Finnish politicians demand electricity retailers to adjust the prices of fixed-term contracts

Finnish politicians demand electricity retailers to adjust the prices of fixed-term contracts

“There is freedom of contract in Finland and the signed contracts are binding, but companies have the opportunity and also the responsibility to proactively bear social responsibility and meet people halfway,” he reasoned.

About 130,000 Finnish households signed a new electricity contract during a time when the price of electricity exceeded 30 cents per kilowatt hour, according to a study presented to the Trade Committee. When many households thought at the beginning of winter that an expensive fixed-term contract is better than an exchange-electricity contract, many committed themselves to contracts that seem expensive today for a year if not two.

When the countries of Central Europe have replenished their natural gas reserves, the winter has turned out to be more moderate than feared and consumers have managed to cut energy consumption, the continent has avoided both power outages and outrageously high prices.

In Finland, fixed-term electricity contracts are currently available for about 11 cents per kilowatt hour, according to Helsingin Sanomat.

The Commerce Committee considered electricity contracts as part of the discussion on the government’s proposal on the compensation of electricity costs incurred by households this winter.

Pekka SalomaaSuomen Energia’s electricity market director told Helsingin Sanomat that electricity retailers hardly change prices in their contracts halfway through, because such a measure could be disastrous for their finances.

He explained that companies are largely committed to paying a certain price for the electricity they supply to fixed-term customers through futures contracts, which guarantee their ability to supply electricity. When Finnish households signed expensive electricity contracts amid widespread concern, futures prices were also high.

Reducing the price of the contract before it expires would in many cases mean delivering electricity at a loss, Salomaa said.

“The price is protected when the contract is signed [by buying futures]. Electricity retailers in particular, who do not have their own electricity production, do not have the opportunity to make large concessions.

He also reminded that adjustments have not been made when retailers have been under pressure to raise prices, such as during the early winter price hike. Some consumers could thus enjoy considerably more budget-friendly fixed-term contracts at the peak of energy prices.

The members of the trade committee also expressed their hope that electricity companies always offer fixed-term contracts as an alternative to exchange-traded electricity contracts. Some retailers stopped offering forward contracts late last year due to rising futures prices and considerable uncertainty over winter prices.

Grahn-Laasonen reminded that stock exchange electricity contracts are not suitable for all consumers: “That is why it is important that fixed-price electricity contracts are also available in the future. Consumers cannot be left alone to bear the electricity price risk.”

Aleksi Teivainen – HT

Source: The Nordic Page

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