risk returns was also important to obtain a broad level of acceptance of the council s decision in favour of EWE. 04 Theodor Weber, mayor of the Grossheide local authority 64 LOCAL AUTHORITIES ALREADY PARTICIPATING EWE's network participation model now enables local authorities to acquire a 25.1 per cent share of EWE NETZ GmbH. By the end of the first subscription period in autumn 2013, 64 local authorities had decided to participate in EWE NETZ GmbH, investing a total of 31 million. EWE is keen to build on this partnership. Participation No participation

20 16 EWE ANNUAL REPORT 2013 NETWORK ADVISORY BOARDS together we TALK NETWORK ADVISORY BOARDS Many local authorities are taking an interest in developments in regional energy supply markets and not only in terms of making their own financial investments in the sector. On the network advisory boards, they can enter into a direct dialogue with EWE concerning the current, planned or desired expansion of the network in their local regions. Not every local authority can or wants to invest in a network company, however important the future energy network may be. This is why Stefan Schwenke, mayor of Worpswede local authority, welcomes the joint discussions in the newly formed network advisory boards: On the advisory board for the District of Osterholz I can present our aims to our contacts at EWE NETZ and make achieving those aims easier, he said. In addition we can benefit from the know-how that EWE contributes, for example in planning and realising energy projects. Discussions in the first district network advisory board for the districts between the Ems, Weser and Elbe were not limited to electricity and gas networks, but also covered the expansion of broadband coverage, for example. Although EWE as a regional provider is expanding and modifying its own network at a rapid rate, numerous locations with a lower population density are not yet connected to the high speed network. A commercially viable solution cannot be found for all communities. In such cases it may depend on whether local authorities and providers are open to cooperating to find unconventional solutions as was the case in Torsholt, for example, where local people went to work with shovels to dig their own cable trench in order to reduce construction costs. What matters most? The issues that concern local communities are discussed at the district advisory boards. Torsten Wüstenberg, head of the EWE network region Cuxhaven, cites examples from his region: In discussions with city representatives we discuss issues such as street lighting or connecting new residential and commercial districts to the gas, electricity and telecommunications networks, or we coordinate our planned building and maintenance work. In addition, EWE uses the regular meetings to disseminate information on current and strategic plans for the expansion of the network. Depending on current events, further political or economic developments concerning the expansion of renewable energies or the construction of smart grids beyond the scope of the district may be discussed. We enjoy a stimulating exchange, said Torsten Maus, Managing Director of EWE NETZ. The cities and local authorities are important partners for us in implementing the energy turnaround in our region together we can surely drive the changes forward more effectively. 01 Mayors from the Cloppenburg district met in the Zentrum Zukunft and made a joint decision to form a Network Advisory Board as in other districts in the EWE region.

21 THE ENERGY OF TOGETHERNESS 17 NETWORK ADVISORY BOARDS 01

22 18 EWE ANNUAL REPORT 2013 CUSTOMER ADVISORY BOARDS CUSTOMER ADVISORY BOARDS New ideas, criticism, feedback and encouragement for EWE, the work of the customer advisory boards since 2011 has been priceless. Concrete results of the regular meetings are improved clarity in invoicing, new service offerings and more information on the energy turnaround. The best way to hold an open discussion is face to face. This way, partners in a discussion who come from different backgrounds and who have different knowledge sets can combine to create new perspectives. Criticism can be expressed and accepted, and prejudices can be overcome. For exactly this reason EWE created three customer advisory boards, one each for the Weser / Ems, Weser / Elbe and Brandenburg regions. Intensive dialogue Discussions on the advisory boards are productive. It is precisely this direct exchange that results in concrete ideals and suggestions for improvement, explains Christian Haferkamp, Managing Director of EWE VERTRIEB at the meetings. For example, the members of the advisory boards pressed for more transparency in invoicing, advertising and correspondence. They suggested loyalty offers for long-term EWE customers, to complement offers made to new customers. Further, they asked for more understandable and detailed information on the consequences of the energy turnaround for electricity and gas consumers. On the other hand, EWE managers and employees asked how products and services provided by EWE are received by advisory board members, and they wanted to know how the company s involvement in the community is perceived. How the work of the boards is bearing fruit can be seen and read in the EWE magazine hallo nachbar. All households in the Ems / Weser / Elbe region receive the magazine, with a total of 980,000 copies distributed four times a year. In addition, a further 300,000 households in Brandenburg have been receiving an edition with issues concerning their region since November In my view, the work of the customer advisory board has improved the communication between EWE and its customers. And while contact has got better, the company s ties to existing customers could be even stronger. Of course, we were not able to reduce prices through the customer advisory board, but now I can follow and understand the company s pricing policies much better. EWE staff have not held back information from us. I made the case on the customer advisory board for longterm price stability; I find that more important than short-term offers. Also, EWE should provide more information about the many smaller projects that the company supports. Catherina Spille, Ahlhorn, tax consultant

