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AB LESTO investicijų planas 2015–2025 m. 1
Turinys
AB LESTO INVESTMENT PLAN
FOR 2015-2025
AB LESTO Investment Plan for 2015 – 2025 2
Contents
CONTENTS
Chief Executive's Letter 3
Introduction 5
1. Stakeholder Expectations 7
Stakeholder Model 7
Stakeholder Model application to LESTO 8
Analysis of expectations 9
Customers 10
Society 13
Regulators 17
Energy Sector 20
Shareholders 21
The interrelationship between stakeholder groups and their
expectations 22
2. Analysis of LESTO distribution network problems 23
PROBLEM No. 1: Deterioration of network elements 23
PROBLEM No. 2: Poor automatic control of medium voltage
distribution network 35
PROBLEM No. 3: Non-resistant distribution network to weather
conditions 37
PROBLEM No. 4: Substandard voltage in the power supply network 40
PROBLEM No. 5: Energy accounting lacking details 42
PROBLEM No. 6: Stealing of network elements 43
PROBLEM No. 7: Insufficient compensation of fault currents 44
The interrelationship between stakeholder expectations and
network problems 45
3. Financial estimation 46
4. Investment programmes 48
PROGRAMME No. 1: Climate Resilient Network 48
PROGRAMME No. 2: Safe and reliable network 49
PROGRAMME No. 3: Reliable power supply network 51
PROGRAMME No. 4: Smart Network Control 52
Terms and abbreviations 54
Annexes 55
ANNEX 1. Pictures of deteriorated equipment 55
ANNEX 2. LESTO questionnaire for stakeholders 60
AB LESTO Investment Plan for 2015 – 2025 3
Chief Executive‘s Letter
CHIEF EXECUTIVE'S LETTER
Dear Customers, Employees and Shareholders,
The daily goal of LESTO employees is safe and reliable
electric power supply to every Lithuanian consumer. This
task is of top priority for me and other LESTO employees in
our daily activities. We set to our work with great
responsibility because only by getting to know customer
needs and expectations we will contribute to the growth of
consumer welfare.
Already now, looking forward to the future, we are
thoroughly planning the main works of the electricity
network modernisation and renovation. This will improve
the quality of our services even more, open up new
opportunities for existing and new electricity consumers.
With this objective in view, we have prepared LESTO
Investment Plan for the period of
2015–2025. This document contains our utmost and
extremely important works for the upcoming decade. We
have prepared this document based on the needs of our
customers, state and authority institutions, organisations
representing consumers, investors, and other parties
concerned.
We are planning to upgrade the power distribution
network every year based on the best international
practices and with regard to the infrastructure lifetime.
The major part of the electrical economy was built four or
five decades ago, and typical lifetime of the distribution
network elements is about 50 years; therefore, the period
of 2015-2025 will be a significant stage in LESTO operation
- to renew the part of the wearing-out electrical assets,
which consists of more than one hundred thousand electric
lines, more than one thousand transformer substations,
distribution points, and almost thirty-six thousand
transformer rooms.
By the end of the useful service period of our network, it
will just become incapable to meet customer expectations
and safety requirements. That is why it is necessary to take
a major step in the near future, and set to the works aimed
to achieve the future goals. The introduction of smart
technologies will provide us with an opportunity to
consume power in a more efficient and economical way,
we will integrate more renewable resources, and what is
most important, to meet the growing needs of our
customers.
The network managed by LESTO had no substantial
upgrade from the beginning of the electrification, thus
planned investments are necessary. When assessing the
need for investments, we have taken a responsible
approach to the calculation of its effect on the tariff. We
will replace only wearing-out, unsafe and unreliable
facilities, and exert all possible efforts to avoid any
essential changes to the tariff.
Reliability of electric power supply is one of the main
evaluation indexes of our activity. Our aim is to provide
customers with a possibility to use electricity on one-click
of a button, take care of network reliability from them, and
ensure prompt power recovery in case of power
interruption.
For that reason, we have provided for four Investment
Programmes:
AB LESTO Investment Plan for 2015 – 2025 4
Chief Executive‘s Letter
Program for building a climate resilient network aims
to make 40% of our network to become cable. We
endeavor to secure our customers confidence about
the reliability of electric power supply. These changes
will also contribute to more beautiful landscape of our
country.
A Program for a provision of safety and reliability aims
at continuous replacement of old and wearing-out
elements by modern and safe facilities.
A Program for the quality of the voltage aims at the
renewal of network segments with the vast voltage
losses, thus not capable of assuring an adequate
quality of electric power voltage for customers.
Smart Network Program covers the implementation of
the projects aimed to improve the operational
efficiency, distribution network control and the
reliability of electric power supply. Immediate tasks
include the installation of the Unified Dispatch Centre
and Distribution Management System (DMS),
automated accounting for private and business
customers.
LESTO Investment Plan for a period of 10 years is a solid
foundation for the stable and harmonious development of
the Company that will meet the needs of the future
generations.
Aidas Ignatavičius
CEO LESTO AB
AB LESTO Investment Plan for 2015 – 2025 5
Introduction
INTRODUCTION
Application of the long-term business planning principles in
the energy infrastructure companies is considered de facto
Best Management Practice. Distribution Network Operator
LESTO is no exception, as the infrastructure managed is
with relatively long accustomed depreciation terms of
tangible assets (30-50 years), high requirements for
equipment reliability and safety, and smooth running.
After LESTO Business Strategy for the period of 2014-2020
was approved in May 2014, there is a need to prepare a
long-term strategic document in order to specify, explain
and summarize the goals expressed in the Strategy and the
Long-Term Financial Plan related to the long-run
investments into LESTO distribution network
The Document has been prepared with a view to present
LESTO long-term investment goals, directions and its scope
for as wide circle of parties concerned as possible (Society,
Customer, Regulators, and Energy Sector).
The following presents Document's position in the
hierarchy of legislative acts:
It also embodies relations between this Document and
other documents for planning used in LESTO and Lietuvos
energija, UAB (hereinafter - LE) commercial activities. It is
significant to note that the Investment Plan is a part of an
integrated strategic planning process, making an integral
part of other significant long-term planning documents
LE and LESTO Strategies for 2014-2020.
AB LESTO Investment Plan for 2015 – 2025 6
Introduction
The Investment Plan provides for a specific number of the
objects planned for replacement. The number has been
determined based on information available about current
network state and expert assessment. The Document will
be reviewed and updated prior to each regulation period,
i.e. every 5 years, as set forth in the Law on Electricity.
According to the scheme, LE and LESTO Strategies for
2014-2020 establish the main goals and specific financial
indexes for this Document.
LE and LESTO Sector Strategies also establish general
principles of operation in specific business fields and
specific measures that constitute the Document to the
extent that relates them to the long-term investments (for
example, IT). LESTO Strategy for Technological Network
Development and LESTO Investment Ranking Scheme
comprise the tools used in this Document to present the
Investment Programmes and their financial estimation.
Monitoring of the implementation of the Programmes and
measures described herein is conducted in LESTO 3-year
Business Plan.
The Document is divided into four main parts:
Part 1. Stakeholder mapping identifies LESTO main
stakeholders, describes, summarizes and prioritizes their
expectations.
Part 2. Analysis of LESTO distribution network problems
identifies and describes the main problems existing in
LESTO distribution network infrastructure, and relates
them to the stakeholder expectations.
Part 3. Investment Programmes contains descriptions of
the Investment Programmes with their goals, indexes,
terms, financial appraisal and profit generated for
stakeholders.
The following presents the process of the Document preparation:
AB LESTO Investment Plan 2015 – 2025 7
Stakeholder expectations
1. STAKEHOLDER EXPECTATIONS
LESTO manages the distribution network, serves customers
on the entire territory of the Republic of Lithuania, and has
a wide circle of various customers. Due to LESTO business
specifics and its geographical location, it is influenced by
many different stakeholders (for example, customers,
National Commission for Energy Control and Prices
(hereinafter - NCC), Ministry of Energy, State Forestry
Services, Municipalities, foreign investors, etc.) with
different interests. Decisions made and actions taken by
LESTO can exert significant influence on its activities as
well.
For these reasons, the Stakeholder Theory was selected for
the preparation of LESTO Investment Plan for 2015-2025.
This Model is universal, flexible and with an easily grasped
structure that perfectly fits for the analysis of different
expectations, and for the substantiation of the actions
arising therewith on the part of the Company.
Stakeholder Model
This model allows stepping beyond the traditional Agency
theory applied in the preparation of strategies, in which
Company shareholders mean the most important
stakeholder, and making profit the main reason of the
Company's existence. The stakeholder theory emphasizes
that the company operates in a far broader environment
and interconnects with a vast number of stakeholders.
With such a great number of stakeholders, their
expectations differ, and sometimes even contradict each
other. The task of the Company managers is to balance
stakeholder interests. One of the stakeholder model
cornerstones is balancing stakeholder expectations that
lead to the stable development and long-term
performance of the Company.
Based on the Stakeholder Model, planning is conducted for
a long-time period (510 years). The following presents the
main steps of the stakeholder analysis used for the
preparation of the Document (refer to Figure 1):
Figure 1. Investment Plan for 2015-2025 Preparation Chart
AB LESTO Investment Plan 2015 – 2025 8
Stakeholder expectations
The stakeholder model or application of its principles in the
strategic planning with time becomes one of the most well
-known ways to reflect the relation between an
organisation and its environment gaining in strength. The
stakeholder model in business planning is particularly
relevant and applied to the companies that provide
regulated services, monopolistic or state governed
companies. Many stakeholders exert influence on the
activities of such a company; often these companies
include non-profit organisations, and one must find a
balance between significantly different expectations.
One of the relevant examples preparation of business
strategies based on the principles of this model by
distribution networks operators in the United Kingdom in
2013.
Stakeholder Model Application to LESTO
LESTO Investment Plan for 2015-2025 outlines five main
stakeholder groups and specifies stakeholders herein; refer
to Figure 2. These stakeholder groups have already been
analysed, when preparing LESTO long-term Strategy for
2014-2020. An additional group “Energy Sector” was
added, while “Employees” and “Contractors” were
removed, since these groups are not considered the cause
of long-term investment implementation; the expectations
of these groups are examined during detailed action
planning of investments and risk assessment.
Figure 2. Map of LESTO stakeholder groups
AB LESTO Investment Plan 2015 – 2025 9
Stakeholder expectations
Expectations of some stakeholders coincide, for example,
all regulators virtually exist for protection and security of
interests of customers and different society groups. In
spite of it, in order to conduct a more detailed analysis,
expectations of each stakeholder group were separately
analysed and then put into general groups.
Analysis of expectations
Stakeholder expectations have been identified based on
the following information sources:
1. Surveys on the request of LESTO (LESTO Customer
Satisfaction Survey in 2013, LESTO Reputation
survey in 2013).
2. Public information on stakeholders' websites or
their public documents.
3. Stakeholder survey (detailed information about
the survey is presented in the Annex No. 2
“Stakeholder survey questionnaires”).
4. During interviews at the meetings with
stakeholders.
5. Analysis of claims and calls received from LESTO
customers.
The following presents a brief summary of each identified
stakeholder group, its relations with LESTO activities and a
summary of expectations of the stakeholder groups.
AB LESTO Investment Plan 2015 – 2025 10
Stakeholder expectations
LESTO has over 1.6 million customers. Company customers
are widely different: from large enterprises to summer
houses, owners of households, which consume electric
power (hereinafter EP) on a seasonal basis, so their needs
and expectations in respect of the Company are different.
Large corporate customers. A large corporate customer is
a commercial customer that consumes more than 1 million
kVh per year. By the end of 2013, LESTO had 810 large
corporate customers that were supplied with 4 TWh of EP
or almost 50% of the distributed amount of EP from the
Company.
LESTO provides only the distribution service to them
because almost (96%) all of the customers purchase the EP
from independent suppliers. These customers take an
active part in the management of their EP costs, almost all
of them (99%) have been equipped with an automated EP
meters and 95% of them use the self-service portal “My
electricity”. Approximately 45% of them belong to the
second consumer category, i.e. EP recovery must be
ensured in 2.5 hours, and 40 customers comprise the first
consumer category with a right for an uninterruptible
electricity supply.
Changes in the consumption pattern of large corporate
customers (for example, business termination, redirection,
connection of new facilities) can exert significant influence
on the Company's network load.
