Annual and Sustainability Report 2016. - ewz...Annual and Sustainability Report. And, because we are now in an anniversary year, we also look back even further. Back to where it all

Committed to the future:

Annual and Sustainability Report 2016.

Committed to the future: visionary for 125 years.

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OVERVIEW.

KEY FIGURES. 227,495CUSTOMERS

46,931LIGHTS

191,800BROADBAND CONNECTIONS

1,189 EMPLOYEES

SITES1 AND GRIDS.

EUROPE

SWITZERLAND

24,930 commercial and business customers 202,565 residential customers

6,067 LED lights 40,864 conventional and special lights

225 women 964 men

Wind power

Hydropower

Nuclear power

Waste incineration

Biomass

Photovoltaic and solar energy

Heat contracting

Energy contracting

Fiber-optic telecom network

Distribution

318 GWHHEATING AND COOLING SALES

Income statement

2015 2016Total operating income CHF million 813.4 859Earnings before interest and taxes (EBIT) CHF million 67.8 68.2Net result CHF million 68.3 68.5Employees Number 1,202 1,189

Electricity

2015 2016Total power production GWh 5,473 4,827Power production from renewable energies GWh 3,129 2,729Electricity sales supply Switzerland GWh 3,859 3,820Sales of green power GWh 382 380Addition of new renewable energies MW 45 0.6Electricity consumption in the City of Zurich GWh 2,904 2,958Customers Number 225,944 227,495

Heating and cooling

2015 2016Heating and cooling sales GWh 289 318Earnings from energy services CHF million 49.8 52.4

Distribution

2015 2016Overhead lines km 412 413Cable km 4,963 5,168Substations Number 30 30 Transformer stations Number 881 882

Telecom

2015 2016Buildings with broadband connections Number 22,600 27,200Available broadband connections Number 176,000 191,800

Development grants

2015 2016ewz.effizienzbonus in the supply areas CHF million 15.5 15.2Power conservation fund CHF million 6.5 3.9naturemade star fund CHF million 2.8 2.4

¹ Power production from the company’s own plants, procurement rights, partner plants and third-party plants

48,200 buildings to be connected in the city of Zurich

4,827 GWHPOWER PRODUCTION

3,820 GWHELECTRICITY SALES SUPPLIED TO SWITZERLAND

Hydropower: 49 %Nuclear power: 42 %Wind/solar: 7 %Other: 2 %

Electricity supply Switzerland

217 GWh Pumped storage

357 GWh Electricity supplysubsidy systems and PPAs 3,028 GWh

Purchase trading

3,463 GWhSupply trading

naturemade star-certified naturemade basic-certifiedFrom renewable energies

Other

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Every day at ewz we strive to be better: Even more committed, more sustainable, more visionary, and simpler – for our cus-tomers and for other stakeholders. We are constantly strengthening our position as the market leader with pioneering energy and communications solutions by regard-ing the challenges facing the energy indus-try as opportunities. In 2016, we once again managed to hold our ground in a difficult environment, and I am very proud of that fact. We set very high targets for ourselves and achieved many of them, though we also had to overcome a few setbacks. We were, unfortunately, unable to convince elected officials of the need to change ewz’s legal form. Several major power failures preoccu-pied us – and also the media. This will spur us on to make further improvements. How-ever, if we look at the overall picture, we can see the excellent work that ewz does every day for the city of Zurich and for our custom-ers throughout Switzerland. This is also evi-denced by the award from the Swiss Fed-eral Office of Energy for the best supplier of energy in Switzerland. The top ranking is a reward for our consistent and sustainable actions and our important pioneering role in Swiss energy policy. We report on this and many other successes over the past year in this Annual and Sustainability Report. And, because we are now in an anniversary year, we also look back even further. Back to where it all began. ewz was founded 125 years ago, shortly before the official opening of the Letten hydropower plant, which is where the current Man-agement Board photograph was taken. This excursion reminded us, the members of the Management Board, of the development of electricity from being a rare luxury good to the lifeblood of today’s modern world. However, ewz is not just indulging in the past. We are also striding with commitment into the future with innovative, digital, and sustainable products and services.

FOREWORD BY THE CEO.

The operations. Alongside reliable power production and distribution, ewz’s operations include spe-cialized energy efficiency consultations and innovative energy, telecom, and grid services, plus public lighting and public clocks throughout the city of Zurich. ewz is addressing issues that will be important in the future: safe and environmentally friendly power supply, and efficient use of energy. To this end, the municipal company is investing heavily in the expansion and promotion of renewable energies and is eager to mas-sively increase the production of electricity from wind as well as solar power over the coming years. The principle of sustainabil-ity and the goal of the 2000-watt society are enshrined in the municipal code of the city of Zurich. There will therefore be no new in-vestments by ewz in nuclear power plants. ewz will strive for a phased, early withdrawal from nuclear energy, but the sale of invest-ments is a difficult proposition.

The organization.ewz is a service department of the city of Zurich, which means that it is a dependent institution under public law. Dependent re-fers to the fact that it operates on its own be-half yet does not possess its own legal per-sonality. All transactions conducted by ewz are subject to the usual responsibilities as defined in the municipal code. The Manage-ment Board of ewz consists of the CEO and division managers.

Committed to the future: ewz is a leading company with pioneering energy and communications solutions. The Zurich Municipal Electricity Service accepts responsibility for a sustainable energy future and offers its customers innovative products and business ideas. As part of this, sustainability and innovation are among the cornerstones of ewz’s operations so that we can provide the best solutions to ensure energy supply for the future.

ORGANIZATION. TABLE OF CONTENTS.

OVERVIEW.2–3Organization 4Foreword by the CEO 5

125 YEARS AND THE FUTURE. 6–7

THE OPPORTUNITIES OF THE FUTURE. 8–9What will the future 10of energy look like?Perspectives 12

MILESTONE INDEX.Department statement 14Events in 2016 15Sustainability Management 16

CONTRIBUTION TO ENERGY TRANSITION. 20–21Renewable energies 22Security of the power supply 24Green power 25

INNOVATIONS. 26–27 Developing innovative products 28and services More than electricity 29Energy solutions 30

STAKEHOLDERS AND SOCIETY. 32–33Modern communications infrastructure 34for ZurichFocus on customers 35Stakeholder engagement 36Social commitment 37

SUSTAINABILITY IN EVERYDAY OPERATIONS. 38–39Environmental management 40Opportunity and risk management 42Sustainable procurement 43

ATTRACTIVE WORKING ENVIRONMENT. 44–45Talent search and development 46Occupational health and safety 48 Health promotion 49

FINANCIAL REPORT 2016. 50–51Annual and management report 2016 52Income statement 2016 54Balance sheet 2016 55Cash flow statement 2016 56Notes 57Performance and energy data 59

GRI G4 Content Index.60–61

ABOUT THIS REPORT.62Imprint 63

Marcel Frei,CEO

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WE ARE ALL “THE POSSIBILITY MAKERS”.

COLLECTIVE ENERGY TRANSITION.

WORKING YESTERDAY FOR THE DAY AFTER TOMORROW.

THE FUTURE IS ALREADY HERE.

2017 is a special year. In this Annual and Sustainability Report, ewz looks back not only on last year, but also on 125 years of history and takes a glance at the future through the eyes of young people. At the start of ewz’s history, the focus was on the economic de-velopment of the city of Zurich. Later, ewz had to pay increasing attention to environ-mental conditions and, in the last decade, the energy transition has gained promi-nence. These days, as an energy service provider, ewz is the possibility maker, juggling global developments, such as climate change, and the increased need for energy. The future will be shaped by new customer needs and advancing digitalization.

ewz adopts a visionary and sustainable forward-thinking approach for its stakehol-ders at all times. This has always been the common denominator in its operations, and it will continue to be so. This enables ewz to create new possibilities for and with its stakeholders and customers in response to changing conditions. This report will focus on all those things that ewz made possible in 2016.

The energy transition is about far more than the phase-out of nuclear power and the shift away from fossil fuels. The expansion of renewable energies and the promotion of energy efficiency and energy services are therefore just a few aspects of ewz’s long-term vision. Switzerland, with the 2050 Energy Strategy and a huge range of activities, is mo-ving toward a sustainable energy future. ewz is making a significant contribution to this, with dedication and foresight, by taking steps such as promoting an effective internal cul-ture of innovation, expanding the fiber-optic network, and demonstrating huge commit-ment to environmental improvement measures. To make this possible, and to go the extra mile, ewz engages in continuous dialogue with all stakeholders and integrates their needs into the development of products and services. As we continue the journey to becoming a 2000-watt society, the focus of all ewz’s activities is on customer satisfaction.

ewz has been a possibility maker for the last 125 years. On pages 14 and 15 we address the key milestones in our history – from bringing light to the city of Zurich for the first time in the 19th century to raising public awareness with a Power Conservation Day back in the 1960s, all the way through to introducing 100% renewable energy for all residential customers from 2015 onwards.

In the future, new customer needs will have an even greater influence on ewz’s operations. This is reason enough to start looking ahead in this Sustainability Report. Pupils from the secondary school in Männedorf held a workshop addressing the issue of how we will live in the future. An insight into the workshop and some visions from it can be found on pages 7 to 11.

125 YEARS AND THE FUTURE.

The following pages are all about what we will make possible together tomorrow and the day after, what is already possible today, and what ewz made possible in the past. Working hand in hand with customers, stakeholders and employees. Together we are moving in the direction of a sustainable energy future for society as a whole.

This Annual and Sustainability Report is also our way of thanking all the possibility makers who have made history with ewz and will shape the future with ewz.

After all, we can only achieve sustainability by working together. Together we are: The Possibility Makers.

ewz.ch/dieMöglichmacher

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http://www.ewz.ch/dieMöglichmacher

THE OPPORTUNITIES OF THE FUTURE. What will everyday life be like tomorrow? We are in a dynamic environment. ewz wonders what the customers of tomorrow will need. We wanted to know from pupils how they imagine their future. How will they live and move around in the future? What is important to them? ewz held a creative workshop with a lower secondary school class and gained a lot of valuable ideas about how everyday life will look in the future.

“In the future, the fridge will tell us which products are still fresh and then give us tasty meal suggestions for dinner.”Paula and Ayanna, pupils at the secondary school in Männedorf and Possibility Makers, together with their classmates

125 years of ewz, 125 years of innovation.In its 125 years of corporate history, ewz has come up with innovative solutions for cus-tomers, implemented spectacular infra-structure projects, and decisively helped shape the energy environment in Switzer-land. One thing in particular is decisive in the course of history – learning. Few fore-

saw that the current transformation in the energy industry would be so rapid. The fact that electricity generation from nuclear power is seen very differently today is just one of many factors that have played a role. In dealing with new risks and opportunities, ewz is continuing to be agile and flexible so it can anticipate changes and respond rap-idly to them.

The future is renewable.Innovative areas such as energy from renewable resources, electromobility, and intelligent forms of living and working are becoming increasingly important and are extremely relevant to ewz as well. ewz has already evolved from an electricity provider into an energy and communications service provider, yet it is still only at the start of an ongoing transformation. This is being driven by technological developments, whether in the internet of things, energy transition in energy production, electrification of mobil-

ity, or robotics which makes extensive auto-mation possible. It is also being influenced by political changes, such as Switzerland’s relationship with the EU, the promotion of renewable energies, or the global climate agreement. Social change is also having a major influence on the future, and will play a decisive role in shaping ewz. Several of these developments are still difficult to fore-see, which is why looking at the future re-quires not only knowledge and imagination but also sometimes fantasy, quantum irra-tionality, and creative naivety. Something, in fact, which children still have naturally.

Convergence of energy, telecommuni-cations, and mobility as a driver.As in the past, ewz is constantly preparing for the future in new ways. Innovation was and is one of the most important and strong-est drivers in this. Mr. Duell was convinced back in 1899 that further innovation was im-possible. As we know today, he was wrong. Similarly, any forecast of ewz’s growth would also have been much too pessimistic. In re-cent decades, ewz was primarily affected by innovations in the energy sector. This situ-ation has changed markedly in the last few

years. The convergence of energy, informa-tion technologies, and mobility is creating an environment which is very different in its complexity and innovative capacity from the past century. Digitalization is speeding up transformation in every industry. There are important drivers from society and pol-itics, research and development, and also customers.