23 THE ENERGY OF TOGETHERNESS 19 CUSTOMER ADVISORY BOARDS I read about the opportunity to apply one morning in the newspaper and spontaneously decided to apply. I found it good that a local energy supplier was asking normal customers what it is that they want. Also, I was interested to see whether the company was really going to take the suggestions of the customer advisory board seriously. After two years I can confirm that. Among the things we discussed at the board was the fact that EWE does a lot for new customers, but too little for existing customers. I consider the fact that the products EWE house check and EWE thermographic check are now offered at a much reduced rate to loyal customers a personal success EWE implemented this suggestion very quickly. Sven Merten, Rehfelde (Brandenburg), call centre manager As members of the first customer advisory board, they represented the customer s views within EWE for two years: Sven Merten, Rehfelde (Brandenburg) 03 Catherina Spille, Ahlhorn 03 Among other things, the magazine provides interesting background information about how the electricity market works or how electricity and gas networks are operated, for example. Employee profiles also provide a personal view of the company from the inside. hallo nachbar also reports on news from the customer advisory boards, for example on improvements recommended by the boards or the search for new members for the next term in office. The magazine also answers questions posed by advisory board members at their latest meeting. The customer advisory boards also ask about progress in expanding the broadband network in the region, about energy prices, or they might want to know how the region profits from the fact that EWE is located here.

24 20 EWE ANNUAL REPORT 2013 CUSTOMER ADVISORY BOARDS 04 advisory members with a deep insight into commercial decisions and is open for criticism and suggestions for improvements. With growing trust on both sides, many members come to identify with the company more and more over the course of their work. We are very happy about that, said Sandra Stamer, responsible staff member for the EWE customer advisory boards. Over time, however, the readiness to provide criticism reduces because of the atmosphere of trust. But we need exactly that criticism in order to continually improve our customer communication and marketing work. For this reason the terms of office for the advisory boards will be reduced from 24 to 18 months in future. In addition, the number of members on each board will be increased from 15 to Heidrun Schröder, Brake 05 Karsten Borchers, Westoverledingen Any EWE customer is eligible to become a member of a board. When a new term of office for board members is approaching, the application form is sent with the EWE customer magazine hallo nachbar. The form is also accessible at all times on the internet. In order to achieve the greatest possible diversity, applications are sorted based on age, employment, residential status and size of household. Thereafter, selections are by lottery. Christian Haferkamp is looking forward to working with the new board members, who have recently been appointed and who will provide their customer input until mid I am looking forward to hearing what they currently find to be of interest in our company and what we can do better in the future. The work of the customer advisory boards is of great importance to the company. For this reason, the Managing Director Christian Haferkamp attends all the meetings so far with only a single exception. Also at the table are further managing directors or heads of department of the telecommunications branch and the respective head of business customer or private customer business in their capacity as host. They all listen to the members of the advisory board and answer questions. An atmosphere of trust A face-to-face discussion is not in itself a guarantee of an more intensive exchange of opinions. A good atmosphere in which everyone can speak their mind without it becoming just a talking shop is important, said Anika Meyer, who also acts as a contact person for the members of the advisory board between meetings. In order to create the right atmosphere, EWE provides the I wanted to experience for myself how EWE dealt with the joint effort of the advisory board, and I was very curious about the topics to be addressed at the meetings. For example, I found it particularly interesting to learn about the role of renewable energies at the company and how well the company informs its customers on this subject. Before my work with the advisory board, EWE was just an energy supplier. Now I am informed about the company s structure and processes. I got to know committed and knowledgeable employees who were very open about the topics and the questions raised by the boards. Our suggestions were accepted and implemented. It would be helpful if EWE could provide transport to the meeting places in future. Heidrun Schröder, Brake, surveyor

