Increases in electricity distribution charges could be capped, says Rehn

Caruna Oy has claimed that its recent price hikes are necessary due to the grid development projects it has had to launch following the adoption of the new Electricity Market Act in 2013.

Olli Rehn (Centre), the Minister of Economic Affairs, has revealed that he has asked the Energy Authority of Finland to launch an inquiry into the increases in electricity distribution charges introduced by Caruna, a power grid operator based in Espoo.

“We're evaluating our options. One of the alternatives under consideration is […] imposing a cap or maximum limit on one-time price hikes,” he said in an interview with YLE on Monday.

Rehn was by no means the only lawmaker who called attention to the considerable price hikes introduced by Caruna: as many as three Members of the Parliament – Arto Satonen (NCP), Eerikki Viljanen (Centre) and Päivi Räsänen (Christian Democrats) – submitted a written question about the increases as the Parliament convened on Monday.

“Caruna Oy raised its electricity distribution charges by 27 per cent in south-western Finland. The per kilowatt-hour cost of electricity distribution will increase from 2.95 cents to 3.98 cents. The energy costs of a 120 square metre, electricity-heated detached house will rise by almost 300 euros a year,” writes Satonen.

He points out that consumers cannot shop around for electricity distributors because they have a monopoly in their region of operation.

Räsänen points out in her written question that Caruna has a 20 per cent market share and roughly 650,000 customers who are not in a position to select their electricity distributor.

The Energy Authority of Finland should according to Satonen look into the reasons for the price hikes and be granted the authority to distribute them over a several-year period. Räsänen and Viljanen, in turn, argue that the Energy Authority should have the possibility to intervene in price hikes sooner than currently.

“The profits and profit distributions of power grid operators must be evaluated in light of the special characteristics of the sector. The median return on invested capital has been 8–10.5 per cent in recent years. The average profit margin of such companies was over 16 per cent in 2014. The figures can be considered excellent for the companies,” writes Viljanen.

Aleksi Teivainen – HT
Photo: Martti Kainulainen – Lehtikuva
Source: Uusi Suomi