Small corporate customers. A small corporate customer is
a commercial customer that consumers less than 1 million
kVh of electric power per year. By the end of 2013, LESTO
had more than 50 thousand small corporate customers.
The Company sent 1.8 TWh or 22% of all amount of
distributed EP to them. LESTO operates as both an EP
distributor and supplier (83% of their total EP consumed)
for a group (~30%) of small corporate customers, 8% of
which have been equipped with automated EP meters,
88% of them use the self-service portal “My electricity”.
2,3 thousand small corporate customers belong to the
second consumer category, i.e. EP recovery must be
conducted in 2.5 hours, and 30 customers comprise the
first consumer category with a right for an uninterruptible
power supply.
Private customers. A private customer is a natural person
that purchases electric power for personal, family or
domestic needs unrelated to economic, commercial or
professional activities. By the end of 2013, LESTO had 1.55
million private customers. The Company sent 2.6 TWh or
almost 30% of the total amount of distributed EP to them.
LESTO operates as both an EP distributor and supplier to
the majority of private customers (99.5%).
A small number of private customers use the self-service
portal “My electricity” (4.5% of users). On average, a
private customer consumes EP to the amount of
EUR 19. EP costs of private customers make a relatively
small part in comparison with household income (3%), but
an uninterruptible power supply is especially important for
everyday life.
State Consumer Rights Protection Authority. Authority
coordinates state institutions' activities on protection of
consumers, represents Lithuania in the international
organizations, protects consumers' public interest,
examines complains, and performs educational activities.
LESTO customers who are not satisfied with the quality of
the services provided can protect their interests with the
help of this institution. The main expectation of this
institution is provision of high-quality services by LESTO.
Lithuanian National Consumer Federation. Federation
represents consumers' public interest, seeks for integration
of consumer policy to state management and educates
consumers. Federation sees energy services as “the most
important services for Lithuanian consumers in terms of its
price and quality. Energy services are mainly provided by
monopolistic companies, so consumers' rights are most
vulnerable in this sector”.
Consumer Federation implements many projects in relation
to promotion of responsible consumption and energy
efficiency (for example, the Project on Education of Multi-
storey Apartment House Residents, “Top-10” Project on
Efficient Energy Consumption, preparation of
recommendations for efficient energy consumption).
Lithuanian Confederation of Industrialists. Confederation
of Industrialists unites more than 2.700 enterprises
operating in Lithuania. Confederation represents the rights
AB LESTO Investment Plan 2015 – 2025 11
Stakeholder expectations
of its members, encourages application of ecological
requirements, business development with a common
platform to reach business companies. Almost all
companies are LESTO customers as well. For his reason,
Federation of Industrialists has been identified as a
stakeholder capable of effective representing of business
companies and expressing its opinion on business
expectations related to electric power.
Customer Expectations
GCSI. LESTO customer satisfaction index is measured once
per year by customer satisfaction survey. From 2012
customer satisfaction is measured according to GCSI Global
Customer Satisfaction Index) methodology. The index
reflects both general satisfaction of LESTO customers and
assessment of separate branches of LESTO activities.
According to the survey findings in 2013, connection of a
new consumer, timely fault handling and the quality of
electric power supply have the most profound effect on the
general satisfaction of both private and corporate
customers.
These three fields both play a key role and, according to
private and corporate customers, are subject to
improvement in the first place.
Private customers gave 7.6 points, while corporate
customers 6.7 out of 10 for the easiness of a new
consumer connection to the network.
8.2 points were given by private customers and 7.8
points out of 10 by corporate customers to evaluate
timely fault handling during power supply
interruptions.
The quality of power supply (stable voltage, no
flickering) received 8.5 points from private customers,
and 8 points out of 10 from corporate customers.
Taking into consideration the importance of these fields for
customers and their poor evaluation, they must be put on
top of the priority list in order to ensure customer
satisfaction in LESTO services.
GCSI research trends were supported by the analysis of
customer complaints conducted in 20132014. Almost
one-fourth (24%) of all complaints is related to recurring
failures and/or voltage fluctuations, i.e. complaints about
the quality of EP supply received from consumers.
Additionally, 14% of complaints relate to the new
consumer connection.
GCSI research results were supported by the survey
findings conducted among large corporate customers.
Timely failure handling, uninterruptible and reliable EP
supply are important for the large corporate customers.
Large corporate customers, when answering the
questionnaire, marked as “very important” the energy
efficiency, provision of consulting services and prompt
information exchange with LESTO. Visual reduction of
pollution and reduction of the network impact on nature
and fauna are of medium importance for corporate
customers.
LESTO Reputation Survey. According to LESTO Reputation
Survey (2013), the quality of electric power supply only
partially satisfies or does not satisfy one-fourth of LESTO
customers, i.e. 24%. The most frequently stated reasons of
dissatisfaction include power supply interruptions, power
failure and voltage fluctuations.
Stakeholder Survey. Lithuanian National Consumer
Federation and State Consumer Rights Protection Authority
completed the Stakeholder Expectations Questionnaire
(refer to the Table 1) in this group. Lithuanian National
Consumer Federation specified reduction of the network
impact on nature and fauna, reliable and uninterruptible EP
supply, equipment safety and visual reduction of pollution
as their key expectations. State Consumer Rights
Protection Authority's key expectations include reliable and
uninterruptible EP supply, energy efficiency and safety of
network facilities.
Stakeholders in the customer group evaluated the invisible
physical network in picturesque places and protection of
stork nests as the least important expectations.
AB LESTO Investment Plan 2015 – 2025 12
Stakeholder expectations
Table 1. Stakeholder expectations of different customer groups
Large corporate
customers
Lithuanian
National
Consumer
Federation
State Consumer
Rights
Protection
Authority
Average score
Energy efficiency and sustainable consumption 4 4 4 4.0
Reliable power supply (excluding power surges) 4 3 4 3.7
Uninterruptible power supply 4 3 4 3.7
Prompt settlement of legal disputes 3 4 4 3.7
Prompt power supply recovery after storms 4 3 4 3.7
Safety of power network facilities 3 3 4 3.3
Consulting on LESTO services 4 3 3 3.3
On-line information exchange with LESTO 4 3 3 3.3
LESTO performance 3 3 4 3.3
Cooperation in the implementation of the energy
efficiency surveys and application of innovations 3 4 2 3.0
Cooperation in the implementation of social
responsibility projects 2 4 3 3.0
Detailed information about LESTO Investment Projects 2 3 4 3.0
Reduction of the network impact on nature and fauna 2 4 2 2.7
Noise level from LESTO facilities 2 3 3 2.7
Visual reduction of pollution, removal of overhead
lines and worn-out rests 2 3 2 2.3
Protection and safe transfer of stork nests 2 3 1 2.0
Invisible physical network in picturesque places,
national parks, settlements 2 2 1 1,7
AB LESTO Investment Plan 2015 – 2025 13
Stakeholder expectations
Many organisations with different objectives represent
public interests. For a more effective analysis,
organisations were divided into four groups according to
their interests: nature protection, self-management,
science and research, and other.
Nature protection
State Service for Protected Areas. One of its key objectives
is to ensure the security of the protected areas, their
sustainable usage and landscape stability, preservation of
landscape and biological diversity, and creation of
conditions for educational tourism in the protected areas.
Pursuant to the Law on Protected Areas of the Republic of
Lithuania, the general system of protected areas consists
of:
The areas protecting unique or typical objects of
natural cultural landscape. These include strict
reserves, reserves and objects of cultural heritage
(monuments).
Territories under ecological protection are identified in
order to avoid adverse impact on the protected
objects of nature and cultural heritage or adverse
impact of anthropogenic objects on the environment.
This category includes zones of ecological protection.
Restorative protected areas intended for restoration,
enhancement and protection of natural resources.
These include restorative and genetic plots.
Complex protected areas cover areas under
preservation and protection, recreational and
economic areas. These include state (national and
regional) parks, strict biosphere reserves and
biosphere grounds.
Some part of protected areas is under particular protection
for its significance, complexity and uniqueness, which
currently covers more than 1.023 thousand ha, i.e. about
15.67 % of the country area.
The elements of LESTO distribution network, namely
overhead and underground power lines, transformers,
underground power lines and metering cabinets comprise
the perimeter of protected areas. LESTO used the data of
Service for Protected Areas to identify the number and the
type of network elements present in the protected areas,
refer to Figure 3 “LESTO overhead power lines and
substations in protected areas”. Network elements
produce a negative impact on flora, fauna, and decrease
the value of landscape.
AB LESTO Investment Plan 2015 – 2025 14
Stakeholder expectations
Figure 3. LESTO overhead power lines and substations in protected areas
Protected areas are represented in green colour on the
Figure 3. According to the Figure, LESTO operates 4.133
(9%) substations and 10.5 thousand km (11%) of overhead
power lines.
Directorate General of State Forests and State Forest
Service organise and coordinate restoration, maintenance,
protection and usage of forest resources. Lithuanian
forests cover approximately 33% of the country area and
account for 20% of the Company overhead power lines. A
major part of failures in the overhead power lines ( 80%)
occurs during storms on the territories covered by forest.
Lithuanian Ornithological Society. Ornithological Society
aims at provision of efficient protection to birdlife1,
conducts researches on birdlife and its living environment.
LESTO and Lithuanian Ornithological Society started
cooperation in 2011. Currently they participate in the
implementation of the Project on Preservation of White
Storks, whereby more than 3200 of stork nests have been
transferred to special nesting platforms. According to the
1 DIRECTIVE 2009/147/EC OF THE EUROPEAN PARLIAMENT AND
OF THE COUNCIL of 30 November 2009 on the conservation of wild birds
studies2 , collision with overhead power lines is one of the
main causes of non-natural bird deaths. Three bird deaths
account for each kilometre of lines per year3, or about 280
hundred thousand birds in LESTO overhead grid. This
problem is particularly topical in habitat of birds (Žuvinto
Reserve, the Lower Nemunas, at the beach, etc.) and on
the territories covered by forests. Distribution network is
extremely dangerous for large birds (owl, geese, and
eagles). They do not notice the wires while flying and
because of large size of the wings, they die after coming
into contact with the wires. Replacement of the overhead
electricity lines is a solution to this problem.
Self-management
Municipalities. There are 60 local municipalities in
Lithuania that coordinate education, territory planning,
provision of information to society and recreation.
Municipalities are aware of the city development plans
best of all, and LESTO coordinates plans for development
and reconstruction of streets and territories with them.
2UN Convention on migratory species. 2011. Guidelines for
mitigating conflict between migratory birds and electricity power grids
3 Rubolini, D., Gustin, M., Bogliani, G., Garavaglia, R.. 2005. Birds
and powerlines in Italy: an assessment
AB LESTO Investment Plan 2015 – 2025 15
Stakeholder expectations
Local Authorities. Lithuanian Association of Municipal
Local Authorities. Association consists of 443 Lithuanian
Local Authorities. Association coordinates and encourages
cooperation with Local Authorities, strengthens
partnership with local authorities, business and non-profit
organisations, encourages active participation of residents
in decision-making, and strengthens communal movement.
Local Authorities are closely connected with residents and
can best convey to them the challenges they face. Through
the Local Authorities LESTO educates the society on the
maintenance of planting in the network protected areas
and safe conduct with electricity.
Science and Research
Research and education bodies (Kaunas University of
Technology, Vilnius Gediminas Technical University, Vilnius
University, Klaipėda University). Every year about 175
hundred thousand students study at Lithuanian
universities. This is a large, young and active community.
LESTO maintains close ties with Kaunas University of
Technology due to the particularity of university's
activities, i.e. the widest range of engineering professions.
LESTO experts participate in lectures as external lecturers
and guests, and help improving study programmes.
In 2013, 92 students from 34 different higher education
schools from Lithuania and Europe did the practical
training at LESTO. Universities operate as scientific and
research centres, so mutual cooperation provides benefit
to both parties.
Lithuanian Energy Institute carries out scientific research
activities for sustainable development of Lithuanian energy
sector and other branches of economy, integration into
European energy systems and European scientific
environment, encourages economic development based on
innovations and knowledge, participates in the installation
of modern processes and facilities, which ensure efficiency
and safety of energy objects and systems, efficient usage,
conservation of energy resources and reduction of
pollution. LESTO considers Lithuanian Energy Institute as
its partner and adviser in the implementation of innovative
projects.
