POLICY MAKERS in Finland have urged electricity retailers to adjust the contracts they sold to customers early this winter amid widespread concerns about electricity prices, reports Helsingin Sanomat.
Sanni Grahn-Laasonen (NCP), the chairperson of the Parliament’s Commerce Committee, on Tuesday stated in a press release that all members of the committee are pleading with electricity companies to adjust their highest-priced fixed-term contracts.
“In Finland, there is freedom of contract and signed contracts are binding, but companies have the opportunity, as well as a responsibility, to proactively exercise corporate social responsibility and meet people halfway,” she argued.
Roughly 130,000 Finnish households entered into a new electricity contract at a time when electricity prices exceeded 30 cents per kilowatt hour, according to a study presented to the Commerce Committee. With many households thinking at the beginning of the winter that an expensive fixed-term contract was better than an exchange-electricity contract, many committed to what now seem as expensive contracts for a year if not two.
As Central European countries have replenished their natural gas reserves, the winter has proven more moderate than feared and consumers have succeeded in slashing energy use, the continent has avoided both electricity outages and outrageously high prices.
In Finland, fixed-term electricity contracts are currently available for around 11 cents per kilowatt hour, according to Helsingin Sanomat.
The Commerce Committee mulled over electricity contracts as part of its discussion on a government proposal to compensate households for electricity costs incurred this winter.
Pekka Salomaa, the director of electricity markets at Finnish Energy, told Helsingin Sanomat that electricity retailers are unlikely to adjust the prices in their contracts mid-term because such a move could be devastating for their finances.
Companies, he explained, have largely committed to paying a certain price for the electricity they supply to fixed-term customers through futures contracts, an instrument they use to guarantee their ability to supply electricity. As Finnish households were agreeing to expensive electricity contracts amid widespread concerns, also futures prices were high.
A company lowering the price of a contract before expiry would in many case mean it is supplying electricity at a loss, said Salomaa.
“The price is protected when the contract is signed [by buying futures]. Especially electricity retailers without their own electricity production don’t have the opportunity to make major concessions.”
He also reminded that no adjustments have been made when retailers have been under pressure to raise prices, such as during the price surge witnessed early this winter. Some consumers were consequently able to enjoy noticeably budget-friendly fixed-term contracts at the peak of the energy prices.
Members of the Commerce Committee also expressed their hope that electricity companies always offer fixed-term contracts as an alternative to exchange-electricity contracts. Some retailers stopped offering fixed-term contracts late last year amid surging futures prices and significant uncertainty about winter prices.
Grahn-Laasonen reminded that exchange-electricity contracts are not suitable to all consumers: “That is why it is important that electricity contracts with fixed prices are available also in future. Consumers alone cannot be left to carry the price risk for electricity.”
Aleksi Teivainen – HT