Smart home – or how young people picture the future.This is why ewz has collaborated with a class at Männedorf (Zurich) secondary school to design the future. How will we live at home in the future? How will we play and eat, work and relax? In a creative workshop, the boys and girls shared their vision of the future – with Lego, clay, wood, and cardboard. What emerged are designs of the future that we could never have improved on. Full of details, creativity, and optimism – unprejudiced, pragmatic, and with a touch of humor and healthy skepticism about technological de-velopment. Not all the children’s ideas will become real – houses today are very rarely completely energy-neutral and robotics is developing very fast, but still is not entirely integrated into everyday life – but we all know that Thomas Watson wasn’t 100 % ac-curate in his future predictions either. What we at ewz can learn from children is the courage to try new things, question exist-ing things, and find creative solutions to the challenges of tomorrow.

WHAT WILL THE FUTURE OF ENERGY LOOK LIKE? Smart home: A combination of energy, convenience, and security.

“There’s nothing new. Anything you could invent has already been discovered.”Charles H. Duell, Commissioner of the US Patent and Trademark Office, 1899

“What the world of tomorrow will be like is greatly dependent on the power of imagination in those who are learning to read today.”Astrid Lindgren, children’s author, 1958

“I think that in the future most homes will be managed and con-trolled by smart-phone. Robots will take over the housework.”Jara

“In the future, houses will be-come power sta-tions – they will generate electri-city and store it directly on site. Enough for all the appliances at home and the elec-tric car.”Luca and Nicola

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PERSPECTIVES.

“Successfully boosting

EFFICIENCY and cutting costs – the expertise of our finance and controlling departments is essential here.”

Hanspeter Rahm

“Thanks to reliable internal services, our employees can deliver

PEAK PERFORMANCE.”Arno Stark

“Secure, reliable, and ecofriendly

POWER PRODUCTION at attractive prices is what motivates us every day.”

Martin Roth

“ewz’s voice needs to be heard not just in the city of Zurich –

we offer our EXPERTISE actively throughout Switzerland to authorities and politicians.”

Harry Graf

“Good timing is no accident with us – particularly with low

MARKET PRICES it is often the difference between winning and losing.”

Cédric Aubert

Environment representative: Martin Roth

Occupational Safety and Health Management representative: Benedikt Loepfe

Process and Quality Management representative: Arno Stark

Risk Management and Internal Control System representative: Hanspeter Rahm

Equal Opportunities representative: Regula Bel Kadhi

Data Protection representative: Arno StarkThe Executive Board (as at April 2017)

“Taking on the seemingly IMPOSSIBLE, questioning what already exists, dreaming up what doesn’t –this is how ewz continues to develop.”

Stéphanie Engels

“With our new division we are meeting needs for complex

ENERGY SOLUTIONS even better – simply, and from a single source.”

Christoph Deiss

“ewz is making an important contribution

to the ENERGY TRANSITION by investing in renewable energies and developing sustainable energy and communications solutions.”

Marcel Frei

“We’re operating today’s

POWER GRID safely and cost-effectively, while at the same time equipping ourselves for the renewable future.”

Benedikt Loepfe

“We achieve long-term growth by meeting

CUSTOMER NEEDS with simple, digital, and sustainable solutions.”

Corinne Pellerin

Christoph Deiss

Energy SolutionsProject business with energy contracting and facility management, energy consultations, grid services, and business development.

Marcel Frei

CEOa.i. TelecomConstruction and operation of the urban fiber-optic network and provision of innovative communications solutions for companies and municipal organizations.

Benedikt Loepfe

Distribution GridPlanning, construction, operation, and maintenance of grids and installations in Zurich, central Grisons, and Bregaglia. Operation and maintenance of public lighting and clocks in the city of Zurich.

Corinne Pellerin

Sales and MarketingDevelopment, maintenance, marketing, and sales of products and services, support and competent advice to customers, and efficient billing.

Arno Stark

ServicesSupport and service functions for procurement, property, human resources, legal affairs, project management and IT.

Martin Roth

Power GenerationPower production from own hydropower, wind and solar plantsand investments in domestic and foreign power plants.

Cédric Aubert

Energy EconomicsManagement of power production and guarantees of origin, electricity and certificate trading, use of power plants, balance group, research, and risk management.

Stéphanie Engels

Corporate and Business DevelopmentInternal corporate services relating to business development, innovation, strategy, and sustainability. Strategic cross-divisional projects.

Harry Graf

Media & Public AffairsCompetence center for media relations, public affairs, issue management, and crisis communication.

Hanspeter Rahm

Finance and ControllingSupport and service provider for all financial and business matters and processes and also responsible for financial and management reporting.

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MILE- STONES.

As a pioneer, ewz is proud of its history and of the employees who have made it possible. It all began with bringing light into the city of Zurich, and to this day our commitment translates into ongoing innovation, energy services, and state-of-the-art telecommunications solutions.Travel through time with ewz.

125 years

of ewz

MILE- STONES.


1888 –

1900

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2015

1888 –

1900

1900 –

1910

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2000

80s +

90s

60s +

70sElectricity flows into Zurich:The Letten hydropower plant provides light for the first time, followed soon after by an electri- fied tramway.

MILE- STONES.


1900 –

1910

since

2015

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2000

80s +

90s

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70sPreviously unimaginable: A 140 km power cable brings electricity from Grisons to Zurich. Hydropower plants are expanded in Bregaglia, in central Grisons and along the Limmat River.

MILE- STONES.


since

2015

since

2000

80s +

90s

60s +

70sElectricity usage in everyday life skyrockets, prompting further expansion of ewz’s infrastructure of power plants and distribution grids. Rising demand leads to a move into nuclear power through investments. With the “Power Conservation Day”, ewz acts early to raise awareness of a sustainable approach to electricity.

MILE- STONES.


since

2015

since

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80s +

90sSustainability and renewable energy are ewz priorities: Free energy efficiency consultations expand the portfolio, as does the first solar power exchange in Switzerland.

MILE- STONES.


since

2015

since

2000 For the very first time, customers can choose their electricity product and its quality. ewz begins the process of opening up the en-tire city of Zurich with fiber optics by 2019. The proportion of wind farms increases, and ewz gains ex-perience in solar thermal energy, geothermal energy, and fuel cells. Innovative energy services com-plement the portfolio, and the first smart street lighting is installed. River courses are renaturated around power plants.

MILE- STONES.


since

2015The energy mix for all residential customers is 100 % renewable.

January 18Quick and personal exchange with custom-ers: AXA Winterthur, ewz, and SBB launched the messenger solution “Smoope”.

April 26 The results of the power conservation pilot project are now available. Thanks to the lay-people who completed a training course followed by energy efficiency consultations, average electricity consumption fell by 4.3 %. Pages 38, 39

May 12The study commissioned for the repair and optimization of the ewz site in Herdern was decided. The most impressive proposal was submitted by Meili & Peter Architekten AG together with the general planner Häm-merle + Partner GmbH from Zurich.

June 1 The renaturation of the Rothenbrunnen stream was a success: A huge variety of plants and animals colonized the area in increasing numbers. ewz’s naturemade star fund put CHF 140,000 toward this renaturation. Pages 20, 21

June 570.4 % of voters said yes to a proposal re-quiring ewz to sell all its investments in nu-clear energy by 2034 and to stop procuring nuclear power. Pages 4, 6, 16, 22, 52

June 20With the new “solar.mobil-Pass” customers of Zurich Public Transport (VBZ) can travel anywhere on the Züri Line with solar power for a year.

June 21The construction of ewz’s urban fiber-optic network progressed on schedule. It is now available to 180,000 homes and business premises. Page 34

July 1-3ewz was represented at Züri Fäscht with a stand at the Utoquai and provided a free public WiFi network around the Bellevue area.

July 18Founding of smart grid solutions AG, in which ewz holds a 40% stake. The goal is to develop and distribute a power quality measuring device that records the condition of the power grid at various locations in real time. Page 24

August 27ewz formally opened the renovated Albigna plant cableway. The cableway is essential for operation of the Bregaglia power plants and makes a valuable contribution to tour-ism in the valley. Page 22

August 31Due to joint cost controlling for the ewz grids in Zurich and Grisons, Grisons households will pay an average of 18 % less for their elec-tricity in 2017.

September 1With its sustainable concept, ewz won the tender to supply heating and cooling for the new “Les Jardins du Couchant” complex in Nyon. Geothermal and solar energy will be the main energy sources used.

September 9ewz became the new owner and operator of the Splügen district heating project with wood-chip heating. Following the comple-tion of the renovation work, ewz formally opened the plant with customers.

September 14The City Council applied for the “New Busi-ness Solar” credit facility. This should set the platform for ewz to add innovative projects to its existing activities. Page 22

EVENTS IN 2016.

September 15 ewz launched ewz.meinsolar in Grisons as well. With this service ewz coordinates the entire implementation of a photovoltaic sys-tem on the customer’s own roof, from plan-ning and installation to commissioning.

September 22ewz and Equinix launched ewz.cloud ac-cess. This new offering gives Zurich com-panies private access to their cloud. ewz delivers a quick and secure point-to-point connection via the fiber-optic network.

October 26The City Parliament decided not to sup-port the proposal for a change of legal form. ewz wanted to use further credit facilities to guarantee the leeway required to ensure its continued existence in the marketplace.Pages 5, 16, 53

October 26 The City Council applied to the City Parlia-ment for a loan of 9.4 million Swiss francs with which ewz could acquire a stake in a company that will supply heating, cooling and fresh air to a new sports and leisure center in Lausanne.

November 7ewz is ranked first in the latest federal benchmarking study on energy efficiency and renewable energies. Pages 5, 16, 25

December 11ewz enabled the first energy-neutral Zurich New Year’s Eve Run.

December 21The City Council applied for a credit facility of 200 million Swiss francs for investments in renewable energies. Pages 16, 22

DEPARTMENT STATEMENT.

ewz stays on the ball.The city of Zurich has committed to the 2000-watt society in a public referendum, and it aims to withdraw from nuclear power by no later than 2034. These have been ewz’s declared goals for quite some time now, and the company is eager to stay ahead of its competition in terms of energy effi-ciency and renewable energy. According to the latest benchmarking study by the Swiss Federal Office of Energy, ewz is very close to its goal of becoming the ideal supplier of en-ergy as defined by the federal government’s 2050 Energy Strategy and is therefore at the top of the rankings. ewz’s efforts also help the city of Zurich to top national and inter-national comparisons of sustainability time and again.In the meantime, however, other energy providers have also realized that they need to rely more on renewable energy and en-ergy services. The majority of these are not municipal administrative departments and therefore have better conditions in the mar-ketplace than ewz, especially in terms of quick decision-making and confidentiality. The City Council was eager to compensate for this disadvantage by converting ewz into a public-sector institution, but did not manage to achieve majority support in Parliament. However, so that ewz can continue along the path already chosen, the City Council will ap-ply to the City Parliament for a credit facility of 200 million Swiss francs for the production of energy from renewable sources. It also wishes to change the regulations concerning the handover of ewz’s profits. The years of huge revenues are long gone for the energy industry, including for ewz. Elec-tricity prices are below the cost of production, and may not have bottomed out yet. This is all the more reason why ewz must set its priorities in areas where it is already strong: in its sustainable products and services and its proximity to customers. However, ewz must also be creative and provide new services. In the area of solar energy, for example, the City Par-liament has approved a credit facility for this of 10 million Swiss francs. The approximately 1,200 employees of ewz are responsible for the company’s success. I am constantly aware of their huge dedication, their expertise and their inventiveness. That fills me with confidence.

Andres Türler,Member of the City Council and head of the Utility Operations Department of the city of Zurich

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The UN Sustainable Development Goals. With its sustainability management, ewz also accepts responsibility on the international stage. The member states of the United Nations (UN) have agreed on goals for global sus-tainable development. These goals place responsibility on both rich countries and the poor-est nations. For the first time, it is not only countries but also companies that are involved. The ewz sustainability policy makes an effective contribution toward five of these “Sustain-able Development Goals”:

Sustainability management. ewz’s strategic goals include these material sustainability issues and therefore guarantee that ewz as a company is not only competitive but also makes a long-term contribution to society and to the city of Zurich as an owner. Sustainability management ensures that the sustainability strategy integrated into the corporate strategy in 2016 is implemented and has direct access to the Management Board. In 2016, the Sustainability Board was inte-grated into the Management Board to simplify the situation further. The latter discusses the set sustainability priorities once per quarter and derives any recommended actions.