Lithuanian Hydrometeorological Service collects, stores
and analyses meteorological and hydrological information
on Lithuanian climate. This information is necessary for
Lithuanian national needs and for discharge of
international commitments in mitigating negative impact
of adverse hydrometeorological conditions on natural
environment and human population.
Other
State Department of Tourism carries out strategic planning
of tourism, submits proposals on the issues of the state
tourism policy and its implementation to the Government
of the Republic of Lithuania, assists in the implementation
of the National Tourism Development Programme,
coordinates the activities of the ministries and
Governmental institutions, county governors, municipal
institutions, and state park management bodies in tourism
development. One of the important fields of Department
activities is the development of the objects as an attractive
tourism destinations and their popularisation.
Replacement of LESTO overhead electricity lines by
underground network contributes to this objective.
Society Expectations
Different stakeholders share common expectations. It is
important to note that we took a broad view on the
analysis of the society expectations, i.e. a broader circle of
stakeholders with certain organisations representing their
expectations. To gather information about stakeholder
expectations, we sent 48 questionnaires to stakeholders
that represent a public interest and received 38 responses
with the answers provided in the Table 2 below. We also
organised meetings with Lithuanian Hydrometeorological
Service, Lithuanian Ornithological Society and the Forest
Owners Association of Lithuania and carried out the
analysis of public documents.
After summarizing the survey data and public information,
we can state that reliable power supply, equipment safety,
energy efficiency and sustainable usage are first in
importance for the stakeholders representing the public
interest (refer to the Table 2). These statements have been
valued as extremely important. Such statements as visual
reduction of pollution, reduction of the network impact on
nature and fauna, cooperation in the implementation of
the energy efficiency surveys and application of
innovations are also very important for the society.
AB LESTO Investment Plan 2015 – 2025 16
Stakeholder expectations
Table 2. Expectations of the separate stakeholders in the society group
Stat
e S
erv
ice
Fo
r
Pro
tect
ed
Are
as
Lith
uan
ian
Hyd
rom
ete
oro
logi
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Serv
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Mu
nic
ipal
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Kau
nas
Un
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f
Tech
no
logy
Viln
ius
Un
ive
rsit
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Nat
ure
Re
sear
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Lith
uan
ian
Co
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on
of
Ind
ust
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ists
.
Inve
sto
rs'
Foru
m
Lith
uan
ian
En
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Inst
itu
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Lith
uan
ian
Ass
oci
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f
Loca
l Au
tho
riti
es
Ave
rage
sco
re
Energy efficiency and sustainable
consumption 4 4 4 4 4 4 4 3 4 4 3.9
Uninterruptible power supply 4 3 4 3 4 4 4 4 4 4 3.8
Reliable power supply (excluding
power surges) 4 3 4 3 3 4 4 4 4 4 3.7
Safety of power network facilities 3 3 4 3 3 4 4 4 4 4 3.6
Prompt power supply recovery
after storms 4 3 4 2 3 4 3 4 4 4 3.5
On-line information exchange with
LESTO 4 3 3 3 3 4 4 4 4 3 3.5
Reduction of the network impact
on nature and fauna 2 4 2 4 3 3 4 3 4 3 3.2
Cooperation in the implementation
of social responsibility projects 2 4 3 3 3 3 4 4 3 3 3.2
LESTO performance 3 3 4 3 2 3 3 4 3 3 3.1
Cooperation in the implementation
of the energy efficiency surveys and
application of innovations
3 4 2 3 3 3 4 3 3 3 3.1
Prompt settlement of legal disputes 3 4 4 2 3 3 3 3 3 3 3.1
Consulting on LESTO services 4 3 3 2 2 3 3 4 3 3 3
Protection and safe transfer of
stork nests 2 3 1 4 3 3 3 3 4 3 2.9
Detailed information about LESTO
Investment Projects 2 3 4 2 3 3 3 3 3 3 2.9
Noise level from LESTO facilities 2 3 3 4 2 3 3 3 3 2 2.8
Visual reduction of pollution,
removal of overhead lines and
worn-out rests
2 3 2 4 2 3 3 2 3 3 2.7
Invisible physical network in
picturesque places, national parks,
settlements
2 2 1 4 2 3 2 3 4 3 2.6
AB LESTO Investment Plan 2015 – 2025 17
Stakeholder expectations
National Commission for Energy Control and Prices
(hereinafter NCC) is one of the most significant
institutions in LESTO activities that LESTO cooperates with
in order to ensure the quality of the services in line with
consumer expectations and increase its performance.
Due to considerably low purchasing power, Lithuanian
residents are particularly sensitive to even minor price
adjustments for electricity, so NCC aims at making the price
of EP as low as possible for the end users and seeks to find
any possible way to reduce each constituent of the price of
EP, including the constituent of distribution.
LESTO coordinates the key investments planned (more
than 1.5 million euro) with NCC and the basic pricing
principles of electric power supply. This institution
regulates almost all practical aspects of LESTO activities,
establishes methodologies for calculation of maximal tariffs
for electric power, and the procedures for submission and
examination of requests for adjustment of new prices or
tariffs for electric power, and afterwards checks the
calculations of prices and tariffs according to respective
requests. NCC also monitors the application of the prices of
electricity and implementation of energy saving
programmes, including the Energy Efficiency Directive of
the European Commission and its accompanying legislative
acts in Lithuanian national legislation.
In the activities of any company, a part of customers pays
attention to the problems related to the quality of the
services and the processes. Should LESTO consumers have
complaints about the above-described fields, NCC shall
examine consumer complaints and disputes that arise,
protecting consumer interests. This institution has broad
powers, and submits reports and proposals conducted
within its competence
to the ministries, Seimas and the Government of the
Republic of Lithuania.
State Energy Inspectorate. The key objective of the State
Energy Inspectorate (hereinafter SEI) is to conduct
technical state control of power facilities owned by legal
and natural persons in order to ensure reliable, efficient
and safe supply and consumption of energy resources.
LESTO maintains close cooperation with SEI in solving
technical issues in this field.
SEI issues to LESTO and its subcontractors certificates
granting the right to operate power facilities, terminates
and annuls its validity, monitors the observation of the
operational conditions set in the said certificates and the
requirements of legislative acts. SEI also monitors the
reliability of power distribution and supply, including
consumption efficiency and observation of the
requirements set for the quality of energy. In case if
technical issues arise, LESTO consults SEI to find the best
solution.
SEI examines complaints regarding failures of power
objects, facilities and metering devices, requirements for
power quality, violations of electric power accounting and
payments for the energy consumed, accidents,
termination, suspension or restriction of power supply.
Ministry of Energy of the Republic of Lithuania
(hereinafter ME) develops the state policy in the energy
sector and organises its implementation, i.e. develops the
legal framework significant for LESTO activities in relation
to power supply, safety of power objects and facilities,
mounting of power facilities, operation, usage and other
technical aspects.
ME approves the rules for distribution, supply and
consumption of energy and energy resources, establishes
requirements for the energy and energy resources. One of
its key functions is related to the approval of plans for the
development of the state energy objects and the policy for
the usage of sustainable sources. ME establishes
conditions and procedures for connection of users and
producers to the objects (networks, facilities, systems) of
operating power companies and that is very important for
LESTO.
This stakeholder also establishes conditions and
procedures for certification of persons entitled to operate
power facilities. LESTO and ME representatives have been
cooperating for many years already in different working
AB LESTO Investment Plan 2015 – 2025 18
Stakeholder expectations
groups and initiating changes in Lithuanian electric energy
system.
Ministry of Economy of the Republic of Lithuania. Ministry
of Economy of the Republic of Lithuania (hereinafter - ME)
plays a significant role in LESTO activities because the
ministry submits to the Government proposals for the
priorities and objectives of economic development of
Lithuanian economy, manages support to business
development, participates in the implementation of long-
term state strengthening programmes, in the assessment
of cost impact of climatic changes on the economy, and in
the development of the principles and guidelines for good
management for companies.
ME participates in the development of the consumer
protection policy. LESTO is the company that has the
greatest number of customers in Lithuania of 1.6 million
that is why the guidelines of the policy are topical for the
Company and have significant influence on the
arrangement of its activities. Ministry also coordinates the
metrology of all Lithuanian economy branches, i.e.
activities of EP metering devices, prepares technical
regulations and other standard documents in this field.
The price of electricity for the end users is substantial for
the Ministry of Economy, so this is the reason why LESTO
cooperates with ME to make Lithuania more attractive for
local and foreign investors, which is one of the key
priorities of the Ministry activities. ME monitors the
implementation of the proposals for the improvement of
business conditions submitted by state institutions and
establishments, organises expert appraisals of national and
international research on business conditions, summarizes
the results of the analyses and submits the reports and
proposals for the improvement of business environment to
the Government and other state institutions. These
recommendations are partially related to one of LESTO
services connection of new users to LESTO distribution
network.
ACER. The main functions of the Agency for the
Cooperation of Energy Regulators (ACER):
To issue general recommendations for the usage and
development of cross-border gas pipelines and
electricity networks to serve as the grounds for laying
down specific rules by operators of EU states.
To monitor the implementation of the network
development plans for a period of 10 years throughout
the European Union and to plan the development of
the national networks.
To decide on the matters substantial for several states,
in the case when national regulators fail to agree or
apply for ACER opinion.
LESTO receives the major part of ACER decisions and
recommendations from the local regulator (NCC) or
through legislative acts adopted by ME.
The European Commission’s Directorate-General for
Energy. The European Commission’s Directorate-General
for Energy (hereinafter DE ENER) is responsible for the
development and implementation of the European Energy
Policy. The main objective of the DE ENER is to ensure that
the European Energy Policy serves for all economy sectors,
public entities and citizens. With this objective in view DE
ENER:
Contributes to setting up an energy market providing
citizens and business with affordable energy,
competitive prices and technologically advanced
energy services.
Promotes sustainable energy production in line with
the EU 2020 targets and with a view to the
decarbonisation objective until 2050.
Enhances the conditions for secure energy supply in a
spirit of solidarity and cooperation between EU
Member States.
DE ENER carries out its tasks in many different ways. For
example, it develops strategic analyses and policies for
certain energy sectors; promotes the completion of the
internal energy and other types of markets; supports the
reinforcement of energy infrastructure, ensures that
indigenous energy sources are exploited in safe and
competitive conditions. Another very important field of
supervision is to ensure that markets can deliver agreed
objectives, notably in efficiency and renewable energies
(hereinafter RE).
Directorate-General also monitors the transfer of EU
legislation standards (directives, network codes, etc.) to
Lithuanian national legislation acts. Some of them exert
direct influence on LESTO. For example, the Energy
Efficiency Directive that requires from LESTO and other
obligated parties of the energy sector to use energy more
efficiently to achieve Union’s 2020 headline target.
AB LESTO Investment Plan 2015 – 2025 19
Stakeholder expectations
Government of the Republic of Lithuania. Government of
the Republic of Lithuania is currently updating the National
Energy Independence Strategy and will select the most
economically advantageous and consumer reasonable
strategic decision for the state energy self-sufficiency that
will influence LESTO activities.
The Governmental Programme aims to increase the
efficiency of energy consumption, develop distributed
generation, and promote setting up small cogeneration
plants closer to consumers. EU support will be used for
modernisation of electricity networks based on smart
network solutions that will enable more efficient usage of
various generation sources, create favourable conditions
for the development of the electromobile economy,
production of heat pumps and other facilities regulating
production and consumption of electricity.
It is planned to amend legislative regulation of energy
transmission and distribution so that Regulator would
consider the criteria of energy consumption efficiency prior
to the approval of tariffs on transmission and distribution
services.
The State expects smooth participation in the above-
mentioned processes from LESTO, including:
Transparent and profitable operation for contributions
to the State Budget with dividends on a regular basis.
Positive brand of monopolistic company with priority
given to the high-quality services.
Implementation of the projects aiming to increase the
value of the managed property and company
performance.
Fast and flexible readjustment to the new and subject
to changes requirements of Lithuanian and EU
legislation.
Regulator Expectations
In summary, stakeholder key expectations related to
Regulation with regard to LESTO are as follows:
Reasonable and competitive price of services.
Improvement of the quality of services in line with user
expectations.
Safety and reliability of the electricity network.
Business transparency and improvement of
performance.
AB LESTO Investment Plan 2015 – 2025 20
Stakeholder expectations
Litgrid, AB (hereinafter LITGRID) is an electricity
transmission system operator (hereinafter TSO). The
company manages Lithuanian electricity transmission
market and is responsible for its development. Its main
function is to ensure an efficient and reliable operation of
the national power system.
