National power grid operators of Finland and Sweden disagree on restrictions to exports of electricity

Fingrid: "Kraftnät complied with regulations, but was morally in the wrong"

print this

The National power grid operators of Finland and Sweden disagree on whether the Swedish operator Svenska Kraftnät had the right to reduce exports of electricity to Finland in December.
      Kraftnät feels that in the name of national interest it had every right to limit exports to Finland in order to secure the supply for domestic clients.
      In the Friday issue of the Finnish daily Turun Sanomat, a Kraftnät production manager explained that the idea behind the move was to prevent an increase in price of electricity in Sweden. Jan Magnusson, Director-General of Svenska Kraftnät, in turn, argues that without the limitation to exports the entire area of Southern Sweden might have experienced a power failure.
      "We cannot export electricity at the cost of a domestic power shortage. I don't believe any other country would do that either, not even Finland", states Magnusson.
     
In any case, as a result, Finland experienced a major market shake-up: on December 8th, the price of power leaped up to an all-time high, EUR 1,150 per Megawatthour (MWh), even if the peak only lasted for an hour.
      "We feel it was unethical. In Finland we would not do something like that", Timo Toivonen, President and CEO of Fingrid, criticises the Kraftnät decision.
      "We support the idea of Finland and Sweden forming a joint price area."
      The Association of Finnish Energy Industries, an energy sector industrial policy and labour market policy organisation, also released a statement saying: "Countries' internal problems should not be projected on other nations."
     
Kraftnät only gave the Finns a two-minute warning before reducing the exports of power to Finland by 30 percent of the total capacity, while making provision for a possible nuclear power stoppage in Sweden.
      According to the Nord Pool (Nordic exchange for trading electric power) regulations, restrictions to exporting power should be announced at least two hours in advance.
      "Finland would have had capacity to compensate for the reduction had it been made known in advance", Toivonen complains. "The resulting price peak was unnecessary."
      Afterwards, when looking into the Nord Pool code, Fingrid discovered a loophole that made Kraftnät's radical measure legitimate.
      At the turn of the year, Nord Pool revised its regulations making such express decisions unlawful in the future.
     
According to Finland's Minister of Trade and Industry Mauri Pekkarinen (Centre Party), "Kraftnät acted against the spirit of our agreements."
      "The problem is that the wording of these agreements is far too general", Pekkarinen explains.
      In response to Pekkarinen's enquiry on the matter, the Swedish Minister for Sustainable Development Mona Sahlin, approached Finland through a constructive letter, in which she blamed Kraftnät for misconduct.
      Sahlin apologised for the affair, and vouched for the efficient running of the Nordic power market in the future.


Previously in HS International Edition:
  Sweden secured cheap electricity for domestic clients by cutting off exports to Finland (24.2.2006)

Links:
  Svenska Kraftnät
  Finnish Energy Industries
  Nord Pool
  Mona Sahlin, Minister for Sustainable Development, Government Offices of Sweden

Helsingin Sanomat