Promote gender equalitysee “Diversity” page 47

Produce reliable, safe and sustainable energysee “Renewable energies” page 22

Create an innovative and resilient infrastructure see “Security of the power supply” page 24“Modern communications infrastructure for Zurich” page 34 Promote sustainable cities and communities see “Biodiversity” page 23 and “Energy Solutions” pages 30, 31

Combat climate change and its impacts see “Green power” page 25

http://www.un.org/sustainabledevelopment/ (only available in English)

Major trends.Consumption is rising worldwide, for exam-ple, for food and electricity. According to one study1, the global population in 2050 would need a total of three planet Earths to meet global demand. Forecasts indicate that resources will become scarcer in the fu-ture. In the same period, the concentration of greenhouse gases and of carbon dioxide in the atmosphere is set to double. Scientists believe that this will lead to higher global temperatures and increasingly extreme weather phenomena.

SUSTAINABILITY MANAGEMENT.

Priorities of sustainability.Energy supply is in a particularly challenging situation: Fluctuating power generation, consequences of the changing regulatory environment, and a skills shortage are a few of the issues currently facing ewz. But this is opening up new opportunities. ewz is developing new and innovative products and services together with its stakeholders and demonstrating its commitment to its staff as an employer. The main sustainability priorities which ewz is addressing are pre-sented in the following materiality matrix (GRI G4-19). These sustainability priorities form the bedrock for sustainability in the cor-porate strategy. They are reviewed annually by external and internal stakeholders.

¹ “2052: A global forecast for the next forty years”, Professor Jorgen Randers, University of Cambridge)

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Relevance from the perspective of ewz Increasing

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ewz materiality matrix.ewz’s sustainability priorities:

1 Security of supply

2 Investment in renewable energies

3 Innovation

4 Sustainable products and services

5 Customers’ energy efficiency

6 Environmental management

7 Stakeholder engagement

8 Customers

9 Occupational health and safety

10 Talent search and development of employees

11 Modern communications infrastructure

ewz is also focusing on the development of the following topics within the company:

12 Opportunity and risk management

13 Sustainable procurement

14 Corporate governance

15 Diversity management

16 Social commitment

http://www.un.org/sustainabledevelopment/

CONTRIBUTION TO ENERGY TRANSITION.ewz is committed to the production of green power and the renaturation of waterways, which has a positive effect on bio-diversity: For every kilowatt-hour of green hydropower sold, one cent goes to ewz’s naturemade star fund for environmen-tal improvements. In 2016, around 140,000 Swiss francs went toward renaturation of the Rothenbrunnen stream in Grisons. Customers who purchase green power are contributing directly to environmental improvements. This is how wonder-ful the energy transition can be.

“We enjoy being in the great outdoors and want to contribute to its conservation so that our chil-dren can delight in its diversity in the future as well. That is why we are committed to eco-friendly power supply. We have been buying green power since 2010.” Sabine Hasler, Member of the Management Board of Woniya Nature Academy and a Possibility Maker, together with her family

Around half of the electricity produced by ewz comes from hydropower plants. For this rea-son, the provisions of the Swiss Water Conservation Act are hugely important to ewz. The statutory rehabilitation of the catchments, which ensures appropriate residual water flow, is an important task at present which has already been implemented for all ewz plants – with the exception of those in central Grisons. At the round table, ewz devised a viable solution with the communes, the fisheries and environmental organizations, and the canton. ewz received the cantonal decree required as a basis for implementation shortly before the end of 2016. Once the agreed measures have been implemented, which is expected to happen by 2019, all plants will satisfy the legal requirements. Since the law was revised in 2011, the federal government has also imposed increased en-vironmental requirements on hydropower plants. These concern fish mobility, fluctuations in water discharge, and the bed-load balance: When ewz rehabilitates the bed load at the Wettingen power plant in the middle of 2017, gravel and sand banks below the power plant will expand and contract constantly with the ebb and flow of the river, invigorating the ecosystem. ewz demonstrates special commitment to renaturation, both along and in the vicinity of waterways. That helps power plants produce renewable electricity. ewz promotes biodiver-sity there with funding from the naturemade star fund for certain projects. One cent for every kilowatt-hour sold of green power generated exclusively by naturemade star-certified power plants goes into the fund. In 2016, around 4.6 million Swiss francs flowed into the fund for environmental compensation measures. Of this, 2.4 million Swiss francs were spent on renaturation and projects promoting biodiversity.

4.6 MILLION SWISS FRANCS FOR ENVIRONMENTAL COMPENSATION MEASURES.

Biodiversity in the field of hydropower plants.

Goal review for 2016 and outlook for 2017.In 2016, ewz again assumed responsibility for managing Maggia Kraftwerke AG, in which ewz has a 10 % stake. The trading team at ewz is optimizing use of the complex hydropower plants and selling electricity and green certificates of origin on the whole-sale markets. In the year under review, ewz invested mainly in the greater Zurich area and in smaller photovoltaic systems in order to meet the demand for the investment model ewz.solarzüri. On the whole, production from renewable energies fell slightly by 11 % to 2561 GWh. Production from hydropower was deter-mined in 2016 by a hydrologically average first six months replaced by extremely dry weather from September. Electricity pro-duction from hydropower was reduced by 12 %. In July 2016, ewz commissioned the completely overhauled Albigna cableway, which will secure future access to the dam and, with this, operation of the Bregaglia power plants.In 2017, ewz will continue to invest in secur-ing and optimizing production from its own hydropower plants as well as partner plants. It is also planning to invest in new renewable energies, particularly wind farms and, to a smaller extent, photovoltaic systems as well.

One of ewz’s overarching long-term goals is to distance the production portfolio from nu-clear power and switch entirely to the pro-duction of renewable energies. Since 2015, customers with basic supply have been re-ceiving 100 % renewable energy and even business customers are consciously turning their back on grey electricity or nuclear power and are procuring 72 % green power. ewz will sell off its nuclear power invest-ments and procurement rights by 2034 pro-vided that the plants are not decommis-sioned before then. The resulting drop in quantity will mainly be replaced by electric-ity from hydropower, wind power, and solar energy. To this end, ewz reviewed and up-dated its own production strategy in 2016. Under the new strategy, ewz expects to sub-stantially build up renewable energies when electricity market prices rise again in the medium to long term.ewz is pursuing a cost-effective production strategy: Instead of accumulating power in the short term, the focus is on strategic po-sitioning by, for example, securing sites for wind power plants. Thanks to this produc-tion strategy, ewz will be able to respond to market developments more quickly. ewz produces significantly more electricity from its own plants and from long-term con-tracts than customers consume. This ena-bles it to supply a sufficient amount of elec-tricity at stable prices. The surplus is sold to the power exchange.

SOLAR POWER EXPERTISE INCREASED.

RENEWABLE ENERGIES.

Production strategy.

¹ Production from the company’s own and partner plants.

2322

Investment in environmental improvement measures by ewz’s naturemade star fund.in CHF million

2016Power generation from naturemade star- certified hydropower plants

in GWh 457

Sales from naturemade star hydro products and product components

in GWh 457

Cash inflows in CHF million 4.6Cash outflows in environmental improvement measures

in CHF million 2.4

Key data of ewz’s naturemade star fund.

ewz is actively helping to shape the innovative solar market and, thanks to the credit facility “NEW BUSINESS SOLAR”, it is enabling promising pilot projects, new products, and investments.

Power production from renewable energies1. in GWh

20120.00.51.01.52.02.53.0

2013 2014 2015 2016

3000

2012 2013 2014 2015 2016

240018001200

6000

While work progresses to expand renewa-ble energies in Switzerland and Europe, electricity products are also experiencing a shift toward renewable energies. ewz has long been a specialist in “green power” made entirely from renewable energies. This is why ewz supplies electricity prod-ucts from various sources, such as certi-fied and uncertified Swiss hydropower pro-duction as well as domestic and foreign shares in solar, wind and biomass plants. Even ecologically top-quality naturemade star-certified electricity products from 100% solar power, for example, are availa-ble. The green power products are secured by our own facilities and long-term power purchase contracts. Nevertheless, the portfolio of production facilities does not entirely match the demand for electricity products. On the one hand, the weather causes fluctuations in annual produc-

tion, while on the other the demand trends are changing more quickly than the portfo-lio of our own facilities. ewz therefore optimizes production through short-term procurement from the market, trade in physical electricity, and certificates of ori-gin, which ensure the ecological quality of the products.

Goal review for 2016 and outlook for 2017.At 380 GWh, sales of ecologically top-qual-ity naturemade star-certified electricity

products to end customers were on a par with the previous year. ewz aims to in-crease sales of these electricity products by 2.5 % per year until 2020. Since 2014,

sales have grown by 3 % a year on aver-age. ewz is therefore successfully fol-lowing its set course into the future.

SALE OF GREEN POWER ON A PAR WITH PREVIOUS YEAR.

GREEN POWER.

Security of supply is a major asset, and it is becoming more and more important as society becomes increasingly digitalized. However, there is no 100% availability in power supply. By comparison with the rest of Switzerland, ewz achieves very good scores for security of supply. A secure power supply means that the num-ber and duration of interruptions or voltage fluctuations must be kept as low as possible. That is why ewz constantly maintains and modernizes its distribution grids. This en-sures the availability and long service life of the facilities. ewz is also adapting its net-work to meet future challenges: Numerous small and private solar power systems are producing more and more electricity. This will lead to increased fluctuations in the net-work as dictated by the intensity of the sun. For this reason, ewz is working on a flexible network with intelligent battery storage fa-cilities. This will make it possible to match production and consumption accurately.

Goal review for 2016 and outlook for 2017.The situation regarding security of supply was tense throughout Switzerland during the 2015/2016 winter season, but ewz made a major contribution to securing national supply with its flexible portfolio of produc-tion facilities. Over the last five years, the duration of inter-ruptions per customer in the city of Zurich amounted to 9.7 minutes per year on aver-age. The goal of keeping this duration under ten minutes was therefore achieved. The most unusual interruptions were the two successive power outages in Zurich on September 4 and 5, 2016. The media cov-ered them extensively in their reports as they affected densely populated urban dis-tricts. A defective insulator in a high-voltage cable led to short circuits. As a rule, damage caused by third parties, such as construction companies, is the main cause of power outages. Since early 2016, ewz has been tightening up its procedures and it reserves the right to initiate official proceedings. Various actions are having an impact: In 2016, power failures caused by third parties fell by 30 %. The GridBox system launched by partner company “smart grid solutions AG” in 2016 is increasing security of supply. It enables grid operators to monitor the grid continu-ously and independently in real time, which means, for example, that photovoltaic sys-tems can be managed actively. This system, which has been co-developed by ewz, will be commercialized further in 2017.

FEWER POWER FAILURES CAUSED BY THIRD PARTIES.

SECURITY OF THE POWER SUPPLY.

2524

Quality of the electricity procured by business customers.in % Green powerGreen power or nuclear power

Sales of naturemade star electricity products. in GWh

27.8 %

72.2 %

According to the latest benchmarking study by the Swiss Federal Office of Energy, ewz is very close to its goal of be-coming the ideal supplier of energy as defined by the 2050 Energy Strategy. With 87 % of targets met, ewz occupies FIRST PLACE and is playing a leading role in the production of re-newable energies.

Causes of power interruptions: Third-party damage. Number of interruptions

2012080

160240320400

2013 2014 2015 201620120

102030405060

2013 2014 2015 2016

INNOVATIONS.How can regular inspections of high-voltage lines and masts be automated and at the same time made more efficient and safer? The answer to this is the LINDA drone. It can hover in position and take photos from any perspective. A laser scanner and ultraviolet camera also identify and document damage not visible to the eye.