LITGRID manages the national electricity balancing in real
time and ensures the quality of electricity in the
transmission network. Lithuanian electricity transmission
networks are connected with the neighbouring electric
energy systems: Lithuania is connected with Latvia by four
330 kV and three 110 kV electricity lines, with Belorussia -
by five 330 kV and seven 110 kV electricity lines, with
Kaliningrad district by three 330 kV and three 110 kV
electricity lines. At present time, the company is
implementing strategic projects on the construction of
power links with Poland (LitPol Link) and Sweden
(NordBalt).
LITGRID is responsible for planning of the national
electricity transmission network, accident prevention and
liquidation, ensures that the quality of the transmitted
electricity meets the standards.
Since LITGRID directly transmits the EP only to 11 users,
LESTO services the majority of customers and is an
intermediary between them and LITGRID. Therefore,
stable operation of LESTO transformer substation
(110/35kV) is of great importance for LITGRID. Prompt
restoration of power supply after storms and natural
disasters is crucial for LITGRID.
Small producers. According to the data of the national
balance of electricity production and consumption in 2013,
15% of electric power consumed in Lithuania last year was
produced by using various RES. Considering rapid
technological progress and herewith related decrease in
costs of RES installation (especially solar and wind farms),
world's and EU targets on reduction of climatic changes, it
is obvious that this part of the sources will be constantly
increasing in the general balance of the state energy.
Customer expectations in this growing segment with
regard to LESTO could be as follows:
Prompt connection of RES to the distribution network.
Application of efficient technological solutions.
Independent suppliers. In 2010, a free electricity market
was set up in Lithuania and the electricity supply services
were separated from the electricity distribution services.
Independent suppliers of electric power entered the
liberalized supply market, whose main function is to buy
the electricity from producers and importers, and then
resell it to consumers. Competition between suppliers
encourages them to reduce the price of electricity to the
end users. Seventy-four companies held independent
electric energy supplier's licenses as of 30 September 2014.
Independent suppliers, acting as representatives of
consumer interests, negotiate the purchasing price of the
electric energy with producers and importers, and assume
the risks of fluctuations of its consumption. Independent
electricity suppliers mainly work with corporate customers.
Since consumers provide information about the electricity
consumed to LESTO, timely receipt of the necessary data is
vital for independent suppliers. In the transition period,
the history of EP consumption data of specific domestic
users is equally important because independent suppliers
can use it in order to develop a portfolio of the targeted
customers. Independent suppliers are particularly
interested in receiving hourly consumption schedule in the
real time. For example, by means of smart meters.
AB LESTO Investment Plan 2015 – 2025 21
Stakeholder expectations
Ministry of Finance of the Republic of Lithuania. Ministry
of Finance (hereinafter MF) is both a principal
shareholder of Lietuvos energija, UAB, and LESTO owner.
MF is responsible for the performance, improvement of
efficiency and business transparency of the entrusted
companies.
The area of competence of the Ministry of Finance, which
is related to preparation and coordination of the EU
funding programmes for the period of 2014-2020, is
significant in LESTO activities. LESTO has great scope to use
the support from the EU Structural Funds for
modernisation of the network objects.
Lietuvos energija, UAB (hereinafter LE), holds the
majority of LESTO shares (94.39%). The remaining shares
are listed on the Stock Exchange. LE as direct shareholder’s
key expectations directed towards achievement of its main
Business Strategy for 2014-2020 objective – sustainable
increase of value – are as follows:
Constant improvement of operational efficiency
reduction of operational costs by optimization of
business processes.
High-level customer servicing, introduction of the
state-of-the-art technological developments and
expansion of the remote channels for customer
servicing.
Provision of high-quality EP distribution services
ensure proper technical state of network facilities and
systematically modernise and automate the
distribution network.
Reduction of adverse effects of the energy objects on
the environment and human population.
NASDAQ OMX Vilnius is a sole securities market
infrastructure operator in Lithuania offering services of
securities trade, listing and information. The operator is
headed by Nordic Northern Europe’s securities market
operator NASDAQ OMX (including the Copenhagen Stock
Exchange, the Stockholm Stock Exchange, the Helsinki
Stock Exchange, Riga and Tallinn Stock Exchanges). The
mission of the NASDAQ OMX Vilnius is to organize and
develop Lithuanian securities market by creating the most
favourable conditions for issuers, investors, and financial
intermediaries to exploit efficiently the advantages of the
capital market.
LESTO is listed on NASDAQ OMX Stock Exchange from the
beginning of the company establishment in 2011. Each
quarter LESTO informs its shareholders through the Stock
Exchange about its performance, provides its comments on
the results and publishes the annual performance reports.
NASDAQ OMX key expectations for issuers include high
reputation, business transparency and effective
communication.
Minority shareholders. LE owns 94.39% of LESTO shares,
while the remaining shares belong to the minority
shareholders. Minority shareholders are shareholders that
do not have the voting control due to the minor quantity of
the owned shares and thus cannot influence any decisions,
but they are entitled to attend shareholder meetings and
receive dividends.
Minority shareholders are interested in:
Transparent and profitable LESTO activities.
Regular dividend payments.
Stable or increasing prices of LESTO shares.
Investors Association represents and protects small
investors, provides recommendations and carries out
educational activities. Association's expectations virtually
coincide with the interests of minority shareholders.
AB LESTO Investment Plan 2015 – 2025 22
Stakeholder expectations
The interrelationship between stakeholder groups and their expectations
Figure 4 reflects summarized stakeholder expectations and
stakeholder groups, indicating which expectation is
important for each group. Figure 4 presents a summary of
LESTO stakeholder expectations
Figure 4. Stakeholder Expectations
AB LESTO Investment Plan for 2015 – 2025 23
Analysis of LESTO Distribution Network Problems
4: ANALYSIS OF LESTO DISTRIBUTION NETWORK PROBLEMS
The analysis of the distribution network involved the
evaluation of technical parameters of the equipment (age,
number of failures, types of equipment) and application of
the expert appraisal. The findings revealed the existing
problems of the network that hamper the satisfaction of
the stakeholder expectations:
PROBLEM No. 1: Deterioration of network elements
PROBLEM No. 2: Poor automatic control of medium
voltage distribution network
PROBLEM No. 3: Non-resistant distribution network to
weather conditions
PROBLEM No. 4: Substandard voltage in the power supply
network
PROBLEM No. 5: Energy accounting lacking details
PROBLEM No. 6: Network thefts
PROBLEM No. 7: Insufficient compensation of fault
currents
The problems listed above have significant influence on the
main indexes of LESTO activity: SAIDI, SAIFI and customer
satisfaction. The following presents a detailed analysis of
each problem.
PROBLEM No. 1: Deterioration of network elements
Deterioration of 35 kV overhead power lines
The average lifetime of 35kV overhead power line is 41
year, if property depreciation period of 45 years is applied.
According to the Figure
5, only 87 km or a bit more than 2% of lines of 35 kV
overhead power lines were rebuilt from 1989.
Figure 5. Age histogram of 35 kV overhead power,
km
LESTO operates 20.7 thousand poles of 35 kV overhead
power lines, 58 types of different poles (the pole differs by
shape: square or round, by material: metal or reinforced
concrete, type of structure). 4 types of them (PB35-1,
PB35-1V, TKA ir TKA-1) are particularly unsafe. In general,
almost a half, 42%, of all poles of 35 kV overhead power
lines operated by the Company are unsafe.
Wearing-out
until 2014
Wearing-out
until 2025
AB LESTO Investment Plan for 2015 – 2025 24
Analysis of LESTO Distribution Network Problems
PB35-1 and PB35-1V-type poles from reinforced concrete
were mounted in 1954-1989. Their average lifetime is 40
years. This type of poles have a shape of a square, and
they are usually very crumbled, cambered, so there is risk
of tumbling down, especially during storms, refer to the
Annex No.1 “Pictures of depreciated equipment”.
TKA and TKA-1-type poles from reinforced concrete were
mounted in 1954-1989, the majority of them was built in
1960-1965, and their average lifetime is about 51 year.
This type of poles have many cracks along its full length
with crumbled tops, so there is risk of tumbling down,
especially during storms.
The poles of 35 kV overhead power lines weigh 4-6 tons,
they are 14-23 m high, so tumbling down is particularly
dangerous, even in the case of automatic voltage
disconnection. On average, the pole of 35 kv overhead
power line is erected in one day, but the process of
ordering and delivering them may take up to several
months.
Table 6 presents the elements of 35 kV overhead power
lines that have worn-out due its age or technical features.
Table 6. Deficiencies of LESTO 35 kV overhead power lines
AB LESTO Investment Plan for 2015 – 2025 25
Analysis of LESTO Distribution Network Problems
Ageing of 10 kV network lines
10 kV network consists of overhead and underground
power lines. The average lifetime of 10 kV line is about 30
years. 70% of 10 kV network length consists of the
overhead power lines. Depreciation period of 10 kV
overhead line is 30 years, and the underground line’s 40
years. The average lifetime of the overhead line's kilometre
is 43 years, i.e. 13 years more than the depreciation period.
The average lifetime of the underground line's kilometre is
29 years.
Figure 7. Age histogram of 10 kV overhead lines, km
10 kV line network consists of more than 10 different
elements. The following three groups of them have been
distinguished to analyse the age:
Poles of the overhead power lines. LESTO 10 kV
network contains more than 570 hundred thousand
poles and about 90 different types of them. 51% of
poles are of SNV 2.7 type. A part of poles (such as C-2
and SN-2a) is unsafe. Production technology (used
concrete) of this type of poles is of poor quality, poles
quickly become crumbled and cramped. Poles of this
type account for 1% of the total quantity of the poles.
The major problem in the age of 10 kV poles lies in
the overlong period of their service, i.e. 84% of
poles continue operation after expiration of the
depreciation period and are older than 30 years. A
significant part of the worn-out poles consist of
crumbled, canted and cramped poles and they will
most likely tumble down in storms and cause
network failures and danger to the environment.
Cables of underground lines. LESTO 10 kV network
consists of more than 12 thousand kilometres of
underground lines or 30%
of the entire 10 kV line network. A part of
underground line cables (such as AAŠpsU, AAŠv,
AAŠvU or ASB) is unsafe due to the poor quality of the
materials and poor control during the production
process. ~9% of 10 kV underground network consist of
the said cables. Unsafe cables were produced in the
period of 1989-1998 with its insulating material being
unsafe too, and for this reason, underground lines
frequently deteriorate.
Switching devices switch on/off the line or change the
direction of the current in it. Usually switching devices
are mounted on the pole lines and exist in two types:
Wearing out
until 2014
Wearing-out
until 2025
AB LESTO Investment Plan for 2015 – 2025 26
Analysis of LESTO Distribution Network Problems
reclosers and mechanical limiters. In the event of
failure on the line and temporary interruption of EP
supply to customers, switching devices help to reduce
the consequences of the failure: if the failure is behind
the limiter, after disconnecting the limiter it is possible
to supply the EP to customers on the line section from
the substation up to the limiter, thus improving SAIDI
index.
There are about 20 thousand of limiters with
manual operation or, on average, one limiter per 6
km of the lines in LESTO network. The average
lifetime of the limiter is 21 year, and its period of
service is about 30 years. 3RN-1-10, 3RN-1-20 or
3RN-2-20-type limiters are particularly unsafe
because they are worn-out and rusty, so they jam
and break while attempting to switch them on.
Approximately 49% of the total quantity of limiters
consists of the mentioned limiters.
Table 8 presents the elements of 10 kV overhead lines that
have worn-out due its age or technical features.
Figure 8. Deficiencies of LESTO 10 kV overhead lines
AB LESTO Investment Plan for 2015 – 2025 27
Analysis of LESTO Distribution Network Problems
Ageing of 0.4 kV network lines
0.4 kV network consists of the overhead and underground
lines. 77% of 0.4 kV network length consists of the
overhead lines. The average lifetime of 0.4 kV overhead
line's kilometre is about 34 years. Depreciation period of
0.4 kV overhead line is 30 years, and the underground
line's 40 years.
