Power lines in Espoo on 18 July 2022. Electricity suppliers in Finland’s largest cities have raised their prices markedly due to the volatility of the spot market, reports Helsingin Sanomat. (Mikko Stig – Lehtikuva)


POWER RETAILERS in Finland’s largest cities are raising the prices in their open-ended electricity contracts due to sky-high prices on the electricity market, reports Helsingin Sanomat.

Helen, the energy utility of the City of Helsinki, has announced it is raising the price of basic electricity by 58 per cent to 23.21 cents per kilowatt-hour as of early October. Tampereen Sähkölaitos is raising its price by nearly 130 per cent to 33 cents per kilowatt-hour as of mid-September.

Oomi Energia, the retail arm of a group of ten municipal energy utilities including Oulun Energia and Vantaan Energia, raised prices for its current customers by an average of 26.5 per cent in early July.

Turku Energia will raise the price in its open-ended electricity contract to 33.9 cents per kilowatt-hour in early October. The company offered the contract until recently at prices that varied based on the pricing period: the increase has been no more than two per cent for customers with new contracts but as much as 330 per cent for very old open-ended contracts.

Harri Salo, the director of sales at Turku Energia, justified the raises with price developments on Nord Pool, the leading power market in Europe.

“The reason is strictly the behaviour of the power exchange spot market. The war Russia started in Ukraine has been reflected heavily in electricity prices. Our margins don’t improve one bit from the increases,” he said to Helsingin Sanomat.

Average hourly day-ahead prices on the spot market were last week at their highest level this decade. In August, the prices have been almost double the average for the whole year, according to the daily newspaper.

“It’ll be a very difficult winter for those who don’t have a valid old electricity contract. Prices will increase manifold in new electricity contracts,” told Salo.

Turku Energia adjusts the prices of its open-ended electricity contracts ever six months, meaning the next adjustment will be made in April. The municipal power retailer is presently only offering new customers contracts based on spot-market prices due to the market volatility.

Oomi Energia and Tampereen Sähkölaitos are also among the several power companies that have halted the sales of open-ended electricity contracts to new customers.

“It’s very difficult to offer fixed-term electricity contracts with fixed prices because the price levels are fluctuating so dramatically. The power exchange is functioning in an unpredictable way,” explained Salo.

Typically when the price outlook is foggy electricity retailers seek to guarantee their profitability by adding risk premiums to their prices, but they are presently so high that some are even re-considering introducing them to the contracts.

“The risk premium right now is so high in our opinion that we don’t want to introduce it to retail contracts. We’re of the opinion that it’s better for both the retailer and customer to use hourly-priced products for the time being,” said Jussi Laitinen from Tampereen Sähkölaitos.

Aleksi Teivainen – HT