“Our joint pilot project shows that bringing together expertise makes innovative solutions possible. Lucerne University of Applied Sciences and Arts, Aeroscout, and ewz are working closely together on researching and testing the everyday viability of drone inspection using automated flight planning.”Prof. Dr. Christoph Eck, Project Director, Lucerne University of Applied Sciences and Arts, Managing Director of Aeroscout, and a Possibility Maker

GATE 0 Project idea

GATE 2 Business case and prioritization by Management Board

GATE 4 Project conclusion and handover to the line

GATE 1 Project proposal

GATE 3 Project approval

IDEA PHASE

STRATEGIC PHASE

MARKET LAUNCH PHASE OPERATIONAL BUSINESS

IDE

EW

Z MORE THAN ELECTRICITY.

Selection of products and services for businesses.

Power production

Fiber-optic network

Heating & cooling energy

supply

Individual consultation, electricity purchasing and billing

Raising of sta� awareness

Operation of heating and refrigeration plants

Energy contracting Redundant power connection

Site networking

ewz.zürinet

Power supply

Own production of solar power

Development grants

Fast-charging station

Operation of transformer stations

Battery storage system

Planning and �nancing of

plants

Parts of the core business of energy providers face huge competition these days – namely power production and electricity sales. New business models, innovative products, and services help cushion the fall in revenues. They form the bedrock for fu-ture business fields. The Management Board is responsible for the strategic focus of innovation priorities. Based on this, ewz’s Innovation Manage-ment team actively promotes a compa-ny-wide culture of innovation with a view to confronting new challenges with greater in-ventiveness. The process begins with plenty of ideas from employees. These are col-lected in vessels such as “ideewz” – an in-house ideas portal. The concepts are then expanded upon at innovation workshops and considered together with experts as well as potential customers. To become a finished product, every idea passes through

five “gates” – from the project idea through to integration into the operational business, as the graphic below shows. Thanks to this standardized process, ideas receive the at-tention and support required from manage-ment right from the outset. The resulting projects are able to access financial and hu-man resources more quickly and more eas-ily. This helps accelerate the innovation pro-cess and to detect both potential and risks early.

Outlook for 2017.In 2017, at least ten projects are set to pass through “Gate 1”, and thereby officially be launched and processed further as a project proposal (see graphic below).

INNOVATIONS ACCELERATED.

DEVELOPING INNOVATIVE PRODUCTS AND SERVICES.

2928

Soak up some sun for yourself and recharge your mo-bile using solar energy at the same time – this was possible in 2016 at four locations in Zurich that ran the INNOVATION PROJECT “Sunbench”.

SALES OF HEATING AND COOLING INCREASED BY 10 %.

In Energy Services, ewz specializes in the supply of heating and cooling from renewable energies or alternative concepts. The energy sources include waste heat from data centers and geothermal energy. ewz plans, finances, operates, and maintains power supply plants belonging to companies, hos-pitals, communes, and cooperatives.

A concrete example: In 2016, the school in Kollbrunn in the Canton of Zurich started using energy from groundwater, saving 100 metric tons of CO₂-eq per year. ewz cur-rently has 33 energy networks.

Project business therefore includes the sup-ply of heating, cooling and electricity to cus-tomers with increased requirements. Indi-vidual plants or complex energy systems can be operated or optimized. For customers with even higher demands on power supply, such as hospitals, ewz realizes transformer stations or redundant con-nections as part of its grid services. In the city of Zurich, ewz operates a reserve grid which also provides electricity when the power fails in the traditional grid.

Goal review for 2016 and outlook for 2017.Sales of thermal energy increased in 2016 by 10% to 318 GWh. The goal of an annual 10% increase was therefore achieved thanks to the acquisition of new projects. Around 2/3 of energy sold is heat. In its Energy Services plants, ewz saves a total of 44,721 metric tons of CO₂-eq each year. Energy sales will increase further in 2017 and beyond. Alongside the acquisition of new plants within Energy Services, heating networks that are currently under construc-tion will be completed.

¹ CO2-eq is a unit of measurement for green-house gas emissions. Gases, such as sulphur hexafluoride (SF6) or methane, are standardized to the greenhouse gas potential of CO2. This allows the total emissions of greenhouse gases to be calculated.

1,875 ENERGY EFFICIENCY CONSULTATIONS BOOST CUSTOMERS’ ENERGY EFFICIENCY.

Energy systems are becoming increasingly complex. This is posing huge challenges for customers. Not only do they want to pro-duce their own electricity, heating and cool-ing in increasing numbers, they are also eager to increase the efficiency of their con-sumption installations. The newly created “Energy Solutions” division deals with pre-cisely these changing customer needs – with a focus on business customers, energy providers, cities, and area developers. Start-ing with a personal, comprehensive energy efficiency consultation, ewz follows this up by offering a complete package of cleverly networked and modular energy solutions. Thanks to these individual projects, custom-ers are achieving cost-effective and ener-gy-efficient targets throughout Switzerland. We know from experience that even just a site visit and on-site consultation with one of the 19 qualified ewz employees brings an energy cost saving of 10 % to 15 % if the sug-gestions are implemented. One area where there is potential for savings is the optimiza-tion of building technology. This can be real-ized following an in-depth analysis of the op-eration. Simple optimizations include a ventilation system that only runs during working hours or a lighting system that is converted to LED and equipped with light sensor technology.

Since March 2016, ewz has been a distribu-tion partner to energo, an association with a specialized program for engineering ser-vices and consultations in relation to energy efficiency in buildings. This means that ewz can offer in-depth operation optimization. The Swiss Federal Office of Energy esti-mates that the energy requirements of build-ings can be reduced throughout Switzer-land by 23 %. ewz will make an active contribution to this.ewz also monitors operating indicators, and in so doing exposes any inefficiency in the operation of plant parts. For example, the performance curves of photovoltaic sys-tems need to track so-called global radia-tion. And the seasonal performance factor of heat pumps should correlate with the number of heating degree days in order to be efficient. More and more customers are recognizing the potential in the field of energy efficiency. An increasing number of companies are concluding target agreements with the fed-eral government or the canton. ewz advises and supports them as they set targets to im-prove efficiency.

ENERGY SOLUTIONS.

3130

HEATING NETWORKS enable the procurement of heating and hot water from local resources in a man-ner that is up to 100 % CO2-neutral. Since 2016, ewz has also been oper-ating biomass district heating systems in Schiers and Bergün.

Sales of environmentally friendly heating and cooling. in GWh

CO2 savings by customers. in t CO2-eqCO2-eq savings through energy contracting Annual additional CO2-eq savings through energy contracting

Those who know more can save better. With targeted company consultations, ewz promotes sustainable action and reveals ways of optimizing operation. AWARENESS-RAISING PROGRAMS for energy, water, and other environmental issues heighten awareness of sustainability.

2012 20120 0

80 8000160 16000240 24000320 32000400 40000

2013 20132014 20142015 20152016 2016

STAKEHOLDERS AND SOCIETY. Promising ideas with great development potential emerge in discussions with customers. This is what happened during the energy efficiency consultation at the workshop for the disabled run by the St. Jakob Foundation in Zurich: Energy savings of 16 % were achieved here within three years. After ten years, this is set to rise to 22 %. Most of these savings were made possible simply through efficiency gains from optimizing opera-tions. Such successes inspire ewz over and over again to search for optimal solutions with stakeholders.

“We were very surprised that we were able to im-prove the energy efficiency of our plants dramati-cally without any major expense. This means that we can put the foundation money entrusted to us to even better use for our 500 employees and to develop new areas of activity. We are also relying on the expertise of ewz’s energy professionals for our new business center.” Karl Sigrist, CFO and Deputy Director of the St. Jakob Foundation’s workshop for the disabled and a Possibility Maker

FOCUS ON CUSTOMERS.

ewz’s customers are among the company’s most important stakeholders. It is their needs that govern what ewz offers. Over the last ten years, ewz has expanded its customer base and extended its business activities. This is not only due to the gradual liberalization of the electricity mar-kets, it also has to do with rapidly changing technologies. These days, there is nothing unusual about electricity customers who produce electricity themselves and also want to operate their cooling systems more efficiently at the same time. To enable ewz to meet the indi-vidual needs of its customers even better and also to be a technology leader, ewz now distinguishes the more standardized prod-uct business from the very individual project business. The new “Energy Solutions” divi-sion offers complex energy solutions with the focus on energy supply and distribution from a single source. This approach is allow-ing ewz to strengthen the project business and focus more heavily on active market de-velopment. The product business is being professionalized and more heavily digitized. Attention is being paid to residential cus-tomers, commercial and business custom-ers with a focus on electricity and electro-mobility, and supplementary offers and new services. Innovative, digital-based forms of dialogue and services will also enable a more personal and more direct exchange with ewz.

Goal review for 2016 and outlook for 2017.The number of contacts made with custom-ers in person and on the telephone in the Customer Service Center rose to around 127,000 in 2016. This figure is rising because the urban population is growing. The ques-tions asked by callers mainly revolved around moves and statements. In the interests of continuous improvement, ewz conducted a customer survey in 2016. It was based on the “Net Promotors” concept. This distinguishes between satisfied, pas-sive and dissatisfied customers. Over a pe-riod of three months, ewz surveyed the call-ers in the Customer Service Center about their satisfaction and the quality of the ser-vice. We were pleased to learn that our customer advisors were rated as outstand-ing for friendliness, expertise, clarity and speed. A small number of dissatisfied people voiced their displeasure with overarching issues, such as the absence of full market liberalization. Customer surveys will continue in 2017 in or-der to press ahead with further development of ewz’s products and services. ewz will con-tinually switch the customer segments and contact points involved in the surveys with a view to making targeted improvements and developing purposeful measures.

OUTSTANDING GRADES FOR THE CUSTOMER SERVICE CENTER.

ewz is enabling the communications infra-structure of the future. Our information and communication society is also increasingly becoming a mobile society. Ever greater vol-umes of data are transferred digitally, which is why ewz is continually expanding the in-frastructure for the city of Zurich: Communi-cations companies are able to make their services available to the general population based on ewz’s fiber-optic network. But back to the future: The goal is to make the city smarter and more intelligent. To achieve this, an increasing number of sen-sors will gather information on things such as parking lot occupancy. What this means in practice is that vacant parking spaces will be found more quickly and can be managed better.The large number of sensors will not be at-tached directly to the fiber-optic network but connected to the network via wireless tech-nology from critical spots. ewz will test this technology with two pilot projects: a public WLAN at Bellevueplatz, particularly for use

at major events, and a Lora network for link-ing various sensors.

Goal review for 2016 and outlook for 2017.The city of Zurich has set itself the goal of offering the fiber-optic network to everyone by 2019. ewz will realize broadband connections in collaboration with Swisscom. Thanks to the growth of the city, more pri-vate households and businesses will be con-nected up to the fiber-optic network by 2019 than expected when planning began. For this reason, the city of Zurich will assume 260,000 connections. With completed con-nections currently standing at 80 %, ewz is well on the way to achieving comprehensive network coverage. Since 2016, ewz has been realizing connec-tions that could not be achieved as part of the ordinary expansion for reasons such as the erection of a new building.

80 % OF ALL PRIVATE HOUSE-HOLDS AND BUSINESSES ARE CONNECTED TO THE FIBER-OPTIC NETWORK.

MODERN COMMUNICATIONS INFRASTRUCTURE FOR ZURICH.

3534

2015Number

2016Number

Residential customers 200,935 202,565Commercial customers 22,897 22,682Business customers 2,112 2,248

Total customers in Switzerland

225,944 227,495

2015Number

2016Number

Customer inquiries 123,717 126,721Invoices 1,637,724 1,616,420

Customer structure in Switzerland – electricity.

Customer service center – key figures.

Private households and businesses connected. Number of connections

ewz.zürinet. Provision already exists, ewz.zürinet is availableProvision in the next 12 monthsProvision by 2019

ewz supports the transition to a “SMART CITY”, which targets maximum quality of life for the popu-lation with mini- mal consumption of resources. In a pilot project, ewz tests the measurement of parking lot occupancy in the public arena. A mini sensor sends readings over long dis-tances – with little radiation.

20120

50 000100 000150 000200 000250 000300 000

2013 2014 2015 2016 2019

SOCIAL COMMITMENT.