Figure 9. Age histogram of 0.4 kV lines, km
Low-voltage 10 kV line network consists of more than 10
different elements. The following two groups of them have
been distinguished to analyse the age:
Poles of the overhead lines. LESTO 0.4 kV network
consists of more than 1.260 thousand poles and about
70 different types of them. About 50% of the overall
quantity of the poles consist of the 10 most frequently
used poles. A part of the poles (such as SN-2a, Pa-1, A-
1a or A-1T) is unsafe. Production technology (used
concrete) of this type of poles is of poor quality, poles
quickly become crumbled and cramped. ~16% of the
overall quantity of the poles are unsafe.
The major problem in the age of 0.4 kV poles lies in
the overlong period of their service, i.e. 74% of
poles continue operation after expiration of the
depreciation period and are older than 30 years. A
significant part of the worn-out poles consist of
crumbled, canted and cramped poles and they will
most likely tumble down in storms and cause
network failures and danger to the environment.
Cables of underground lines. LESTO 0.4 kV network
consists of more than 16 thousand km of the
underground lines or 23% of the entire 0.4 kV line
network. A part of underground line cables (such as
AAŠpsU, AAŠv, APSVG, APŠVu, APVB) is unsafe due to
the poor quality of the materials and poor control
during the production process. 8% of 0.4 kV
underground network consist of the said cables.
Unsafe cables were produced in the period of 1989-
1998 with its insulating material being unsafe too, and
for this reason, underground lines frequently
deteriorate.
Table 10 presents the elements of 0.4 kV overhead lines
that have worn-out due its age or technical features.
Wearing out
until 2014
Wearing out
until 2025
AB LESTO Investment Plan for 2015 – 2025 28
Analysis of LESTO Distribution Network Problems
Figure 10. Deficiencies of 0.4 kV lines
AB LESTO Investment Plan for 2015 – 2025 29
Analysis of LESTO Distribution Network Problems
Ageing of 110/35/10 kV and 35/10 kV transformers
LESTO has 360 pcs. of 110/35/10 kV and 260 pcs. of 35/10
kV transformers. These transformers mark the limit of
LESTO distribution network with LITGRID transmission
system operator and they are particularly important
facilities, on which the reliability and the quality of
electricity supply depends on.
Approximately 29 years make the average age of the
transformers used in LESTO network. The depreciation
period of 40 years applies to them. At the present time,
LESTO operates 620 transformers. 22% of them are
completely worn-out, refer to the
Figure 11.
Figure 11. Age histogram of 110/35/10 kV and 35/10 kV transformers, pcs.
Most of the transformers (about 62%) were produced in
the Soviet Union and do not meet technical requirements
of the present day: winding insulation is worn-out, they
generate heavy idling and short circuit losses, make too
much noise, have too big dimensions, voltage regulators do
not meet the requirements, 110 kV inputs, controllers and
control devices are worn-out. Oil seeps through power
transformer's seams, gasket and valves.
Three main transformer's parts have been distinguished
and included in the analysis of equipment age:
Power transformer for electric voltage earthing in the
network.
Power transformer's switches and their actuators for
voltage control.
Oil tanks for collection of oil that flows out from the
transformer in the event of accident or theft. Tanks are
placed under the transformer, below the ground level.
In the event of oil discharge, it flows into the tank and
does not penetrate into the ground and underground
water.
The ageing problem of other devices (insulators, relay
protection and automation, compensating facilities, etc.) is
not so critical; hence, they were not included in the
analysis. Table 12 presents the deficiencies of 110/35 kV
and 35/10 kV transformer substations.
Wearing out
until 2014
Wearing out
until 2025
AB LESTO Investment Plan for 2015 – 2025 30
Analysis of LESTO Distribution Network Problems
Figure 12. Deficiencies of 110/35/10 kV and 35/10 kV transformers
AB LESTO Investment Plan for 2015 – 2025 31
Analysis of LESTO Distribution Network Problems
Ageing of 35 kV and 10 kV distribution points
LESTO network consists of 221 pcs. of 35 kV and 394 pcs. of
10 kV distribution points. Distribution point is a constituent
part of the substation to distribute electricity from one
point to separate lines of the same voltage.
Distribution points consist of several single cubicles. The
average age of 35 kV distribution point cubicle is about 24
years, 10 kV distribution point cubicle 25 years. The
depreciation period of 30 years applies to the distribution
points. Now the Company operates almost 3.7 thousand or
45% of worn-out distribution points' cubicles, refer to the
Figure 13.
Figure 13. Age histogram of 35 and 10 kV distribution points' cubicles
Wearing-out
until 2014
Wearing-out
until 2025
AB LESTO Investment Plan for 2015 – 2025 32
Analysis of LESTO Distribution Network Problems
Ageing of 10 kV distribution points
LESTO network consists of 523 distribution centres (10 kV).
This assembly is designed to distribute the electric power
from one point to the separate line taps of the same
voltage.
The average lifetime of the distribution center is
approximately 24 years. The depreciation period of 30
years applies to the distribution points. At present, the
Company operates 213 pcs. or 43% of worn-out
distribution points, refer to Figure 14.
Figure 14. Age histogram of 10 kV distribution points, psc.
Wearing-out
until 2014
Wearing-out
until 2025
AB LESTO Investment Plan for 2015 – 2025 33
Analysis of LESTO Distribution Network Problems
Ageing of 10/0.4 kV transformer substations
LESTO operates more than 47 thousand 10/0.4 kV
transformers mounted in 39 thousand transformer
substations. Transformer substation contains delimiters,
closers, insulators, constructional part and other
equipment.
Two types of transformer substations have been
distinguished that face the critical problem of ageing:
Unit transformer substations make up to 38% of the
overall quantity of the transformer substations. The
types of 88% of the unit transformer substations are
"Šiaulių" or "Minsko" (housings of these transformer
substations with some equipment were produced at
the factories in the cities of Šiauliai and Minsk); refer
to the Annex No. 2 “Pictures of depreciated
equipment”. New transformer substations of the
mentioned types have not been produced for 20-30
years already; the Company only repairs the old
substations. The housing of the most part of
substations is rusty, and due to metal that grew
thinner, it is difficult to fix insulators to them;
reinforced concrete poles that support them became
crumbled, they are no more hermetically sealed and
leak water and snow; they are easily accessible to steal
the oil.
Stationary transformer substations belong to the
second largest category of transformer substations,
which makes up 33% of the overall quantity of the
transformer substations. Transformer substations of
this type have been rarely erected lately, only in those
locations where it is difficult to set up a modular
transformer substation. There are two main types of
the stationary transformer substations: immovable
two-storeyed usually located in the suburbs or next to
the abandoned collective farms or one-storey made
from concrete and located in the city.
The average age of the transformer as of the main
assembly of 10/0.4 kV transformer substation is 25 years.
The depreciation period of 30 years applies to all
transformers. LESTO operates more than 18 thousand
worn-out transformers (refer to the Figure 15), and
approximately a half of them consists of the transformers
from Minsko and Šiaulių transformer substations.
Figure 15. Age histogram of 10/0.4 kV transformers
Wearing-out
until 2014
Wearing-out
until 2025
AB LESTO Investment Plan for 2015 – 2025 34
Analysis of LESTO Distribution Network Problems
Figure 16 presents the elements of 10/0.4 kV transformer
substations that have worn-out due its age or technical
features.
Figure 16. Deficiencies of 10/0.4 kV transformer substations
AB LESTO Investment Plan for 2015 – 2025 35
Analysis of LESTO Distribution Network Problems
PROBLEM No. 2: Poor automatic control of medium voltage distribution network
Current situation
With the development of the smart network technologies
and reduction of their prices, economically developed
countries introduce and integrate advanced solutions to an
increasing extent into distribution network management to
improve and increase its efficiency. They enable to identify
failures and eliminate failures in a prompt manner, to plan
the network modes more accurately, to use the available
capacities more efficiently, i.e. to improve the quality of
the services and to reduce the operating costs in time.
Automated grid control presents an improvement in the
segment of the distribution network by means of smart
technology that has one or several of the following
features:
Remote status monitoring of the separate grid
elements.
Remote switch on/off the device, change of its
parameters or modes.
Programming separate elements to respond to certain
unusual situations, automatic switching (self-healing
grid).
Over the past decade, the major emphasis in LESTO
distribution network has been made on the automation of
the elements of the higher voltage grid (110/35/10 kV
substations, 35 kV lines and 35/10 kV substations) because
of the relatively small amount of investments due to the
small number of these elements and considerable return
on these investments.
During this period, LESTO 110/35/10 kV and 35/10 kV
substations, 35 kV and its 10 kV switching devices have
been connected to SCADA Remote Control Equipment,
with reclosers having been partially set up on 10 kV line
enabling monitoring operation of substations in real time,
and if necessary, switching in the separate segments of the
grid.
In order to explore every avenue of the smart grid
technologies and to prepare for the installation of the new
Dispatch Control System (DMS) in 2016-2018 accordingly, it
is necessary to start applying the smart technologies more
extensively in the principal segments of the medium-
voltage grid (10 kV lines, 10 kV distribution points and
10/0.4 kV transformer substations).
The scope of the problem
Following presents information on the automation of
LESTO medium-voltage distribution network elements.
Table 3. Automation of of LESTO medium-voltage distribution network elements in 2014.
Group of network elements Number of elements Facilities with remote or off-line automatic control
10 kV lines 7.180 pcs.
Controllable line-circuit breaker - 5.233 pcs.
Short circuit indicators with information transfer to SCADA - 185 pcs.
Reclosers – 98 pcs.
10/0.4 kV transformer
substations 39.351 pcs. 32 pcs.
AB LESTO Investment Plan for 2015 – 2025 36
Analysis of LESTO Distribution Network Problems
Possible solutions
After analysing the specific segment of the network, the
following technical solutions or a combination of them
could be used to resolve the problem:
Installation of SCADA Dispatch Control in new 10/0.4
kV substations and 10/04. kV substations under
reconstruction.
Installation of SCADA Dispatch Control in 10 kV
distribution centres.
Installation of reclosers in 10 kV lines.
Installation of short circuit indicators with
telecommunication.
Automatic power and voltage control equipment for
newly connected RES producers.
Detailed information on the application of these technical
solutions, selection criteria of segments and selection of
equipment is presented in the Section hereof “Strategy for
Technological Network Development”. Extensive
information on the resolution of this problem in
2015-2025 is presented in the in the description of the
Investment Programme “Smart Grid”.
AB LESTO Investment Plan for 2015 – 2025 37
Analysis of LESTO Distribution Network Problems
PROBLEM No. 3: Analysis of the network weather resistance
Current situation
SAIDI and SAIFI indexes show the reliability of the power
distribution network operators. SAIFI shows the average
number of interruptions that a customer experiences
during a reporting period (per calendar year). SAIDI shows
the average outage duration per customer (per calendar
year). The more higher values these indicators reach, the
more frequent and longer outage durations customers
experience, refer to the Figure 17.
Figure 17. The values of SAIDI and SAIFI indexes in 2008-2013.
The scope of the problem
Within the period of 2011-2013, 154 hundred thousand
failures occurred in LESTO network that prevented from
supplying corporate and private customers with
6.329 MW of electric power or as much as Širvintos Region
consumes per 2 and a half months.
Force Majeure events cause the major part of unplanned
interruptions4. Storms usually result in tree or tree
branch breaking, and when they fall down, they cause
abruption of wires. The major number of the described
failures take place in the areas covered by forest.
4 Force Majeure means circumstances of an extraordinary nature,
beyond human control, and which could not have been reasonably expected or prevented, or eliminated in any possible way. These circumstances include storms, hurricane, sleet, lightning, fire, soil settlement or landslide, a flood greater than annual long-standing, temperature or weather changes exceeding the requirements of the standard technical documents, ice-slick exceeding the requirements of the standard technical documents, governmental action impeding energy supplies due to state of emergency in the country, war, terrorism, sabotage operations or other situations alike.
The principal causes of the failures:
Poor resistance of the overhead line network to winds
and storms causing the major part of outages during
storms.
The major part of the network located in the areas
covered by forest.
Equipment ageing, worn-out or deteriorated network
elements break more frequently.
The causes listed above are interrelated because worn-out
network elements break down more rapidly, and therefore
wires abrupt more easily or cause outages at the
substations during storms.
20% of LESTO overhead lines are located in the areas
covered by forests,
refer to the Figure 18. These lines have the least resistance
to storms, so they are exposed to the biggest risk of power
AB LESTO Investment Plan for 2015 – 2025 38
Analysis of LESTO Distribution Network Problems
cut. Vilnius and Utena Regions cover the most part of the Company's overhead lines.
