The fear of high electricity prices has heated up the debate on whether price increases should be limited by lowering the electricity price ceiling. The representatives of the energy companies generally have reservations about the idea that the companies would lower the price of electricity for consumers.
Next winter is predicted to be a harsh time for the customers of energy companies. They may have to pay a record high price for the electricity they use – unless the state intervenes in the market or the companies themselves limit electricity prices for the benefit of their customers.
Next winter’s electricity futures already give indications of record high prices. They have risen steadily throughout the year, but during the summer they have really exploded.
For example, at the beginning of July, futures prices for the last quarter of this year and the first quarter of next year in the Nordic countries were over 190 euros per megawatt hour. In addition, electricity has occasionally cost more than 50 cents per kilowatt hour on the stock exchange even now in the summer.
The increase in futures prices is directly reflected in the offer prices of electricity companies, because the companies have to hedge their own electricity procurement in the futures market. At the beginning of July, the average prices of contract offers had tripled to quadruple from last year.
Read more: Next winter, there may be a real shortage of electricity and prices may be at wild heights – the consumer now has few ways to prepare
Natural gas the price increase made the price of electricity more expensive already last year. Now, when a real shortage of gas is developing in Europe, the impact is even stronger.
The fear of an unbearable electricity price for consumers has raised a public debate about whether price increases should be limited by lowering the electricity price ceiling.
An Aalto University professor specializing in energy economics introduced the idea of a quick calculation of the price ceiling Matti Liski. According to him, otherwise, the economy will not be able to withstand the increase in electricity prices that may follow from the gas shortage in Europe.
Even though the calculation of the wholesale electricity price ceiling based on the EU regulation is not an instant solution, it has already received quite unreserved support from the members of parliament.
The representatives of energy companies interviewed by Helsingin Sanomat generally have reservations about the idea that the companies would lower the price of the electricity they sell to consumers. The representatives of the companies did not want to take a position at all in the discussion about the calculation of the price ceiling.
Helen’s CFO Timo Rajala says that Helen’s task as a company is to run a profitable business.
“As a company, it is difficult for Helen to do anything else. Helen acts according to the prevailing circumstances. Our current operating environment is really challenging.”
In Finland, during the corona crisis in the spring of 2020, we saw a situation where, for example, banks granted their customers exceptional repayment-free loans and landlords in turn forgave rent to their tenants.
Rajala says that he does not recognize a direct connection between the corona crisis and the current energy crisis.
“I would see it so that Helen operates as a company on commercial grounds. Circumstances are what they are. I would see that it is on a different level than the company’s business to pursue possible compensation or something similar.”
Rajala does not want to comment on the proposal to lower the price ceiling.
“At this point, I don’t want to take a position on the early social discussion on the issue.”
Fortum’s Director of Finnish consumer business Tomi Hänninen emphasizes that the company already gained experience from the exceptionally high price level of electricity last winter.
“Fortum offers various options and tools for the situation, which were already tried last winter.”
What are these options and tools like?
“Fortum can give the customer the opportunity to postpone the due date of the invoice without a separate charge. The customer can, for example, make a payment plan with customer service,” says Hänninen.
“Furthermore, Fortum has additional services for a monthly fee. For example, there is such a payment flexibility service that allows the customer to balance the amount of the electricity bill over a year. Then there is also the price ceiling included in the exchange electricity contract, which cuts the peak price of electricity.”
Helen also offers its customers similar flexibility in paying electricity bills. The company’s customer can, for example, postpone the due date of the invoice by 35 days if he has no payments already in arrears.
Hänninen does not want to comment on the discussion about the electricity price ceiling.
“I don’t want to speculate on the possibility of a regulatory change. That’s up to the rule maker. We adapt to it, and all operators always operate in accordance with the laws and regulations in force. Moving due dates and making payment plans are the flexibilities that Fortum can help customers with.”
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