25 THE ENERGY OF TOGETHERNESS 21 CUSTOMER ADVISORY BOARDS I had mixed feelings at the start of the first meeting. I found myself asking whether the advisory board would be taken seriously. Would we be an alibi for the discussion about gas price repayments which were going on at that time? My scepticism evaporated quickly, the advisory board was taken seriously. A good dialogue began and some good discussions were held, and we were provided with information. For me it was important to make EWE more transparent and understandable for normal customers, maybe the customer magazine hallo nachbar and other initiatives were a good first step. I hope that EWE will continue on this path and be as open and honest with future advisory boards. I hope that in the future, EWE will comprehensively inform its customers, and above all provide understandable information about its corporate and pricing policies. 05 Karsten Borchers, Westoverledingen, electronic engineer CUSTOMER ADVISORY BOARDS FACTS AND FIGURES 54 hours of discussion between members and EWE employees 3 advisory boards Weser / Ems, Weser / Elbe and Brandenburg 250 ideas and suggestions 18 meetings in the past two years

26 22 EWE ANNUAL REPORT 2013 ENERGY TURNAROUND FORUM 01

27 THE ENERGY OF TOGETHERNESS 23 ENERGY TURNAROUND FORUM together we CREATE EWE aims to shape the energy turnaround in partnership with the people of the region. To this end the company invites people in the region to energy turnaround forum events at various locations. Participants have the opportunity to network with others and to work together to drive forward concrete proposals for the region s energy future. Interest in the energy market is no longer limited to playing the role of customer of finding the best energy provider or the cheapest filling station. Many are active participants as producers of electricity or of heat, with generators on the roofs of their houses or in their cellars. Others decide to support the expansion of renewable energies to protect the climate by choosing green electricity providers or by being energy-conscious in their everyday lives. Other creative ideas for the energy future perhaps go too far for individuals to take a personal role. In order to take active steps one needs collaborative partners and these are not always easy to find. This is why EWE created the energy turnaround forum events. We want to create a platform to shape the energy turnaround with others directly on the spot, said project manager Alexander von Monschaw, describing EWE s aim. organisations from the respective area. This team will assess how the ideas might benefit the energy turnaround in the region, and how they could benefit local people. In addition, the ideas may trigger interest from potential partners, who could take an interest in implementing them. For this reason promising ideas will be presented to potential partners. The participants can then decide if and how the ideas may be implemented. Project leader Sigrid Justus noted: The energy turnaround now directly affects every individual. So that even more people, local authorities and businesses can play a role, we are bringing them together at the energy turnaround forums. However, it is possible that many opportunities to drive the energy turnaround forward locally remain unused. We want to change this in the energy turnaround forums, by using networks and the dialogue between participants. From the idea to the concrete project EWE is inviting participants to attend idea workshop events at nine different locations in the northwest through to summer At these events, participants can present their ideas to others and refine them in discussions with other people attending. Then, the proposals will be presented to a selection team comprising representatives from business, politics and community We want to create a platform to shape the energy turnaround with others directly on the spot. Alexander von Monschaw, Project manager Forum Energiewende 01 The energy turnaround forum events are an opportunity to generate and exchange ideas and to find project partners.