Figure 18. The part of 0.4-35 kV overhead lines in the areas covered by forest, km and %
About 80% of all outages occur in 0.4 kV voltage network,
the remaining 20% in 10 kV network. Less than 1% of
outages occur in 35 kV network. It is important to
emphasize that although the number of failures occurring
in 35 kV and 10 kV networks is relatively small, in the event
of failure and cut-out of 35 kV transformer substation, EP
supply will be cut to those customers who are connected to
10 kV and 0.4 kV networks because the grid of the lower
level of voltage depends on the grid of higher voltage. The
following table presents the most frequent causes of
failures in 10 - 0.4 kV network.
Table 4. The principal causes of failures according to different groups of facilities
10 kV
overhead
lines
0.4 kV overhead lines 10 kV underground
lines
0.4 kV
underground lines
10/0.4 kV
transformer
substations
Equipment deterioration
and changes in the
properties of materials
+ + + + +
Impact of natural disasters + +
Failures of reclosers in input
terminals +
Ingrown plants, tree
branches + +
Lack of oil (including thefts)
+
Damages of insulators +
+
AB LESTO Investment Plan for 2015 – 2025 39
Analysis of LESTO Distribution Network Problems
The non-resistance of the overhead lines to climatic
conditions (the wind and storm) will remain the utmost
problem for LESTO. According to the forecast of Lithuanian
Hydrometeorological Service, increase in the average
temperature and the maximal differences between
temperatures in the period of 2015-2030 will bring more
extreme climatic conditions, i.e. cyclones, vortexes, storms,
frost to the territory of Lithuania.
Possible solutions
LESTO incur losses of approximately 1 million euro from
one average storm and power supply recovery can last a
week or even longer. Underground electricity cables have
been used for a while in Western Europe to solve this
problem because underground network has better
resistance to climatic conditions and requires less
maintenance. At present time, underground and overhead
isolated lines make up to 25% of the entire network. It is
planned to increase it by 40% in the next 10 years ahead by
complementary investments. Extensive information on the
solution to this problem is presented in the description of
the Programme No. 1 "Climate Resilient Network".
AB LESTO Investment Plan for 2015 – 2025 40
Analysis of LESTO Distribution Network Problems
PROBLEM No. 4: Substandard voltage in the power supply
network
Current situation
In some segments of LESTO distribution network voltage
fluctuations occur short- and long-term voltage drops
that cause deviation over -10% from 230 V standard5.
These fluctuations disrupt normal operation of electric
equipment and shorten its period of service. These
fluctuations produce particularly adverse effect on the
equipment driven by electric motors, because voltage
drops cause irregular operation of motors, thus shortening
their period of service and increasing the number of
failures. Voltage fluctuations also cause flickering of
incandescent light bulbs, evoking eyestrain and fatigue of
the human body.
Although it is almost impossible to avoid voltage
fluctuations in the distribution grid, network designers
make all possible provisions to maintain the least
amplitude of the fluctuations in the normal mode. The
main cause of voltage fluctuations noticed in LESTO
network over-long lines connecting users and
transformers, and wires with too short sections in these
lines.
This situation was predetermined by the design of the
major part of LESTO network made in the period of 1960 -
1980. Social and economic changes
that occurred in 1995 - 2010 made changes in the profile
of suburban electric users by decreasing the number of
permanent dwelling houses in towns and increasing the
number of single homesteads for leisure rentals. With the
connection of the remote homesteads, the average length
of the low-voltage lines that connect users with
transformer substations has increased. Even though the
number of the consumers decreased on these territories,
there has been a significant increase in the average
consumer demands due to the increased number of
electric appliances used in the household, what in its' turn,
challenges the maintenance of voltage capacities at an
adequate level.
5 In the part LST EN 50160:2010 "Voltage characteristics of
electricity supplied by public electricity networks"
The scope of the problem
LESTO uses two information sources to identify the
problem:
Electrical Network Design software with a voltage
control module that contains stored data on LESTO
distribution network with an integration into the
database of actual consumptions.
Consumer complaints about observed voltage
fluctuations and equipment failures.
Following presents the results of the simulation of the
voltage deviations and the data of the complaints
received from consumers.
According to these data, 9.092 km of LESTO 0.4 kV lines
with 43.324 consumers connected to them take a lead in
the list of the critical objects with voltage fluctuations.
Possible solutions
The following technical solutions could be used to solve the
problem:
To redesign the network configuration to reduce the
length of 0.4 kV line, and exclude the usage of the
unnecessary line segments.
To redesign the network configuration to transfer
the transformer substation closer to consumers.
To replace the line wires with the wires of a larger
section.
To erect a new transformer substation.
It is a common practice to use a combination of the above-
listed methods adapted to the specific area. Extensive
information on the solution to this problem is presented in
the description of the Programme No. 2 “Reliable voltage
maintenance”.
AB LESTO Investment Plan for 2015 – 2025 41
Analysis of LESTO Distribution Network Problems
Table 5. The scope of the voltage fluctuations on the regional level
Region The number of customers experiencing
voltage fluctuations, pcs.
The length of lines under voltage
fluctuations, km
Panevėžys 15.823 2318
Utena 9.334 2.216
Klaipėda 5.337 1.187
Kaunas 4.421 1.299
Šiauliai 3.330 774
Alytus 2.636 667
Vilnius 2.443 632
All regions 43.324 9.092
AB LESTO Investment Plan for 2015 – 2025 42
Analysis of LESTO Distribution Network Problems
PROBLEM No. 5: Energy accounting lacking details
Current situation
1.66 million metering devices is used in LESTO distribution
network to maintain the records of the electric energy
supplies. The major part (~98%) of them include standard
induction or electronic meters without telecommunication,
which readings customers declare themselves each month
according to the indications of the meter screen. Some of
the largest LESTO customers have already been equipped
with more expensive and multifunctional, automatic smart
electricity meters, which transfer the collected data of
consumed amounts of electricity to LESTO via the mobile
telecommunications, but these meters make less than 2%
of the total number of devices.
This operation model is relatively cheap due to a low price
of the standard meter and low telecommunication costs,
but it provides almost no exact information on the actual
and instant electricity consumption and has no features of
monitoring consumptions in the separate segments of the
distribution network. This information is particularly
topical for the identification of electricity thefts, i.e. for
mitigation of commercial loss of electricity. As of today,
the sources of electricity loss are usually detected during
inspections of consumer meters or after receiving calls via
the trust line. Furthermore, the major part of consumers is
not able to analyse the data of electricity consumption as
often as established in the up-to-date standards (standard
established in the EU directive electricity consumption
readings must be provided to the consumer every 15
minutes), and therefore cannot change electricity
consumption pattern in order to use energy more
efficiently.
LESTO has yet made no decisions on the installation of
smart electricity meters on the large scale (a pilot project
will be carried out in 2015-2016 to update the assumptions
of the cost-benefit analysis of the smart measurements), so
in the event if we continue applying the above-described
operation model, there will be no possibility of observing
the actual electricity consumption in the real time in the
separate network segments.
The scope of the problem
The following presents the smart metering features of
LESTO distribution network:
Possible solutions. The most efficient technical solution in
the transition period, unless public installation of smart
electricity meters begins, is to install supervision counters
of electricity with functions of data collecting and
telecommunicating in the intermediate elements of the
electricity grid:
In 110/35/10 kV transformer substations.
10 kV distribution points.
10/0.4 kV transformer substations on the outgoing
lines.
This solution with an appropriate software makes it
possible to segment the electricity grid into parts, to select
the critical sources of loss and conduct a rapid loss analysis.
Extensive information on the resolution of this problem in
2015-2025 is presented in the description of the
Investment Programme No. 4 “Smart Grid”.
Table 6. Smart meters in LESTO network
The total number of elements,
psc.
Including telecommunication,
% Including data collection, %
Customer meters 1.66 million 1.5 1.5
10/0.4 kV transformer
substations 39.351 0.2 0.2
10 kV distribution points 497 47 47
AB LESTO Investment Plan for 2015 – 2025 43
Analysis of LESTO Distribution Network Problems
110/35/10 kV and 35/10 kV
transformer substations 620 100 100
PROBLEM No. 6: Analysis of thefts of the network elements
Current situation
LESTO incurred losses for 1 million euro due to the thefts in
the electricity network in the period of 2011 - 2013. LESTO
conducts a population education initiative “Campaign
2020", cooperates with police and scrap metal dealers to
reduce the number and scale of the thefts.
The scope of the problem
Oil thefts from 10/0.4 kV transformer substations remain
the most crucial problem for the Company. Oil thefts
cause interruptions in the normal operation of the
transformer substations, which burn out and cause
outages. 303 transformers or 0.6 % of the total amount of
transformers have burned out over three years. 63
thousand customers were disconnected due to the
transformer failures because of oil thefts.
Figure 19 presents the distribution of losses incurred due
to thefts.
Figure 19. Losses incurred due to thefts
Possible solutions
It is almost impossible to avoid thefts in the distribution
networks because the major part of transformer
substations is located in the remote villages, is of out-to-
date model and has no alarm system. One of the possible
solutions is to equip the most significant transformer
substations with an alarm system. LESTO also plans to
replace the substations of the out-of-date model (unit
transformer substations) by modern modular substations
of closed type (refer to the Investment Programme No. 2:
“Safe and reliable network”).
AB LESTO Investment Plan for 2015 – 2025 44
Analysis of LESTO Distribution Network Problems
PROBLEM No. 7: Insufficient compensation of fault currents
Current situation
LESTO 10 kV electricity grid was designed with an isolated
neutral and still undergoes further development with it. It
was a common practice in the Soviet Union and Finland,
whereas an earthed neutral is being used in the most
countries of Western Europe.
The significant advantage of this technical solution lies in
the uninterruptible power supply to consumers even in the
case of a failure, breakdown or other type of malfunction
in the network caused by the single phase-to-earth fault,
i.e. cable or wire contact with earth. It enhances the
reliability of the electricity network.
The biggest disadvantage of this solution is related to an
electric current flowing through the earth fault
within a radius of ~8 meters that could be life threatening.
According to the Operational Regulations for Electric Power
Stations and Electricity Networks, earth fault current
compensating devices that ensure the safety in 10 kV
electricity networks must be installed in the case if the
summary earth fault current of all lines connected to the
transformer substation exceeds 10 A.
The parameters of the distribution networks vary due to
the lines being connected and disconnected; therefore, a
distribution network is a constantly changing system due to
the connection of new consumers, disconnection of
unexploited objects, constant changes in consumer
demands; thus it is necessary to maintain constant
monitoring and install proper earth fault current
compensating devices in order to ensure the sufficient level
of compensation of the earth fault current. It is required to
install more fault current compensating devices when
expanding the underground cable network because plastic
cables in aluminium sheath increase the fault current per 1
km of section line by 2,3 A on average, i.e. 20 times more
than conductors of the overhead line.
The scope of the problem
LESTO uses two information sources to identify the
problem:
Electrical Network Design software with a fault current
module that contains stored data on LESTO
distribution network, network charts, information on
the reconstruction and repairs; conducts mathematical
calculations based on the data of line lengths.
The results of the actual measurements taken in the
concerned network segments on a regular basis.
According to the results of the fault current calculations
and measurements made in 2012-2014, LESTO distribution
network contains 71 transformer substations with the
insufficient fault current compensation that could lead to
an unsafe operation.
Possible solutions
The following technical solutions could be used to solve the
problem:
Installation of modern fault current compensation
devices compensating coils with an automatic
current control.
Transfer of the operational earth fault current
compensating devices from the transformer
substations under reconstruction to the transformer
substations with a higher earth fault current or
substations that have no compensating devices at all.
Extensive information on the solution to this problem is
presented in the description of the Programme No. 2
“Reliable and safe network”.
AB LESTO Investment Plan for 2015 – 2025 45
Analysis of LESTO Distribution Network Problems
The interrelationship between stakeholder expectations and network problems
Figure 20 presents the interrelationship between the
stakeholder expectations, problems of LESTO distribution
network and the Investment Programmes. The diagram
shows how solutions of the current network problems
serve the interests of the stakeholder expectations. It also
reflects the Investment Programmes provided for the
period of 2015-2015 in four different colours:
PROGRAMME No. 1: Climate Resilient Network
PROGRAMME No. 2: Safe and reliable network
PROGRAMME No. 3: Reliable power supply network
PROGRAMME No. 4: Smart Network Control
A more detailed review of the programmes is presented in
the Section 6 “Investment Programmes”. Planned
Investment Programmes cover and take into consideration
all stakeholder expectations at least one time. For example,
the solution of the problem of the distribution network
“Non-resistant distribution network to weather conditions”
to replace the overhead lines by underground or isolated
overhead lines contributes to promoting the stakeholder
expectations. Programme No. 1 “Climate Resilient
Network” has been developed to solve this problem.