As a company, ewz benefits in many ways from the society in which it operates: from committed staff, satisfied customers, colla- borative business partners, and from the sympathetic population at the production sites in Switzerland and Europe. For this rea-son, it is a given for ewz to assume responsi-bility and to allow society to share in the company’s successes. With diverse social commitment, ewz con-tributes to sustainable development and to improving the quality of life in Zurich and Grisons. ewz supports partners who uphold the company values of “sustainable”, “com-mitted”, “visionary”, and “simple”. To ensure that these commitments achieve a long- lasting positive effect, they are periodically examined for their relevance to ewz and to society. As an urban company with deep roots in Zurich and Grisons, ewz also helps young people make their way into the world of work. An example of this support is a project run by the city of Zurich which identifies

young people who have reached the end of compulsory education and are extremely likely to struggle to find a job. ewz offers these young people a six-month internship so they can gain work experience and thereby increase their chances of success on the labor market.

FUTURE PROSPECTS FOR NEW GENERATIONS.

To meet the needs of stakeholders, ewz consults various stakeholder groups openly on a regular basis. This close interaction allows future trends to be identified early. It makes a significant contribution to innovation and business development at ewz – and influences the strategic focus. Customers, employees, the voting public of the city of Zurich, and the local population at the sites in Zurich and Grisons are among the main stakeholder groups. They all shape ewz’s business activity. With regard to the reconcessioning of hydropower plants, in particular, round-table talks are held throughout the process and monitoring committees are formed that involve fisheries and environmental organizations, the canton, and the communes. And during operation of the hydropower plants, ewz maintains close contact with interested stakeholders. In doing so, ewz strives to realize viable solutions for all parties involved. ewz also supports the local economy with its business activities through regional procure-ment and bolsters future prospects as an attractive employer.

Goal review for 2016 and outlook for 2017.In 2016, ewz organized the second Stake-holder Forum. A total of 17 customers, busi-ness partners, suppliers, people involved in education and research, and representa-tives of environmental associations and public authorities exchanged thoughts on key sustainability issues and trends. The goal is to strengthen the relationship with stakeholders, to get to know their needs bet-ter and to understand their concerns. ewz is interested in knowing what demands will be placed on the company both now and in the future.

Among the points highlighted by stakehold-ers this year was the fact that ewz’s ability to innovate is extremely relevant. They also spoke out in favor of greater collaboration between ewz and firms, startups, and part-ners within and outside the industry. And they expressed a wish for increased trans-parency, especially with the expansion plan for renewable energies. In 2017, ewz will continue to ensure that stakeholders’ needs reach the company through direct exchange. This constructive dialogue will be maintained and intensified.

PERSONAL EXCHANGE FOR BETTER UNDERSTANDING OF STAKEHOLDERS.

STAKEHOLDER ENGAGEMENT.

3736

Within the frame-work of corporate volunteering, ewz supported the charitable organi-zation “ROCK YOUR LIFE!”. Staff from Human Resources and apprentices at ewz provided young people from a migrant back-ground with con-crete tips on enter-ing professional life and practiced job interviews with them.

Face-to-face dialog helps when it comes to devising VIABLE SOLUTIONS. This is the case with ewz’s Letten hydropower plant, where district organizations, fisheries, and environmental associations as well as cantonal and municipal offices monitor the environmental impact assessment.

SUSTAINABILITY IN EVERYDAY OPERATIONS.Ten residents from the Friesenberg housing estate were trained as power conservation pilots by ewz as part of a pilot project. They then enthusiastically carried out a total of 198 consultations. The goal of the project was to reduce energy consumption in the apartments of the Foundation for Large Families through these layperson energy efficiency consultations. By the end of the project, savings of 4.4 % had been achieved. A responsible, conscious approach to handling resources also plays a central role in ewz’s everyday operations – from energy efficiency through to sustainable procurement.

“The power conservation pilots were immediately excited to be taking part in the pilot project, among them Sacdia Muhiadin. They are proud of their personal contribution to the 2000-watt society. This also makes them a role model for their children.” Sylvia Keller, Director of the municipal Foundation for Large Families and a Possibility Maker, together with Sacdia Muhiadin, Power Conservation Pilot and Possibility Maker

Energy efficiency at ewz.

EFFICIENCY AT HEADQUAR-TERS INCREASED BY 19 %.

ewz supports the transition into a 2,000-watt society by building and operating efficient infrastructures. These are geared toward CO2-neutral and low-loss production and distribution of electricity, heating and cool-ing. As a company, ewz is also committed to designing and operating all its own plants and real estate as efficiently as possible. For large facilities that are owned by ewz and used for heating and cooling systems, ewz enters into a cantonal target agreement to increase efficiency. To provide a further boost to efficiency within the company, a certified energy management system will be set up by 2019. The focus here lies on ewz’s own properties at the sites in Zurich and Grisons. A systematic measurement con-cept was created in 2016.

Over the longer term, ewz is planning to get its office buildings, power plants and substa-tions certified as sustainably run buildings. At the headquarters in Zurich Oerlikon, en-ergy efficiency following the renewal of parts of the building automation has already been increased over the past few years. ewz is therefore a total of 19 % ahead of its goal to become 1 % more efficient with its own buildings every year until 2020. Efficiency gains are not only confined to ecological values but also include economic considerations. ewz increased the propor-tion of electric vehicles in the fleet of pas-senger cars and trucks slightly to 15 %. In ad-dition, the total number of vehicles in the fleet will be reduced gradually.

ENVIRONMENTAL MANAGEMENT. Responsible handling of resources.

HALVING THE VOLUME OF WASTE OVER 10 YEARS.

ewz endeavors to close material life cycle loops, to protect existing resources and to use them efficiently. In specific terms, ewz has more than halved its volume of waste in the past decade and increased its share of recycling material. Over the last five years, ewz has observed only a downward trend in the volume of waste. This is related to the amount of reno-vation work done on substations, for exam-ple, which generate large quantities of reusable materials and waste. A new disposal management approach is set to increase the level of recycling of reusable materials found in waste. The current percentage of recy-cled materials in the total weight is 47 %.

A variety of different resources are used to provide electricity, heating and communication services – to name just ewz’s main products. Some are natural resources, such as thermal energy from groundwater and fos-sil fuels that are used in heating networks. To improve the environmental impact of our own actions, ewz executes a broad environ-mental program. This focuses on improving efficiency in relation to resources and en-ergy demands (see next page). Special at-tention is also devoted to reducing emis-sions that can emanate from hazardous substances, legacy issues, noise, and elec-tromagnetic waves. Increasing biodiversity in water and land ecosystems is also a prior-ity (see page 23). To address the themes of the program in a targeted manner, ewz oper-ates an environmental management system that is certified according to ISO 14001 and audited regularly by external bodies.

4140

Smart LED street lights make ENERGY SAVINGS of up to 90 % possible because they only shine brightly when someone is on the road. ewz expanded the test series to include dimmed lighting in 2016 and will use the results to develop the street lighting of the future.

Energy efficiency at headquarters. in %Current energy efficiency at headquartersTarget energy efficiency at headquarters

Proportion of electric vehicles in the car and delivery van fleet1.in %Electric vehiclesOther vehicles

1 Including motorcycles

15.2 %

84.8 %

2016 ersetzte ewz alle Plastikbecher durch Trinkbecher aus Biokunststoff und Maiskarton, die 100% KOM-POSTIERBAR sind. So kann jede und jeder Mitarbeiten-de zur Nachhaltig-keit von ewz bei-tragen.

In 2016, ewz re-placed all plastic cups with drinking cups made from bioplastics and cornstarch that are 100 % COMPOS- TABLE. This enables every single employee to contribute to ewz’s sustainability efforts.

10 years of recycling and disposal of reusable materials and waste. in t Recycled materialsDisposed waste Landfill waste

0255075

100125150

201420132012 2015 20162001 …0

100020003000400050006000

2014 2015 2016

SUSTAINABLE PROCUREMENT.

ewz makes sure that some 95 % of products and services procured come from Swiss com-panies or companies with Swiss subsidiaries. The main product groups procured by ewz include machinery and technical appliances as well as full sanitary, heating and ventilation systems for operating our own buildings and facilities. Our partner suppliers range in size from small or medium-sized companies through to an international corporation that supplies transformers. ewz has over 1,900 active suppliers. The order volume awarded every year varies between 250 million Swiss francs and 350 million Swiss francs, depending on the size of current projects.

Goal review for 2016 and outlook for 2017.In 2015, potential improvements were iden-tified during a review of the procurement practice. These were developed in 2016 us-ing appropriate measures. Among them was the new office for sustainable procurement, which gathers a lot of know-how centrally and passes it on. In 2016, this office revised the existing criteria catalogues, which in-clude the social and environmental aspects of individual product groups. Another activ-ity it is undertaking is training in this area. For example, in 2016, the environmental del-egates from the divisions were trained to be-come experts in sustainable procurement. It is their task to advise and support the people involved in procurement. For example, they should promote compliance with sustaina-ble criteria in calls for project tenders where environmental and social criteria can make up to 40 % of the decision-making basis. In early 2016, the city of Zurich introduced a new code of conduct for contractual part-ners. ewz also applies this code of conduct with industries that run particular, sustained risks, such as the textile industry. This code contains precise requirements and stand-ards for ecology and occupational safety for partner companies and their products or services. It also presents measures in the

case of non-compliance with the code of conduct. In extreme cases, a supplier can be excluded from contracts with the city of Zurich for five years.ewz is eager to prevent any potential damage to its reputation from misdeeds by suppliers. To this end, the company has subscribed to an industry solution – a database is cur-rently being created which will allow sus-tainability information to be retrieved about suppliers. The goal is to identify optimization opportunities in the supply chain and to find possible solutions.

OPPORTUNITY AND RISK MANAGEMENT.

The societal risks include regulatory risks which could negatively impact the market situation and ewz’s ability to act. So that it can respond as early as possible, ewz is a member of numerous associations and takes part in federal government consulta-tions. At city level, credit facilities provide a minimum degree of flexibility for the expan-sion of renewable energies. As a service de-partment of the city, ewz is financially stable and therefore an attractive partner.Changes in society have brought a steady stream of new requirements for employees or occupation profiles that are difficult to find in the labor market. By offering flexible working time models as well as training options and career opportunities, ewz in-creases the appeal of a job and promotes the development of its employees.Risk management is generally based on the ONR 49000 and ISO 31000 standards and meets the requirements of the city of Zurich in full.

ewz’s sustainable development is managed using strategic goals. As with opportunity and risk management, these are based on economic, environmental, societal and so-cial criteria. For all opportunities and risks, the impact on the company’s reputation is also estimated.The economic risks include financial factors such as low electricity market prices which lie below the cost of own power production. The resulting cash outflow restricts the scope for investment and the low electricity market prices lead to high necessary impair-ment losses for the existing power produc-tion portfolio. In addition, federal estimates only provide a rough estimate of the costs of disposing of radioactive waste from nuclear power plants. ewz places high demands on the cost effectiveness of any new invest-ment and realizes cost-cutting potential on an ongoing basis. The environmental and operational risks in-clude production downtime. To minimize this, ewz performs careful preventive main-tenance and plans optimized renewal investments.

4342

As a supplier, ewz acts so sus-tainably that the procurement plat-form ecovadis.com awarded ewz the GOLD MEDAL for compliance with strict sustainability guide-lines in 2016.

http://www.ecovadis.com

ATTRACTIVE WORKING ENVIRONMENT. In October 2016, the ewz women’s network «frauen@ewz» was founded. This network offers female employees a platform for interdisciplinary and informal exchange. It is also having a positive impact on collaboration with their male colleagues. ewz is resolutely committed to equal opportunities, professional interdisciplinary exchange, training opportunities, a transparent payroll system, and flexible working time models.

“The fact that we actively get together and discuss things outside our daily work routine increases awareness and opens up new perspectives in our day-to-day working rela- tionships. So, I am particularly pleased that the ewz women’s network was founded. Even the very first event was a great success.”Caroline Schnell, IT Solution Engineer, Member of the Board of frauen@ewz and a Possibility Maker together with colleagues

Diversity.

Staff diversity offers ewz a competitive edge: a heterogeneous workforce is more flexible, more agile and more imaginative than mono-cultural companies. A company with a diverse setup understands a diverse clientele better. ewz is fully aware that working life, leisure time, and family activities are more interwoven in this digital age, so it creates attractive working conditions that suit every personality.

