The impact of the epidemic caused a sharp decline in the performance of State Grid in the first quarter

A few days ago, according to the financial statements of the first quarter of 2020 released by State Grid Corporation of China, the company's performance in the first quarter fell sharply due to the impact of the "fall in both quantity and price" of electricity under the epidemic.
The impact of the epidemic caused a sharp decline in the performance of State Grid in the first quarter
In the first quarter, the operating income of State Grid decreased by 8.85% year on year, and the net profit decreased by 106% year on year, resulting in a net loss of 925.5 million yuan (of which, the net profit attributable to the owners of the parent company was -944 million yuan, and the minority shareholders' profit and loss was 18.4091 million yuan).
It is reported that the State Grid Corporation of China recorded a very rare loss in the first three months of each year. According to the surging news data, the company's first quarter financial reports from 2015 to 2019 showed that the net profits of the State Grid in the first quarter were about 14.99 billion yuan, 17.35 billion yuan, 17.20 billion yuan, 17.39 billion yuan and 15.3 billion yuan respectively.
However, this is not due to operational errors, but rather to the staged profit transfer due to the epidemic: in late February this year, the National Development and Reform Commission issued a notice to reduce the electricity cost of enterprises in a staged manner, and support enterprises to resume production and overcome difficulties together. The notice clearly stated that from February 1, 2020 to June 30, 2020, the electricity consumption cost of power users, except those in high energy consuming industries, who are now subject to general industrial and commercial and other electricity prices, and large industrial electricity prices, will be reduced periodically. When calculating and collecting the electricity charges of the above power users (including the users who have participated in the market transaction), the power grid enterprises shall uniformly settle at 95% of the original household electricity price level. The notice also decided to further clarify the implementation time of the supportive two-part electricity pricing policy. The supportive two-part electricity price policy issued on February 7 will be implemented until June 30.
In this regard, the State Grid decided to reduce or exempt electricity charges of about 48.9 billion yuan in its business zones covering 26 provinces, and the reduced or exempted charges are "out of pocket". State Grid said, "All the electricity tariff reductions and exemptions involved in the phased reduction of electricity costs are not transmitted to upstream enterprises such as power generation enterprises, and are not shared with government funds collected on behalf of others."
Of course, in addition to the direct transfer of profits due to the epidemic, the decline in domestic electricity consumption caused by the impact of the epidemic is also an important reason for the sharp decline in the performance of the State Grid in the first quarter. The data shows that in the first quarter of this year, the electricity consumption of the whole society decreased by 6.5% year on year, hitting a new low in the quarterly growth rate of electricity consumption in the past 10 years. At the same time, according to the preliminary calculation of the China Electricity Council, the COVID-19 affected the whole society's electricity consumption of about 170 billion kilowatt hours in the first quarter.
In addition to the State Grid, China Southern Power Grid Co., Ltd. is also affected by the above factors. The financial statements for the first quarter of 2020 released by the company show that the performance of the first quarter has declined significantly. In the first quarter, the operating income of China Southern Power Grid decreased by about 10% year on year, and the net profit decreased by 81.3% year on year to about 827 million yuan (including about 452 million yuan attributable to the owner of the parent company). The company will reduce electricity charges by about RMB 10.6 billion in the business areas of the five southern provinces it covers, while the bill charges are also "out of pocket". In total, the two power grids will reduce electricity charges of about 59.5 billion yuan for large industries and general industrial and commercial enterprises.
In this regard, the China Electricity Council recently issued the Analysis and Forecast Report on the National Power Supply and Demand Situation in the First Quarter of 2020, suggesting that in the calculation of transmission and distribution electricity prices in the second regulatory cycle, the impact of the implementation of price reduction policies by power grid enterprises should be considered in a balanced way, and the price reduction funds should be raised through multiple channels during the subsequent price verification in the second regulatory cycle of provincial power grids to reduce the loss of power grid enterprises.