Figure 20. The interrelationship between problems of LESTO distribution network and stakeholder expectations
AB LESTO investicijų planas 2015 – 2025 m. 46
3. FINANCIAL ESTIMATION*
The demand for investment into the distribution network
was planned in 4 steps, see. Figure 21. In order to
determine the direction and the energy asset groups in
worst-state, there were stakeholders' expectations, the
main distribution network, and foreign distribution
network best practices taken into account.
Figure 21. Investment planning scheme
Based on the four steps of the evaluations and analysis,
demand for investment from 2015 to 2025 is 1.7 billion
EUR. The investment will be gradually increased, taking
into account the likely pace of the development of market
participants and their ability to perform larger amounts of
work.
Investments are planned in four investment programs. The
total investment requirement according to the programs
for 2015 - 2025 m. is set in the Table 7.
Table 7. LESTO investment 2015 – 2025 according to the programs, million EUR
Program 1: Climate Resilient Network
Program 2: Safe and Reliable
Network
Program 3: Reliable power supply
network
Program 4: Smart Network
Control
New customers
Other investment
511
426
132
34
521
59
AB LESTO investicijų planas 2015 – 2025 m. 47
Financial estimation
The main part of the company is built in 1960 – 1980, while
implementing the electrification of Lithuania. At that time
most of the network lines and transformer stations were
built (see. eg. 5, 7, 9, 11 figures Problem 1: Network
elements aging).
The company, while planning the investment, aims to
eventually even-out the unevenness caused by
electrification investment. While planning the investment
every year, the detailed plans for equipment replacement
after an in-depth inspection of equipment and selection of
objects of the worst condition will be drawn. The
replacement of elements that can still serve will delayed,
although the economic life reached its end of the period6.
The company's long-term goal (outside the scope of this
programming period) is to eventually reduce the amount of
wearing-out assets and to have an insignificant remaining
number of outdated assets (depending on the equipment
condition).
During the investment planning, special attention was paid
to the impact assessment of investment on the electricity
tariff. While the demand for investment is growing
(compared to 2014), the company is looking for ways to
minimize its impact on the consumers of electricity:
6 Lifetime of individual network element depends on the
environmental conditions, previous repairs, quality and type of device (eg. the underground line lasts longer if there is a dry sandy ground). Therefore, part of the items can be used after the expiry of the period of economic lifecycle, while others need to be replaced before their economic lifecycle reaches the end of the period.
1. The approach is that by replacing the worn-out
elements of the network with new ones, makes it
possible to decrease the need for operational
costs. For example, by replacing the overhead
lines with the underground lines it is easier to
operate them, the inspections are simpler, the
security zone is reduced, and, therefore, the cost
of plant pruning is reduced. Part of the increased
investment is covered by the reduction of
operating costs.
2. Investments are only dedicated to the
replacement of unreliable and insecure network
elements. The company selects objects after each
year routine check-ups on the basis of the actual
condition assessment of the objects. Moreover,
with this long-term plan LESTO aims to equalize
the accumulation of obsolete assets as a result of
electrification period and to replace constant
number of the elements (about 2% of the network
every year).
3. Part of the increase of the tariff will be
compensated by the GDP growth, which increases
the electricity consumption in the country, ie,
increasing the amount of electricity distributed by
the Company makes it possible to receive more
income without changing the tariff.
*The investment plan is solely for information purposes
and should not be considered any advice,
recommendation or other forms of incentive to invest
or perform other actions.
AB LESTO Investment Plan for 2015 – 2025. 48
Investment Programmes
4. INVESTMENT PROGRAMMES
This section presents the description of each Investment
Programme in accordance with the following structure:
1. Description of the Programme and technologies.
2. Why is this Investment Programme under
implementation?
3. Goals.
4. Financial appraisal.
PROGRAMME No. 1: Climate Resilient Network
Description of the Programme and technologies. With the
ageing of the distribution network, a part of the overhead
lines reaches the end of their lifetime and must be
replaced. This Investment Programme covers the
replacement of the existing worn-out (those that reached
the end of the physical existence) overhead lines by
underground or isolated overhead lines. Changing the line
technology helps reducing the risk of tree falls, growing-in,
interruptions caused by animals; therefore, consumers
experience less frequent outages, i.e. increasing the
System Average Interruption Frequency Index - SAIFI.
Why is this Investment Programme under
implementation? With the implementation of this
Programme, the following stakeholder expectations are
taken into account:
Uninterruptible power supply. Reduction of power
outages due to the falling down or ingrowing trees by
replacing the overhead lines by underground lines.
Safety of facilities. Cable networks for reduction of
danger being injured by electric current.
Fast supply recovery after storms. A major part of
power interruptions in the network occur during
storms due to tree or tree branch breaking. A
replacement of the overhead line by an underground
line will eliminate this risk.
Reduction of the network impact on nature and fauna.
Underground networks, particularly those located in
the areas covered by forests produce less impact on
animal and bird habitats.
Visual reduction of pollution and invisible power
network. Replacement of the overhead lines by the
underground network helps reducing the area of the
line security zone from 2-15 meters to
2 meters and the need for pruning the trees or
plantings of greenery. Underground cable lines
contrary to the overhead lines are invisible and do not
reduce the value of the landscape.
Performance and transparency. Replacement of the
overhead lines by the underground network helps
reducing the need for frequent repair, thus curtail the
operational costs.
Goals. The implementation of the Programme “Climate
Resilient Network” aims to increase the part of the
underground and isolated overhead lines from 25% up to
~40% by the year of 2025.
Financial estimation. During the 2015 - 2025 it is planned
to allocate 511 million EUR investment for this program.
The largest part of the investment will be allocated to 10
kV and 0.4 kV worn overhead lines replacement by the
underground lines. The largest part of disruptions occur in
10 kV and 0.4 kV overhead lines, therefore, this part of the
network is a priority
AB LESTO Investment Plan for 2015 – 2025. 49
Investment Programmes
PROGRAMME No. 2: Safe and reliable network
Description of the Programme and technologies. With the
ageing of the distribution network, a part of the lines and
transformer substations reaches the end of their lifetime,
break down more frequently and become unsafe for the
environment. Worn-out elements are replaced by modern
equipment in conformity with up-to-date standards.
Why is this Investment Programme under
implementation? With the implementation of this
Programme, the following stakeholder expectations are
taken into account:
Uninterruptible power supply. Replacement of the
worn-out equipment by new equipment helps
reducing the number of failures of network elements.
Fast supply recovery after storms. A large number of
failures occur during storms. It takes a longer time to
repair out-of-date equipment; the spare parts of some
equipment have been taken out of the production.
Reduction of the network impact on nature and fauna
and the noise level from facilities. New facilities are
quiet in operation, more efficient and heat up less.
Visual reduction of pollution, invisible electric power
network and safety of the electric power network
facilities. Replacement of the old equipment, for
example, Minsko or Šiaulių type transformer rooms
with modern modular rooms, will make power
facilities less visible and safer because of its modular
design thus preventing oil thefts.
Reliable power supply. Equipment upgrade helps
solving the problem of the voltage quality to some
extent.
Performance and transparency. Replacement of old
elements by new elements reduces electric power
losses.
Goals. About one third of the network will be worn-out
within the period of 2015-2025, refer to the Table 8. Such a
sudden increase in deterioration is predetermined by the
electrification in 1960-1980, when the major part of the
network was designed and built. LESTO aims to reduce of
the operation of the depreciated property by 16% at most
by the year of 2025 (calculating in accordance with the
lifetime of elements).
Table 8. The part of LESTO depreciated property in 2014 and 2025 in accordance with the selected groups
The part of the depreciated property in 2014
The remaining part of the depreciated property
after planned investments in 2015
35 kV lines 51% 21%
110-35 kV transformers 24% 6%
10 kV lines 60% 24%
10 kV transformer substations 47% 3%
0.4 kV lines 70% 16%
A part of the total assets 60% 16%
Financial estimation. During the 2015 - 2025 for this
program it is planned to allocate 426 million EUR of
investment. The biggest part of them will go to 10 / 0.4 kV
for replacement of wearing-out transformer substations
and distribution points. Part of the funds will be allocated
to the major high-voltage transformer substation
equipment upgrade. It is also planned that some of the
existing underground lines will reach the end of the period
of their lives, therefore, there will be a need to change
them.
When planning the program "Safe and reliable network"
investment will also include investments into the network
AB LESTO Investment Plan for 2015 – 2025. 50
Investment Programmes
elements, that will make it possible to prevent the thefts
and their consequences. There are funds foreseen, in order
to solve the problem of insufficient earthing, while
installing newly purchased equipment for earthing
compensation and moving the existing equipment during
the planned reconstruction works.
AB LESTO Investment Plan for 2015 – 2025. 51
Investment Programmes
PROGRAMME No. 3: Reliable power supply network
Description of the Programme and technologies. Changes
in the number of electricity consumers and their demands
in the suburban territories in the period of 1995-2010
resulted in the increase of the average amount of
electricity consumption and the average length of the
medium-voltage lines that connect the consumers with
transformer substations. For this reason, regular voltage
fluctuations occur in some segments of LESTO network and
existing equipment fails to ensure the level of voltage of
the corresponding standards.
This Investment Programme covers the reduction of the
network line length, excluding the usage of the
unnecessary line segments, transfer of the transformer
substations closer to consumers, erection of the new
substations and replacement of line wires by wires of wider
section.
Why is this Investment Programme under
implementation? With the implementation of this
Programme, the following stakeholder expectations are
taken into account:
Reliable power supply. Performance of the above-
described steps helps reducing the average course
made by the current to reach consumers, thus
reducing voltage fluctuations and enhancing the
quality of the voltage.
Visual reduction of pollution and invisible power
network. Since it is planned to transfer a part of the
lines for operation to trajectories that are more
efficient by reducing the length of the lines, the
underground network will replace the existing
overhead lines to help reducing visual pollution.
Safety of the electric power facilities. Under this
Programme, a part of the transformer substations will
be replaced by new substations that will better meet
the consumer needs and enhance the safety and
reliability of the electricity network.
Goals. The Programme of the reliable power supply
network provides for putting the lines of 9.092 km total
length affected by voltage drops into order by the year of
2021, thus solving the problem of poor voltage quality with
41.157 (or 95%) consumers connected to them.
Financial estimation. During the 2015 – 2021 it is planned
to allocate for this program almost 132 million EUR
investment. The biggest part of them will go to shortening
of 0.4 kV overhead lines and trimming lines of 10 kV on
new optimal trajectories, as well as for installation of new
transformer stations.
AB LESTO Investment Plan for 2015 – 2025. 52
Investment Programmes
PROGRAMME No. 4: Smart Network Control
Description of the Programme and technologies. The
scope of the Smart Network Control Programme covers the
following measures:
1. Pilot Projects of Network Automation. The
introduction and installation of the smart
technologies in LESTO distribution network has
been limited so far (remote control has been
installed only in high-voltage network elements -
110/35/10 kV substations, 35/10 kV substations,
35 kV distribution points) and has been
implemented only in certain locations (for
example, short circuit indicators with
telecommunication were installed in some
regions).
Today LESTO is preparing to install the smart
technologies in the selected network segments fully.
One of the first steps to achieve the goal is the
“Strategy for Technological Network Development”
prepared by virtue of good practices and results of
scientific research that outlines the smart technologies
suitable for LESTO network. Another step is a
thorough analysis of LESTO network elements,
selection of most effective individual solutions from
the list of the solutions described in the Strategy for
Technological Network Development and
determination of specific amount of the necessary
solutions. Preparation for this step provides for the
implementation of pilot projects of network
automation under the Programme in the period of
2015-2017 with a view to test specific technologies,
which could be installed fully in the future. These
projects aim at the evaluation of the usability of the
smart technologies and testing the practical aspects of
the installation. Upon establishing the needs and
directions of installation of the smart network
elements, the scope of the Investment Programme will
be corrected accordingly.