Goal review for 2016 and outlook for 2017.These days, ewz’s employees come from 30 different countries. To enable all of them to lead their own lifestyle, ewz offers pro-gressive employment models, such as flexi-ble working hours, job sharing and home office, and is committed to a non-discrimina-tory working environment. Since 2015, ewz has been advertising vacancies with a work-load of 80 % to 100 % as a rule, and the visual language of the job advertisements points to the diversity of the company. Both are un-doubtedly a reason for the increase in part-time employees by 2 percentage points. 16 % of employees worked at ewz in 2016 with a workload of less than 100 %. To increase the proportion of female execu-tives, special attention is being given to pro-moting women within succession planning. The percentage of women within ewz as a whole is 19 %. ewz will strive to raise the total percentage of women to 25 % by 2025. ewz will also look to achieve the same proportion of women in senior positions. For both indi-cators ewz is on the home straight. A further measure to support women is the

“frauen@ewz” network, which was founded in 2016. This aims to allow women at ewz to network better internally, to enable dis-cussions of issues that are specific to women, and to encourage mutual support. The first such event, in October 2016, proved to be very popular: 1/3 of female employees took part.In January 2017, the Zurich municipal author-ities and ewz will be introducing the annual working hours scheme. Under this scheme, the working hours within a year can be per-formed flexibly and without a monthly upper limit – i.e. exactly when more or less work is necessary. The hours worked can be offset over several months. Block times will also be abolished. However, line managers must still ensure the availability of the team and must define these times.

PERCENTAGE OF WOMEN HAS RISEN AGAIN.

The energy markets are changing con-stantly and becoming more competitive as new products and services are launched. ewz and its staff need to be able to keep up with this rate of change. The challenge for Human Resources is to retain the right know-how and to expand it. This is achieved by recruiting qualified tradespeople and en-gineering professionals as well as new tal-ents from the “Millennial” generation, who were born in the 1980s through to the early 2000s. This generation’s understanding of digital technologies, social media, and per-sonal fulfillment at work differs from that of prior generations. ewz equips itself for the future and adapts its corporate culture, style of leadership and working conditions specifically to suit future demands. As a result, ewz attracts talented individuals who become committed and re-main with the company so they can realize our visionary plans.

Goal review for 2016 and outlook for 2017.To drive forward this change in the corpo-rate culture, ewz has developed corre-sponding principles of behavior and leader-ship that govern teamwork at ewz. They are based on the corporate values that were in-troduced in 2015: “committed”, “visionary”, “simple” and “sustainable”. These principles of behavior and leadership were discussed and reflected on in workshops involving all employees in 2016. For example, internal and external cooperation as well as per-sonal initiative are not only increasingly en-couraged but also demanded. The benefit of this can be seen in the improved interdisci-plinary development of innovative products and services. The change of culture is also becoming visi-ble with very specific measures aimed at more individual support: At the start of the 125th anniversary year in 2017, ewz will be introducing two new career models for specialists and project leaders alongside the traditional managerial career path. At the same time, employees will have access to adequate exchange and information plat-forms depending on the model and level. By adopting this approach, ewz will encour-age staff to actively explore strategic mat-ters and objectives. This will reinforce the shared focus.

VISIONY CAREER MODELS INTRODUCED.

TALENT SEARCH AND DEVELOPMENT. Targeted HR management with foresight.

4746

Proportion of women across the entire company. in % Proportion of women

Employment level: women. in % Part-time Full-time

Employment level: men. in % Part-time Full-time

Proportion of women in management positions. in % Proportion of women

15 %

19 % 48 %

52 %

9 %

91 %

It is employees who make every-thing at ewz possi-ble. Alongside the TALENT SEARCH it is a declared goal to develop employees and to offer attractive opportunities to them. In addition to the annual target-setting discussions, the senior manage-ment also conducted company-wide succession and talent rounds in 2016 for the first time.

Employees. Number Employees in ZurichEmployees in central Grisons and the Bregaglia Valley

16 %

84 %

Employment level. in % Employees with a workload of less than 100 %Employees with a workload of 100 %

0200400600800

10001200

2016

Staff workloads are on the increase. This is because market liberalization in the energy sector is not only producing new technological developments, but also generating greater economic pressure. These changes are adding to the mental and physical strain on employees. The goal of occupational health promotion at ewz is to actively promote the health and well-being of employees. Among other things, it offers access to a range of physical activities, such as free admission to the pub-lic swimming pool. In addition, employees benefit from the long-standing partnership between ewz and the Academic Sports Association Zurich (ASVZ), which enables free participation in well over 100 different sports activities. And employees in Grisons can take fitness classes at reduced prices if they wish. Supplementary course offerings during lunchtime are varied and offer targeted relaxation in addition to movement. Along-side yoga, employees can take advantage of massages, talks on health and free flu vac-cinations in the fall. All these measures serve to improve health and performance capability.

HEALTH PROMOTION.

IMPROVED COMMUNICATION ON THE SUBJECT OF HEALTH PROMOTION.

Besides preventive offerings, ewz also pro-vides support to sick and injured employees: Case Management, as it is called, makes the return to work easier. Specially trained con-tacts provide the employees concerned with advice and guidance in relation to med-ical, legal, and professional matters. In addition, employees can obtain support from an external and neutral advisory ser-vice to help them deal with specific life challenges, such as personal problems, conflicts at work, health problems, or finan-cial issues.

Goal review for 2016 and outlook for 2017.In 2016, ewz increased in-house awareness of occupational health management. The re-design of the website and more intensive personal contact meant that more employ-ees were reached than the year before. To make potential activities even more at-tractive, individual employees were heavily involved in the planning phase.The diverse range of company health pro-motion offers will be continued in 2017. For one thing, the yoga course, which was hugely popular in 2016, will be introduced more widely so that yoga can be attended during lunchtime once every two weeks.

Over recent years, there has been a general increase in awareness of occupational health and safety. ewz adopts numerous measures to avoid accidents and hazards that may put the health of its employees at risk. It does so partly to make its employees feel safer and happier – and therefore be more productive – and partly for economic reasons. The management system for occupational health and safety at ewz is certified accord-ing to OHSAS 18001. This demonstrates the high significance attached to this issue at ewz. The management includes 23 safety officers who are based in every division and at every site. They pursue an annual objec-tive, receive regular training and also net-work. They regularly exchange experiences with external experts and other safety of-ficers, which is hugely important.

Goal review for 2016 and outlook for 2017.The most common accidents that occur in the substations, grid bases and administra-tive buildings in Zurich and Grisons are not electrical accidents, but trips and falls: 22 % of occupational accidents in 2016 were attributable to trips and falls. In 2016, the oc-cupational accident rate was 36 accidents for every 1,000 full-time equivalents (FTEs), which we are pleased to note was signifi-cantly lower than the target of 44, and 41 % below the long-standing industry average.However, we are also pleased to note that in 2016 fewer employees had accidents during their leisure pursuits, as here too the amount, at 137 accidents for every 1,000 FTEs, was just slightly above the long- standing industry average and below ewz’s target of no more than 133 accidents for every 1,000 FTEs. Data show that accidents are nearly four times as likely during leisure time than during work.The further development of occupational health and safety requires a lot of time and

attention. Therefore, the measures in re-lation to the issues of tripping and

electrical hazards will also be contin-ued in 2017.

FURTHER INCREASE IN OCCUPATIONAL SAFETY.

OCCUPATIONAL HEALTH AND SAFETY.

4948

Through various activities as part of the “Water Campaign” in 2016, ewz employees were made aware that drinking sufficient quantities can boost ENERGY AND PERFORMANCE CAPABILITY. From the start on World Water Day through to the handing-out of a Sigg water bottle, all employees were involved.

ewz provided spe-cific ADVANCED- HAZARDS TRAIN-ING for electrical accidents because ewz takes the risks to its staff seriously and is eager to keep on minimizing them.

Seriousness of occupational accidents. Days of absence per occupational accident

Non-occupational accident rate. Number of non-occupational accidents per 1,000 FTEs 1 ewz2 Average for Swiss suppliers of energy 2005–2014 3 Target: < 133 non-occupational accidents per 1,000 FTEs

Seriousness of occupational accidents. Number of occupational accidents per 1,000 FTEs 1 ewz2 Average for Swiss suppliers of energy 2005–2014 3 Target: < 44 occupational accidents per 1,000 FTEs

1

3

2

2

3

1

0 025 150 275 3

100 4125 5150 6175 7

8

2012 20122013 20132014 2014 2015 2015 2016 2016

FINANCIAL REPORT 2016.With its energy contracting services, ewz plans, finances, builds and operates eco-friendly power supply plants on behalf of property owners. The Aargauerstrasse power center supplies several relatively large commercial and residential properties in Altstetten with heating and cooling in a reliable and energy-efficient manner. ewz’s energy contracting services are prime examples of how to reconcile ecology and economy successfully.

“With the expansion of the ewz power center, our newest buildings, ‘Westlink’, ‘Tower’ and ‘Cube’, can also be supplied with eco-friendly heating and cooling energy. The amazing thing for us is that we save 56,000 liters of heating oil or 130 metric tons of CO2 per year and have a reliable energy supply at a cost that can be budgeted for precisely.” Felix Ammann, Project Manager at SBB Real Estate and a Possibility Maker

Cash flow statement.Cash flow from business activities decreased by 48.3 million Swiss francs year on year. The liability caused by the change of method in the valuation of the decommissioning and disposal fund, in the amount of some 40 million Swiss francs, was settled with Kernkraftwerk Gösgen-Däniken AG in 2016. All financial activities are transacted via the city of Zurich. ewz has a current account with the city accounts department for this purpose. The balance of the current account decreased by 23.3 million Swiss francs compared with the previous year.

Performance of a risk assessment.As a dependent institution under public law, ewz is part of the city of Zurich risk assessment. The ewz Management Board has defined its own risk management principles and risk policy based on those of the city of Zurich. The systematically recorded, analyzed, and prioritized risks were summarized in a risk report for the attention of the city of Zurich. Specific measures for dealing with the identified risks were as-sessed and then discussed and adopted by the Management Board on October 4, 2016.

Extraordinary events.No extraordinary events requiring inclusion in the annual financial statements occurred in the year under review.

Outlook.New credit facilities for energy contracting and renewable energies as well as a new regulation for handing over profits should give ewz the leeway required to continue to operate successfully despite the decision not to grant the change of legal form. The City Council will present corresponding proposals to the City Parliament and/or the commune in 2017 for debate. The energy market environment will re-main extremely challenging over the coming years. There is no sign of a recovery in market prices, which will continue to have a negative impact on margins. Cost and optimization pressure will continue to grow. Energy, grid and telecommunications services will continue to be expanded over the coming years which should partially offset the dwindling revenues and margins in the energy sector in the medium term. Secure, long-term supply and stable, plannable income are the objectives for the forthcoming years for the grids operated by ewz in the city of Zurich and central Grisons.

Accounting principles.Elektrizitätswerk der Stadt Zürich (ewz) is a service department of the Utility Operations Department of the city of Zurich. The company manages its own accounts and its own accounting entity within the accounts of the city of Zurich. The closing of accounts and the budget are approved by the City Parliament together with the accounts of the city of Zurich on a yearly basis. The accounting principles are based on the cantonal decrees of the Communal Act (LS 131.1), the Ordinance on the Communal Budget (LS 133.1) and the circular letter of the Department of Justice and Home Affairs concerning the communal budget. ewz depreciates non-current assets based on the Ordinance of the Department of Justice and Home Affairs concerning depreciation according to economic aspects. The numbers used in the finan-cial report are taken without change from the ewz accounting entity of the city of Zurich and are presented in a way that is typical of the industry and market.

