Overhead power lines on a cold winter night in Espoo on 22 February 2023. (Heikki Saukkomaa – Lehtikuva)

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FINNISH ENERGY has voiced its exasperation with a report about electricity prices and the pricing logic of electricity markets published by MOT, the team of investigative journalists at YLE.

MOT on Monday cited a calculation by Peter Lund, a professor focusing on energy questions at Aalto University, that indicate that electricity users paid five billion euros more than usual for electricity in the second half of last year due to the electricity crisis.

His calculation was based on two variables: the average market price in the second half of last year – over 20 cents for kilowatt hour – and energy consumption in the same period. It does not include heavy industries as they tend to use various mechanisms to shield themselves against fluctuations in electricity prices.

“A peculiar calculation that has very little to do with practice,” slammed Pekka Salomaa, the director general of Finnish Energy.

Salomaa reminded the Finnish public broadcasting company that some of the electricity was sold at protected prices as the companies distributing electricity secure future deliveries through the futures market and households effectively fix their prices by signing fixed-term electricity contracts with distributors.

“A substantial share of consumers are at a different price level,” he argued. “This is a preliminary estimate: it’s closer to one billion than five billion. But what it’s exactly is very difficult to say.”

Pertti Järventausta, a professor of electrical engineering at Tampere University, said Lund and Salomaa are talking about two different things – the former about the absolute additional cost and the latter about the profits recorded by electricity producers.

“It’s a question of how much electricity users paid to the ‘electricity market machine’. It’s another matter entirely how the euros are divvied up in the machine between producers and operators that had sold [price] protections,” he reminded, adding that he believes five billion euros to be a fairly accurate estimate of the absolute cost.

Data from Statistics Finland differ from the calculation by Lund, reminded Salomaa. Based on a survey that seeks to determine the prices electricity retailers charged over a certain time period, the data reveal that the average price in the second half of last year was around 13 cents per kilowatt hour.

The figure would yield a total additional cost of around two billion euros.

It remains impossible to estimate the total cost of the energy crisis, reminded YLE. Hundreds of thousands of households committed in the second half of last year to paying prices that are much higher than current market prices for electricity for years to come.

Aleksi Teivainen – HT

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