2. Smart Accounting Pilot Project. This project aims
to equip 3.000 Lithuanian residents with smart
meters in 2015 and to test
them in real time in 2015-2016 and update the
assumptions used for the cost-benefit analysis of
public installation of smart meters. The results of
this project will be used for making the decision
on the possible scenario of public installation of
smart meters. Upon establishing the needs and
directions of installation of the smart metering,
the scope of the Investment Programme will be
corrected accordingly.
3. Project on installation of supervision counters.
The project provides for the installation of the
supervision counters in 10 kV network and
connection to special-purpose software that will
help to identify the precise courses of losses in the
single network zones.
4. Installation of Technological Property
Management System. The project provides for an
installation of an advanced and customised IT tool
designed to make inventories by various sections
and to classify the managed property with all
other necessary financial and technical data. The
tool will be completely integrated into the newly
installed Resource Planning and Accounting
Systems. By introducing these new systems, we
will move to using the advanced solutions instead
of out-of-date TEVIS information system that we
have used for more than a decade in the
management of sectional network development.
5. Installation of the Unified Dispatch Centre and
Distribution Network Management System
(DMS). It is planned to set up LESTO Unified
Dispatch Centre in 2015-2017 with two dispatch
offices in Vilnius and Kaunas that will gradually let
waiving the regional dispatch offices, unite the
network information of different IS and enable
monitoring and managing the grid up to the level
10 kV in the real time.
6. SCADA Control System Update. The project aims
to replace
different SCADA systems purchased in separate
regions during the period of 1995-2005, move to
the unified advanced standard, and subsequently
prepare for DMS installation.
AB LESTO Investment Plan for 2015 – 2025. 53
Investment Programmes
Why is this Investment Programme under
implementation? In summary, the implementation of the
measures of the Smart Grid Programme is concurrent; they
will enable a synergy and satisfy the following consumer
expectations:
1. Uninterruptible power supply, fast power supply
recovery after storms smart solutions will lead
to faster responses to faults and malfunctions and
enable to prevent some failures by changing the
network modes as preventive treatment.
2. Reliable EP supply smart solutions will enable
monitoring more parameters of the quality of the
EP supply in the separate network segments and
make the corresponding decisions on the
management.
3. Prompt reporting and decision-making in
resolution of problems smart solutions will help
locating faults in a prompt and precise manner,
communicating more accurate information to
consumers and prompt network resuming.
4. Operational efficiency and transparency
integration of smart solutions will result in the
decrease of operational expenses for network
maintenance, better planning of recoveries after
breakdowns and better decision-making on the
investments.
Goals. The following presents goals of each programme
measures:
1. Pilot Projects of Network Automation. To test
smart technologies prior to public installation.
2. Smart Accounting Pilot Project. To test the
assumptions and the benefit of the cost-benefit
analysis of public installation of smart meters
conducted in 2012.
3. Project on installation of supervision counters. To
install the supervision counters in the entire
LESTO network until
2020.
4. Installation of Technological Property
Management System. To install the state-of-the-
art tool for the technological property
management.
5. Installation of the Unified Dispatch Centre and
Distribution Management System (DMS). To install
a unified dispatch centre until 2018.
6. SCADA Control System Update. Move to the
single SCADA standard throughout the network.
Financial estimation. During the 2015 - 2025 for this
program nearly 34 million EUR investment is planned.
AB LESTO investicijų planas 2015 – 2025 m. 54
Sąvokos ir sutrumpinimai
TERMS AND ABBREVIATIONS
Abbreviation Definition
LESTO or Company LESTO AB
RES Renewable Energy Sources
DG ENER The European Commission’s Directorate-General for Energy
EP Electric power
ME Ministry of Energy of the Republic of Lithuania
EU European Union
MF Ministry of Finance of the Republic of Lithuania
LITGRID LITGRID, AB
LE Lietuvos energija, UAB
LRAIC model guidelines
NCC Resolution No. O3-287 as of July 5, 2013 REGARDING THE METHODOLOGICAL GUIDELINES FOR
BUILDING THE ACCOUNTING MODEL BASED ON THE FORWARD-LOOKING LONG-RUN AVERAGE
INCREMENTAL COSTS OF THE SERVICES RENDERED BY THE TRANSMISSION SYSTEM OPERATOR AND
POWER DISTRIBUTION NETWORK OPERATORS
TSO Transmission System Operator
MEC Ministry of Economy of the Republic of Lithuania
SEI State Energy Inspectorate
NCC or the Regulator National Commission for Energy Control and Prices
Methodology for upper limits Resolution of No. O3-139 PRICING METHODOLOGY FOR ELECTRIC POWER TRANSMISSION AND
DISTRIBUTION SERVICES AND ESTABLISHMENT OF THE PRICE CAPS
NCC Investment Coordination
Procedure
04 08 2014 NCC Project "PROCEDURE FOR COORDINATION OF THE INVESTMENT PROJECTS OF ENERGY
COMPANIES AT THE NATIONAL COMMISSION FOR ENERGY CONTROL AND PRICES"
Government Resolution
Regarding the Principles for
Setting the State-Regulated
Prices in the Energy Sector
(2014)
Government Resolution No. 1026 as of September REGARDING THE APPROVAL OF PARTICULARS OF
THE PRINCIPLES FOR SETTING THE STATE-REGULATED PRICES IN THE ENERGY SECTOR
AB LESTO Investment Plan for 2015 – 2025 55
Annexes
ANNEXES
ANNEX 1. Pictures of deteriorating equipment
Wearing-out, crumbled reinforced concrete poles of 35 kV overhead lines
AB LESTO Investment Plan for 2015 – 2025 56
Annexes
Worn-out, crumbled reinforced concrete poles of 10 kV and 0.4 overhead lines
AB LESTO Investment Plan for 2015 – 2025 57
Annexes
Worn-out 10/0.4 Minskas and Šiauliai type transformer substations
AB LESTO Investment Plan for 2015 – 2025 58
Annexes
AB LESTO Investment Plan for 2015 – 2025 59
Annexes
AB LESTO Investment Plan for 2015 – 2025 60
Annexes
ANNEX 2. LESTO questionnaire for stakeholders
LESTO sent the questionnaire to 95 stakeholders and received 49 replies.
Our Company operates as an electricity distribution network operator in Lithuania. We maintain the electricity distribution network,
supply electricity and connect new consumers. Our mission is reliable electrical energy creating value for everyone.
We are currently preparing an Investment Plan for 10 years. The Document will outline LESTO investment goals, directions and its scope
until 2025.
We would like to set the investment goals after a throughout analysis of stakeholder expectations mostly related to LESTO activities. We
would like to develop an Investment Plan based on present and future needs of stakeholders that would assist in solving the current
problems and would rely on the best practices of foreign companies.
You are a significant stakeholder for us and your opinion would be of great help in the preparation of this Document; therefore, we are
kindly asking you to evaluate the importance of the following expectations for your entity, activities or community. Any suggestions
and/or comments that you have would be greatly appreciated. The findings of this survey will be used in setting up the priorities of LESTO
Investment Plan for 10 years.
Thank you,
Please evaluate the importance of the expectations for your entity, activities or community:
# Expectation
Importance
1 – least important, 4 – very
important
1 2 3 4
1 Reliable power supply (excluding power surges)
2 Uninterruptible power supply
3 Energy efficiency and sustainable consumption
4 Prompt settlement of legal disputes
5 Prompt power supply recovery after storms
6 Visual reduction of pollution, removal of overhead lines and worn-
out rests
7 Reduction of the network impact on nature and fauna
8 Protection and safe transfer of stork nests
9 Noise level from LESTO facilities
10 Safety of power network facilities
11 Cooperation in the implementation of the energy efficiency surveys
and application of innovations
12 Cooperation in the implementation of social responsibility projects
13 Consulting on LESTO services
14 Invisible physical network in picturesque places, national parks,
settlements
15 On-line information exchange with LESTO
16 LESTO performance
AB LESTO Investment Plan for 2015 – 2025 61
Annexes
17 Detailed information about LESTO Investment Projects
Your suggestions and comments:
AB LESTO Investment Plan for 2015 – 2025 62
Annexes
Summary of LESTO stakeholder responses:
Stakeholder Expectations
Larg
e c
orp
ora
te
cust
om
ers
(>
1
mill
ion
kV
h)
x 6
Lith
uan
ian
Nat
ion
al
Co
nsu
me
r
Fed
era
tio
n
Stat
e C
on
sum
er
Rig
hts
Pro
tect
ion
Au
tho
rity
Stat
e S
erv
ice
Fo
r
Pro
tect
ed
Are
as
Lith
uan
ian
Hyd
rom
ete
oro
logi
-ca
l Se
rvic
e
Mu
nic
ipal
itie
s x
30
Kau
nas
Un
ive
rsit
y
of
Tech
no
logy
Viln
ius
Un
ive
rsit
y
Nat
ure
Re
sear
ch
Ce
ntr
e
Lith
uan
ian
Co
nfe
de
rati
on
of
Ind
ust
rial
ists
.
Inve
sto
rs'
Fo
rum
Lith
uan
ian
En
erg
y
Inst
itu
te
Lith
uan
ian
Ass
oci
atio
n o
f Lo
cal
Au
tho
riti
es
Ind
ep
en
de
nt
sup
plie
rs x
2
Ave
rage
sco
re
Energy efficiency and sustainable
consumption 4 4 4 4 4 4 4 3 4 4 4 3 4 4 3.9
Reliable power supply (excluding
power surges) 4 3 4 3 3 4 4 4 4 4 4 4 4 4 3.8
Uninterruptible power supply 4 3 4 3 4 4 4 4 4 4 4 4 4 3 3.8
Safety of power network facilities 3 3 4 3 3 4 4 4 4 4 4 4 3 2 3.5
Prompt power supply recovery after
storms 4 3 4 2 3 4 3 4 4 4 4 3 3 3 3.4
On-line information exchange with
LESTO 4 3 3 3 3 4 4 4 4 3 3 3 3 4 3.4
LESTO performance 3 3 4 3 2 3 3 4 3 3 4 3 3 4 3.2
Cooperation in the implementation of
the energy efficiency surveys and
application of innovations
3 4 2 3 3 3 4 3 3 3 4 3 3 3 3.1
Reduction of the network impact on
nature and fauna 2 4 2 4 3 3 4 3 4 3 3 3 2 3 3.1
Prompt settlement of legal disputes 3 4 4 2 3 3 3 3 3 3 2 2 3 3 2.9
Consulting on LESTO services 4 3 3 2 2 3 3 4 3 3 3 2 3 3 2.9
Protection and safe transfer of stork
nests 2 3 1 4 3 3 3 3 4 3 3 2 2 2 2.7
AB LESTO Investment Plan for 2015 – 2025 63
Annexes
Stakeholder Expectations
Larg
e c
orp
ora
te
cust
om
ers
(>
1
mill
ion
kV
h)
x 6
Lith
uan
ian
Nat
ion
al
Co
nsu
me
r
Fed
era
tio
n
Stat
e C
on
sum
er
Rig
hts
Pro
tect
ion
Au
tho
rity
Stat
e S
erv
ice
Fo
r
Pro
tect
ed
Are
as
Lith
uan
ian
Hyd
rom
ete
oro
logi
cal
Se
rvic
e
Mu
nic
ipal
itie
s x
30
Kau
nas
Un
ive
rsit
y
of
Tech
no
logy
Viln
ius
Un
ive
rsit
y
Nat
ure
Re
sear
ch
Ce
ntr
e
Lith
uan
ian
Co
nfe
de
rati
on
of
Ind
ust
rial
ists
.
Inve
sto
rs'
Fo
rum
Lith
uan
ian
En
erg
y
Inst
itu
te
Lith
uan
ian
Ass
oci
atio
n o
f Lo
cal
Au
tho
riti
es
Ind
ep
en
de
nt
sup
plie
rs x
2
Ave
rage
sco
re
Invisible physical network in
picturesque places, national parks,
settlements
2 2 1 4 2 3 2 3 4 3 4 3 3 2 2.7
Detailed information about LESTO
Investment Projects 2 3 4 2 3 3 3 3 3 3 3 2 3 1 2.7
Visual reduction of pollution, removal
of overhead lines and worn-out rests 2 3 2 4 2 3 3 2 3 3 3 3 2 2 2.6
Noise level from LESTO facilities 2 3 3 4 2 3 3 3 3 2 3 1 2 2 2.6
Values of the survey scores:
Least important 1
Moderately important 2
Important 3
Very important 4
LESTO AB
Žveju g. 14
Vilnius