Economic environment.On June 5, 2016, voters in the city of Zurich approved a new article in the municipal code aimed at phasing out nuclear power. As a conse-quence, ewz may keep its investments in the nuclear power partner plants of AKEB (Aktiengesellschaft für Kernenergie-Beteiligungen Lu-zern) and in Kernkraftwerk Gösgen-Däniken AG until 2034 at the latest. In addition, the City Council was authorized to sell both investments early. The National Council and Council of States adopted the first package of measures for the 2050 Energy Strategy on September 30, 2016. This includes measures intended to increase energy efficiency and expand renewable energies. A referendum against this resolu-tion has been successfully called, so the Swiss people will make a definitive decision on the 2050 Energy Strategy in early summer 2017. On October 26, 2016, the City Parliament resolved not to approve the change of legal form proposed by the City Council, which would have converted ewz into an independent public-sector institution. ewz is therefore continuing to operate as a dependent institution under public law, as before. The European energy industry is in turmoil and is posing new challenges to the current business model of traditional energy suppliers. Electricity prices on the European markets fell further again in the year under review, and for most energy production technol-ogies, now lie below the generation costs. The reasons for this are the reduced demand for electricity due to the state of the economy, an oversupply of CO2 certificates, and the subsidies for renewable energies, which have somewhat distorted competition. In response to the change in market conditions, many companies in the industry are diversifying with service offerings in a variety of areas.

Income statement.Total revenues for ewz in the year under review were around 859 million Swiss francs, some 45.6 million Swiss francs or 5.6 % above the previous year. The amount of energy sold rose compared with the previous year, which, together with the tariff adjustment for grid usage, led to this growth in revenues. Operating expenses were reduced in total by 2.5 million Swiss francs. Energy procurement costs remained stable despite the higher total amount, while costs for the upstream grids and system services increased by 6.2 million Swiss francs year on year. Earnings before interest, taxes, depreciation and amortization improved by 48.2 million Swiss francs or 30.9 % compared with the previous year. The cost-cutting and optimization measures introduced had the desired effect and, together with the tariff adjustments, led to an improvement in cost coverage, which had a significant positive impact on operating income. Depreciation and amortization rose by 77 million Swiss francs compared with the previous year. The main reason for this were the balance sheet adjustments implemented based on impairment tests. The previous lump-sum provisions for market risk and US leasing were dissolved in favor of impairment losses. In addition, a provision was formed for ewz’s power production portfolio. The power production portfolio that includes the recognized ewz power plants, the investments in partner plants, and valuation of the existing sales contracts, is regarded as an economic unit, so there are no individual value corrections for non-current power production assets. Instead, a corresponding provision has been formed for ewz’s entire power production portfolio based on the comprehensive impairment test. ewz is exempt from taxes in the Canton of Zurich and at federal level as a service department of the city of Zurich. The tax expenses shown are for intercantonal operating facilities primarily lo-cated in the canton of Grisons. The net result rose by CHF 0.2 million to CHF 68.5 million. The payment to the city treasury (city of Zurich income) amounts to CHF 60 million.

Balance sheet.Current assets fell by 5.6 million Swiss francs and amounted to some 23.1 % of the balance sheet total. Non-current assets declined by 64 million Swiss francs due to the value corrections implemented. ewz invested around 107.8 million Swiss francs in plants and investments in the 2016 fiscal year. In addition to investing in network facilities and conventional energy production plants, ewz also spent significant amounts on expanding the fiber-optic network in the city of Zurich, on renewable energies, and on equipment in the energy services business area. Short-term liabilities were down by 42.2 million Swiss francs. The payment, deferred in 2015, for the decommissioning and disposal fund for the nuclear power partner plants was settled in 2016. Long-term liabilities include ewz’s provisions. The value corrections implemented in non-current assets meant that provisions were reduced by 35.9 million Swiss francs in total.

ANNUAL AND MANAGEMENT REPORT 2016.

5352

BALANCE SHEET 2016. INCOME STATEMENT 2016.

5554

AssetsNotes

(from page 57)Dec. 31, 2015

in CHFDec. 31, 2016

in CHFCash and cash equivalents 5,316,116 6,045,163 Current account with the city accounts department 324,196,480 300,908,800 Trade accounts receivable 117,149,208 117,820,884 Inventories 12,890,579 11,316,901 Prepaid expenses and deferred charges 18,196,430 36,072,720 Current assets 477,748,813 472,164,468 Financial assets 6) 391,813,977 390,980,946 Property, plant and equipment 7) 1,246,495,826 1,183,354,529 Non-current assets 1,638,309,803 1,574,335,475

Total assets 2,116,058,616 2,046,499,943

Equity and liabilitiesNotes

(from page 57)Dec. 31, 2015

in CHFDec. 31, 2016

in CHFTrade accounts payable 68,681,071 63,150,285 Other liabilities – 5,360,516 Down payments and installments from customers 22,518,466 21,686,553 Accrued expenses and deferred income 102,027,032 60,869,906 Short-term liabilities 193,226,569 151,067,260 Provisions 5) 728,246,087 692,317,767 Long-term liabilities 728,246,087 692,317,767 Special reserve 1,134,585,960 1,143,114,916 Net profit 60,000,000 60,000,000 Equity capital 1,194,585,960 1,203,114,916

Total equity and liabilities 2,116,058,616 2,046,499,943

Notes(from page 57)

Dec. 31, 2015 in CHF

Dec. 31, 2016 in CHF

Net revenues from goods and services 1) 783,013,694 823,416,599 Capitalized own services 25,455,702 24,126,452 Other operating revenue 4,924,817 11,498,102 Total operating income (overall performance) 813,394,213 859,041,153 Energy procurement 2) – 302,638,272 – 302,283,729 Costs of upstream grids, system services and surcharges 3) – 82,090,907 – 88,326,556 Material and third-party services – 63,532,096 – 53,551,003 Personnel – 150,580,560 – 150,192,225 Levies 4) – 26,335,988 – 24,906,496 Other operating expenses – 32,340,866 – 35,709,562 Total operating expenses – 657,518,689 – 654,969,571

Earnings before interest, taxes, depreciation and amortization (EBITDA)

155,875,524 204,071,582

Total depreciation and amortization – 94,717,792 – 171,761,224 Total changes in provisions 5) 6,656,810 35,928,320

Earnings before interest and taxes (EBIT) 67,814,542 68,238,678

Customer bonus 414,849 –Financial result 9,923,276 8,228,045

Earnings before taxes (EBT) 78,152,667 76,466,723

Taxes – 9,820,724 – 7,937,767

Net result 68,331,943 68,528,956

Withdrawal/contribution to special reserve – 8,331,943 – 8,528,956

Annual profit 60,000,000 60,000,000

NOTES. CASH FLOW STATEMENT 2016.

5756

1) Net revenues from goods and servicesDec. 31, 2015

in CHF Dec. 31, 2016

in CHF Net revenues from sale of energy 375,998,451 380,142,140 Net revenues from grid usage 240,574,068 263,693,804 Net revenues from goods and services sold to communities 40,473,718 41,336,427 Net revenues from surcharge for transmission grid 32,129,328 38,248,196 Net revenues from telecom 18,961,925 21,435,817 Net revenues from energy services 46,483,968 49,462,310 Net revenues from operating supplies and services 28,392,236 29,097,905

Total 783,013,694 823,416,599

2) Energy procurementDec. 31, 2015


in CHF Energy procurement from partner plants – 177,446,938 – 140,621,975 Energy procurement from the market – 115,081,667 – 151,069,976 Fuels, energy for energy service facilities – 10,109,667 – 10,591,778

Total – 302,638,272 – 302,283,729

3) Costs of upstream grids, system services and surchargesDec. 31, 2015


in CHF Costs of upstream grids – 30,955,762 – 33,469,117 Costs of system services – 18,902,868 – 16,519,643 Costs of surcharges for transmission grid (feed-in remuneration at cost) – 32,232,277 – 38,337,796

Total – 82,090,907 – 88,326,556

4) LeviesDec. 31, 2015


in CHF Hydropower plant taxes – 10,363,061 – 9,209,334 Water rates – 10,725,170 – 10,558,106 Concession fees and services – 4,449,659 – 4,429,882 Other levies – 798,098 – 709,174

Total – 26,335,988 – 24,906,496

5) ProvisionsDec. 31, 2015


in CHF Provisions for market risks 254,904,837 –Provisions for US leasing 123,906,265 – Provisions for power production portfolio – 339,871,333 Provisions for investments and subsidiaries 32,393,448 32,503,162 Provision for naturemade star fund 7,668,841 9,797,144 Provision for alternative risk insurance 309,372,696 310,146,128

Total 728,246,087 692,317,767

Dec. 31, 2015in CHF

Dec. 31, 2016in CHF

Annual profit 60,000,000 60,000,000 Depreciation and amortization 94,717,792 171,761,224 Change in provisions and reserves 1,658,568 – 27,399,364 Change in inventories – 1,635,176 1,573,678 Change in accounts receivable – 3,122,251 – 671,676 Change in prepaid expenses and deferred charges 2,807,647 – 17,876,290 Change in liabilities 302,319 – 170,270 Change in down payments and installments from customers 2,950,416 – 831,913 Change in accrued expenses and deferred income 35,870,845 – 41,157,126 Cash flow from business activities 193,550,160 145,228,263 Investments in property, plant and equipment – 130,134,624 – 106,646,896 Investments in financial assets – 9,030,222 – 1,240,000 Divestment of property, plant and equipment and financial assets – – Cash flow from investment activities – 139,164,846 – 107,886,896 Repayment of financial assets 78,614,051 100,000 Change in liabilities due to city's accounts – 68,541,176 23,287,680 Profit transfer to the city of Zurich – 65,284,755 – 60,000,000 Cash flow from financial activities – 55,211,880 – 36,612,320 Net change in cash and cash equivalents at end of accounting period – 826,566 729,047 Cash and cash equivalents at beginning of accounting period 6,142,682 5,316,116 Cash and cash equivalents at end of accounting period 5,316,116 6,045,163

PERFORMANCE AND ENERGY DATA.

NOTES.

5958

Installed power plant capacity

2016Hydropower MW 931.0Nuclear power plants MW 295.8Wind power plants MW 126.5Photovoltaic and solar energy MW 3.0Fuel cells MW 0.2

Total capacity from the company’s own and partner plants MW 1,356.5

Electricity generation

2015 2016Hydropower GWh 2,750.8 2,363.8Nuclear power plants GWh 2,248.0 2,034.2Wind power plants GWh 338.5 326.7Waste incineration plants GWh 94.4 61.7Biomass GWh 16.5 15.6Photovoltaic and solar energy GWh 22.7 23.3Fuel cells GWh 1.3 1.1Gas/diesel GWh 0.8 0.9

Total electricity generation1 GWh 5,473.4 4,827.2

Electricity purchases2015 2016

Purchases from own plants GWh 1,401.4 1,305.5Purchases from partner plants GWh 3,239.0 2,932.8Purchases from third parties GWh 340.1 232.2Trading GWh 1,793.9 3,028.3

Total electricity purchases GWh 6,774.4 7,499.0

Electricity supply2015 2016

Electricity supply Switzerland GWh 3,858.5 3,819.5Trading GWh 2,745.1 3,462.7Pumped storage GWh 170.7 216.7

Total electricity supply GWh 6,774.4 7,499.0

Subsidy systems and PPAs2015 2016

Purchases to feed into subsidy systems and PPAs GWh 492.8 356.6Subsidy system and PPA supply GWh 492.8 356.6

¹ Production from the company’s own plants, procurement rights, partner plants and third-party plants.

