Income statement for 2023

Net revenue in the 2023 financial year rose by €575 million compared with the previous year, from €2,150 million to €2,725 million. The key cause for this rise is the increase in our regulated tariffs for both electricity and gas. This increase is mainly driven by the rising costs for procurement to compensate for network losses and procurement of transmission capacity from TenneT, which is (largely) covered by our tariffs.

• Revenue from electricity was up €539 million on 2022. Almost €500 million of this increase is explained by the aforementioned tariff rises. We also had a larger number of connections and higher transmitted volumes, resulting in a €20 million revenue increase. Among other things, the higher amortisation of customer contributions also resulted in higher revenue.

• Despite the lower number of connections, gas revenue was up €75 million on 2022. All of this was due to the increased regulated tariffs.

• In contrast to the tariffs for electricity and gas, the metering service tariffs were lower in 2023 compared to 2022, which resulted in a €42 million revenue drop.

• Other revenue came to €215 million, which is in line with the previous year.

Net revenue (€ million)

Operating expenses rose from €1,903 million in 2022 to €2,347 million in 2023. This €444 million increase was primarily caused by the following factors:

• The cost of procuring transmission capacity rose by €162 million as a result of the higher tariffs set by TenneT.

• Employee benefit expenses (total of permanent and temporary staff) were €147 million higher in 2023 compared to 2022 as a result of workforce expansion. For further details, please refer to the following page.

• The increase in energy prices led to procurement costs associated with network losses that were €78 million higher compared to 2022.

• Other operating expenses amounted to €249 million and were therefore €62 million higher than the expenses for 2022. One of the causes for this is the increased consultancy costs for various projects. These were higher due to the use of external consultants during the Kenter sale process, but also to prepare for the Kenter carve-out in late January 2024. Consultants were also used during the negotiations for the Framework Agreement with the State, as well as for the (multi-year) project to future-proof our information systems. We also incurred higher costs due to our own energy usage and due to the growth of the organisation (facilities costs, maintenance costs and leasing costs). The costs for 2022 were also lower due to the one-off release of a provision for a loss-making contract at one of the entities in Germany.

The most significant trends in these expenses are discussed below in greater detail.

Operating expenses (€ million)

The total employee benefit expenses for both internal and external employees were €147 million higher than in 2022. The workforce increased by 579 FTEs in 2023, with the average expenses per FTE increasing due to an increase under the collective labour agreement (4%) and due to a labour allowance for technical staff. The larger workforce also resulted in a €12 million cost increase. The number of agency FTEs increased by over 489. These agency workers were hired to ensure sufficient staffing for the work package and specific expertise for ongoing projects, such as digitalisation projects. The larger workforce and the higher average expenses per FTE also resulted in higher capitalised production: this was €318 million, which is €24 million more than in the previous year.

Employee benefit expenses (permanent and temporary, € million)

The costs of network losses were €330 million and were up by €78 million compared with 2022. The main reason for these higher costs is the price effect: the increase in energy prices led to much higher market cost of procurements associated with network losses. Besides the price effect, we had to procure higher volumes. The increase is visible for electricity where the costs increased by €129 million. The gas procurement costs were €51 million lower. Since 1 January 2020, the network operators have had a statutory obligation to purchase gas to compensate for network losses.

Costs of network losses - electricity and gas (€ million)

Transmission capacity costs in 2023 amounted to €453 million, an increase of €162 million compared to the previous year (2022: €291 million). These costs mainly consist of the costs for transmission capacity charged by TenneT. TenneT’s increased tariffs have led to increased costs for us. These tariffs have risen due in part to the investments TenneT has to make, inflation and rising energy prices. In the current regulatory method, the higher procurement costs are covered by our tariffs, so the cost increase does not affect our profit.

Transmission capacity costs (€ million)

The depreciation and amortisation charges and impairment losses on non-current assets amounted to €532 million, which despite the higher level of investment is a decrease of €7 million compared with the preceding year (2022: €539 million). One of the causes of the decrease is the held-for-sale classification of our subsidiary Kenter. From December 2022 this entity was being held for sale, so based on IFRS there was no more depreciation of non-current assets in 2023. This also resulted in depreciation charges being down €10 million in 2023. A relatively larger number of meters was also replaced in 2022, resulting in higher expenses due to divestments. The application of the declining balance method on the gas network from 2022 also resulted in lower depreciation charges. This was used due to an expected decreased utilisation of our gas assets as alternative energy sources become more predominant. The declining balance method has been chosen as this method is better suited to the expected future decrease in the number of users of the gas network. Alliander also estimates that the decrease in the number of users of the gas network will not lead to large-scale decommissioning of the gas assets. Despite a decrease in the number of users of the gas network, the gas mains infrastructure will remain largely operational. In addition, it is expected that natural gas will continue to be of relevance, along with sustainable alternatives such as green gas and hydrogen. Therefore, this does not imply a reduction in the useful life of the gas assets.

Depreciation and impairment (€ million)

The graph on the right shows the operating profit for the last five years. The low profit in 2022 stands out here: this was mainly caused by the rising cost of network losses. These increased costs were partly compensated in our tariffs in 2023, resulting in higher revenue and an increased operating profit for this year.

Operating profit/loss (€ million)

The graph shows the changes in maintenance costs and investments in the network over the last five years. Total expenditure on network investments and maintenance costs in 2023 was €1,740 million, an increase of €178 million compared with 2022 (€1,562 million). The increase was caused by higher investments (€183 million), whereas the costs of maintenance and outages remained relatively stable.

Network maintenance costs and investments (€ million)