28 24 EWE ANNUAL REPORT 2013 ENERGY TURNAROUND FORUM 02 Local participation in the German energy turnaround in the Ems / Elbe region is already very high. A report entitled People s energy in Germany issued by the trend: research market research institute indicates that 30 per cent of electricity in the northwest is generated by renewable sources owned by residents. This compares to a national average of ten per cent. The spirit of the times The energy turnaround forum with its motto Der Norden packt s an ( the North rises to the challenge ) is therefore in the spirit of the times, as was already evident at the first event in Wittmund. People of all ages and people with very different backgrounds responded to EWE s invitation. An excited working atmosphere was generated quickly between the participants. Intensive discussions were held and contributions were listened to carefully. The arguments and views of some resulted in a sharpening and firming up of ideas formed by others. As the results of the various working groups were presented shortly before 9 o clock that evening, there was noticeable sur prise about how much can be achieved in such a short time through working together. It was worth the effort was the conclusion reached by the majority of the participants, who did not leave the Wittmund city hall right after the event ended, but continued their discussions. The results of their work are very impressive. Local participation boosts the energy turnaround. The selection team now has twelve ideas on the table. One of the proposals is to initiate maintenance programmes for I was positively surprised by the fact that concrete projects were immediately addressed in the forum. Alfred Meyer, Wiesmoor

29 THE ENERGY OF TOGETHERNESS 25 ENERGY TURNAROUND FORUM all existing heating systems to ensure that their full energy savings potential is being utilised. Another idea was that local authorities could acquire one or more elec -tric cars and install an electric charging station at their town halls. Participants were also of the view that education in environmental and energy issues should not be underestimated. Amongst other things, this should include answers to the questions what is cheaper and what value do I place on something. 03 By summer of 2014 we will see which of the ideas discussed in Wittmund by the residents will feature in actual projects. The progress of these can be followed by the general public on the website enpackts-an.de. This site provides up-to-date information on the energy turnaround projects in the region, background on the history of the German energy turnaround and updates about current discussions surrounding the Renewable Energy Act (EEG) , 05 The objective of achieving an environmentally friendly, sustainable form of energy supply motivates many people. Some projects, however, can t be achieved single-handed but only in partnership with others. 03 Ideas are developed, evaluated and put into effect together in a step-by-step process. 04 Ideas to enable the energy turnaround to become reality on the ground are in demand.

30 26 EWE ANNUAL REPORT 2013 INNOVATION MANAGEMENT together we THINK In the search for innovative products and business models, EWE will in future rely even more intensively on the creativity of the people who support the company from day to day, who know it well, and who have an interest in the successful future of the company the employees of EWE. They are unmistakeable the white cubes with a letter slot, and the words Your ideas for our future printed on it. They are situated in highly visible locations where employees of the EWE Group are to be found in the reception areas of the company s administration buildings and sales offices, close to lifts, in the corridors. This ensures that good ideas, sooner or later, can easily make their way to the company s innovation management team in the form of short notes on simple cards which are laid out next to the suggestion boxes. Initially only a few keywords are needed in order to initiate a discussion with Claudia Wallschlag and her innovation team. Every suggestion starts a dialogue, she explains. When an employee passes on their idea to us, it is a sign of enthusiasm, engagement and trust. That s why we look at every suggestion carefully and give feedback. What new products would staff like the EWE Group to offer its customers? Can company processes be organised more efficiently? Are there ideas for new business models which the company can develop? Some ideas can be implemented comparatively quickly and without complication, explains Sebastian Jurczyk, Head of Corporate Development. Other ideas enter new territory and require more time to implement. Nevertheless, they may contribute more in the long term to securing a strong market position. Short communication channels, quick reactions One such idea was put forward by Frank Ruloffs, a network architect with EWE TEL. He is fascinated by ways of generating energy that are promising but are still not yet fully researched. For example, it may be possible in the future to generate energy locally, at low cost and without damage to the environment in small power units using hydrogen, nickel and a special catalyst. If 01 A short description is all that is required an innovative idea fits on the back of a card that an EWE employee can deposit in one of the suggestion boxes.