7) Property, plant and equipmentStatus as of Jan. 1, 2016¹

in CHF

Additions

in CHF

Disposals

in CHF

Reclassification

in CHF

Status as of Dec. 31, 2016

in CHFAcquisition values

Power plants 662,484,482 1,017,698 – 1,603,689 665,105,869 Energy distribution facilities¹ 2,377,914,420 604,363 – 5,575,923 76,456,697 2,449,399,557 Public lighting¹ 71,956,363 – – 917,688 5,435,103 76,473,778 Transmission facilities 2,489,009 – – – 2,489,009 Energy and grid services 237,253,582 8,597,406 – 175,175 6,699,640 252,375,453 Telecom systems 143,643,943 9,780,828 – 64,529 – 3,591,391 149,768,851 General facilities, properties, grounds1 258,107,399 7,083,905 – 1,685,273 12,264,255 275,770,286 Facilities under construction 180,156,936 79,562,696 – – 98,867,993 160,851,639 Total 3,934,006,134 106,646,896 – 8,418,588 – 4,032,234,442

Status as of Jan. 1, 2016¹

in CHF

Depreciation and amortization

in CHF

Disposals

in CHF

Reclassification

in CHF

Status as of Dec. 31, 2016

in CHFCumulative depreciation

Power plants – 463,565,401 – 10,092,761 – – – 473,658,162 Energy distribution facilities1 – 1,892,272,071 – 21,765,874 5,575,923 – – 1,908,462,022 Public lighting1 – 38,800,834 – 1,721,087 917,688 – – 39,604,233 Transmission facilities – 731,868 – 125,347 – – – 857,215 Energy and grid services – 83,496,047 – 28,550,060 175,175 – – 111,870,932 Telecom systems – 32,454,831 – 102,333,772 64,529 – – 134,724,074 General facilities, properties, grounds1 – 176,189,256 – 5,199,292 1,685,273 – – 179,703,275 Facilities under construction – – – – – Total 2,687,510,308 – 169,788,193 8,418,588 – 2,848,879,913

Total property, plant and equipment 1,246,495,826 1,183,354,529

6) Financial assetsewz share

in %Share capital

of companyewz share of share capital

Carrying amount in CHF

Investments ewz (Deutschland) GmbH D-Constance 100.0 EUR 84,938,412 EUR 84,938,412 99,522,778ewzert AG Zurich 100.0 CHF 300,000 CHF 300,000 300,000Energie Naturelle Mollendruz SA La Praz 86.2 CHF 6,300,000 CHF 5,430,000 5,430,000AG Kraftwerk Wägital Siebnen 50.0 CHF 15,000,000 CHF 7,500,000 7,500,000smart grid solutions AG Zurich 41.2 CHF 1,700,000 CHF 700,000 700,000Eoliennes de Provence SA Provence 40.0 CHF 6,000,000 CHF 2,400,000 2,400,000Energiepark Sisslerfeld AG Eiken 40.0 CHF 100,000 CHF 40,000 40,000AKEB Aktiengesellschaft für Kernenergie-Beteiligungen

Lucerne 20.5 CHF 90,000,000 CHF 18,450,000 18,450,000

Kraftwerke Hinterrhein AG Thusis 19.5 CHF 100,000,000 CHF 19,500,000 19,500,000Blenio Kraftwerke AG Blenio 17.0 CHF 60,000,000 CHF 10,200,000 10,200,000Kraftwerke Oberhasli AG Innertkirchen 16.6 CHF 120,000,000 CHF 20,000,000 20,000,000Kernkraftwerk Gösgen-Däniken AG Däniken 15.0 CHF 350,000,000 CHF 43,500,000 43,500,000Etrans AG Laufenburg 12.9 CHF 7,500,000 CHF 963,000 963,000Maggia Kraftwerke AG Locarno 10.0 CHF 100,000,000 CHF 10,000,000 10,000,000Swissgrid AG Laufenburg 8.8 CHF 316,327,063 CHF 27,789,722 52,847,958Total investments 291,353,736

Nominal value Carrying amount in CHF

Loansewz (Deutschland) GmbH D-Constance EUR 15,800,000 16,937,600Swissgrid AG Laufenburg CHF 82,209,610 82,209,610Energiepark Sisslerfeld AG Eiken CHF 480,000 480,000Total loans 99,627,210

Total financial assets 390,980,946

¹ Acquisition values and cumulative depreciation were adjusted to historically reconstructed values as of January 1, 2016.

Stakeholder processes.A female business customer, a fisherman, a female resident and a male supplier are all typical stakeholders of ewz (GRI G4-24). Every stakeholder group is affected by the desirable or undesirable consequences of the sustainability themes to a greater or lesser extent (GRI G4-21). Depending on the level of impact, the stakeholders are involved in a suitable form, such as on monitoring committees for the recon-cessioning of hydropower plants (GRI G4-25). The goal of the annual Stakeholder Forum is to take account of the opinions of all stakeholder groups on sustainability issues relating to ewz (GRI G4-26). In 2016, after assessing suggestions made by forum participants, ewz adjusted the significance and definition of individual sustainability themes (GRI G4-23). For example, customers’ energy efficiency was rated much more highly than in the previous year (GRI G4-27). These themes also require the involvement of very diverse business areas (GRI G4-20). In 2016, there were no structural changes requiring adjustments to sustainability indicators (GRI G4-22).Additional information on the GRI G4 content can be found in the GRI Report 2016 at ewz.ch/nachhaltig.

GRI G4 CONTENT INDEX1.

6160

Specific standard disclosuresMaterial topics Management approach and indicators Document Page External auditsSecurity of supply GRI aspect: access

GRI indicator: EU29ASR 2016 GRI Report 2016

16, 17, 24 8

–

Investment in renewable energies GRI aspect: –GRI indicator: –

ASR 2016GRI Report 2016

16, 17, 22, 23 8

–

Innovation GRI aspect: –GRI indicator: –


16, 17, 28 8

–

Sustainable products and services GRI aspect: Products and servicesGRI indicator: –


16, 17, 25, 31 8

–

Customers’ energy efficiency GRI aspect: Products and servicesGRI indicator: EN27

ASR 2016 GRI Report 2016

16, 17, 30 8

–

Environmental management GRI aspect: EnergyGRI indicator: –


16, 17, 23, 40, 41 8

–

Stakeholder engagement GRI aspect: Local communities GRI indicator: SO1

ASR 2016 16, 17, 36, 37 –

Customers GRI aspect: Labeling of products and servicesGRI indicator: PR5

ASR 2016 16, 17, 35 –

Occupational health and safety GRI aspect: Occupational health and safetyGRI indicator: LA6


48, 499

–

Talent search and development of employees

GRI aspect: –GRI indicator:


46, 479

–

Modern communications infrastructure GRI aspect: –GRI indicator: –


349

–

¹ In compliance with the Guidelines in accordance with the “Core option” of the Global Reporting Initiative (GRI).² ASR 2016: ewz Annual and Sustainability Report 2016, ewz.ch/nachhaltig.³ GRI Report 2016: includes additional information in accordance with the GRI Guidelines, ewz.ch/nachhaltig.

General standard disclosuresDocument Page External audits

Strategy and analysisG4-1 Sustainability statement by most senior decision-maker. ASR 20162 5, 12, 13, 14 –G4-2 Opportunities and risks ASR 2016 42, 52, 53 –Organizational profileG4-3 Name of the organization ASR 2016 4 –G4-4 Primary brands, products and services ASR 2016 2, 3, 29 –G4-5 Headquarters GRI Report 20163 1 –G4-6 Countries where the organization operates ASR 2016 3 –G4-7 Ownership and legal form ASR 2016 4 –G4-8 Markets ASR 2016 3 –G4-9 Scale of the organization ASR 2016 2, 3 –G4-10 Total number of employees GRI Report 2016 1 –G4-11 Collective bargaining agreements GRI Report 2016 2 –G4-12 Supply chain ASR 2016 43 –G4-13 Changes in the organization GRI Report 2016 2 –G4-14 Precautionary principle ASR 2016 5, 6–11, 16, 17 –G4-15 Endorsed charters, principles GRI Report 2016 2 –G4-16 Memberships GRI Report 2016 2 –EU1 Installed generating capacity – electricity ASR 2016 59 –EU2 Power production ASR 2016 59 –EU3 Customer structure ASR 2016 35 –EU4 Length of transmission and distributor grid ASR 2016 2 –EU5 CO₂ emission rights GRI Report 2016 2 –Identified material aspects and boundariesG4-17 Consolidated companies ASR 2016 62 –G4-18 Defining the report content and aspect boundaries ASR 2016 62 –G4-19 Material aspects ASR 2016 16 –G4-20 Aspect boundaries within the organization ASR 2016 61 –G4-21 Aspect boundaries outside the organization ASR 2016 61 –G4-22 Restatements of information ASR 2016 61 –G4-23 Changes in scope and aspect boundaries ASR 2016 61 –Stakeholder engagementG4-24 Stakeholder groups engaged ASR 2016 61 –G4-25 Identification and selection of stakeholders ASR 2016 61 –G4-26 Approach to stakeholder engagement ASR 2016 61 –G4-27 Stakeholder concerns ASR 2016 61 –Report profile G4-28 Reporting period ASR 2016 62 –G4-29 Date of most recent previous report GRI Report 2016 7 –G4-30 Reporting cycle ASR 2016 62 –G4-31 Contact point ASR 2016 62 –G4-32 GRI Index chosen option ASR 2016 60, 61 –G4-33 External audits GRI Report 2016 7 –GovernanceG4-34 Governance structure ASR 2016 4, 12, 13, 17 –Ethics and integrity G4-56 Values, norms of behavior ASR 2016

GRI Report 201646, 47 7

––

http://www.ewz.ch/nachhaltig



Publisher.ewzTramstrasse 358050 ZurichPhone +41 58 319 41 [email protected]

April 2017Duplication permitted with indication of source

Copies.German: 650 copies and e-paperEnglish: 200 copies and e-paperFrench: e-paperClimate neutral printing using green power on 100 % recycled paper, “The Blue Angel” certification

Editing and coordination.Sustainability Management/Marketing and Communication

Questions about the [email protected]

Design, production.KSP, Krieg Schlupp Partner Werbeagentur AG

Illustration.Michael Stünzi, Zurich

Photography.Micha Freutel, Zurich

Print.Abächerli Media AG, Sarnen

Further information.ewz.ch/nachhaltig

PUBLICATION DETAILS.

neutralPrinted Matter

No. 01-17-194936 – www.myclimate.org© myclimate – The Climate Protection Partnership

PERFORMANCE

This annual and sustainability report covers the 2016 calendar year. The publishing date is the end of April 2017. It covers all investments in excess of 50 % (GRI G4-17). The sustaina-bility reporting is based on the Global Reporting Initiative (GRI) and its reporting principles, specifically the G4 guidelines. GRI is the leading standard for sustainability reporting. The contents of this report reflect the material topics that show the development of ewz. ewz attaches great importance to including the points of view of employees, management and outside stakeholders in the sustainability management, and it regularly invites repre-sentatives of different stakeholder groups to contribute their suggestions (GRI G4-18). ewz currently publishes its achievements annually in the annual and sustainability report. Fur-ther details can be found in the GRI index at ewz.ch/nachhaltig.

The photographs show various stakeholders in a location of direct relevance to their per-sonal Possibility Maker story. In this report, ewz takes a look at the future with school pupils and visits the banks of a renaturated stream in Grisons with a family that buys green power. Successful energy savers are portrayed, a contracting partnership for eco-friendly energy with the SBB is presented, and female colleagues committed to the ewz women’s network introduce themselves.ewz thanks all those involved for sharing their personal story and making time to have their photograph taken. They represent all the other stakeholders with whom ewz is moving for-ward with shared commitment. A big vote of thanks is also due to the photographer Micha Freutel for the visual realization.

PHYSICAL UNITS AND ABBREVIATIONS.

KEY POINTS AT A GLANCE.

ABOUT THIS REPORT.

kW Kilowatt (1,000 watts)MW Megawatt (1 million watts)GW Gigawatt (1 billion watts)Wh Watt-hourkWh Kilowatt-hour (1,000 watt-hours)MWh Megawatt-hour (1 million watt-hours)GWh Gigawatt-hour (1 billion watt-hours)CO2-eq CO2 equivalentGRI Global Reporting InitiativePPA Power Purchase Agreement

ONR 49000 Austrian Standards Institute Rule “Risk management for organizations and systems”

ISO 31000 International Organization for Standardization “Risk Management – Principles and Guidelines”

OHSAS 18001 Occupational Health and Safety Assessment Series

ElCom The Swiss Federal Electricity Commission: independent national regula-tory authority for the electricity sector

62

mailto:info%40ewz.ch%20?subject=

mailto:nachhaltigkeit%40ewz.ch?subject=


ewz INVITES YOU to meet some of the Possibility Makers in person: Register for a visit and look over the shoulder of ewz employees at, say, the Albigna dam, Tinizong and Höngg power plants, and the Oerlikon grid base.

ewz.ch/fuehrungen

http://www.ewz.ch/fuehrungen

Documents

Annual and Sustainability Report 2016. - ewz...Annual and Sustainability Report. And, because we are now in an anniversary year, we also look back even further. Back to where it all