IERN International Energy Regulation Network

There are about 120 companies engaged in electricity generation and about 550 power plants in Finland. Also imports from Russia, Sweden and Norway play an important role in meeting demand, according to the water situation in the Nordic countries.

Generation has been concentrated mainly in two groups. Fortum (partially privatised, but State of Finland is still the main owner) accounts for about 30% and Pohjolan Voima (controlled by energy-intensive industry) for about one fifth of electricity generation capacity in Finland. In addition, municipal and private electricity retailers and energy-intensive large-scale industry are significant electricity generators.

A major part of the wholesale trade in electricity takes place at the Nordic Power Exchange Nord Pool, whose ELSPOT market price sets the electricity market price in the Nordic countries. Besides the power exchange, electricity is traded on the so-called OTC market and directly between the buyer and the seller. In addition to physical electricity trade, it is possible to buy and sell electricity-related forward contracts at the Nord Pool.

Fingrid Plc is the independent TSO. It resulted from the merger of the former IVO Voimansiirto Oy (Fortum’s subsidiary) with former Teollisuuden Voimansiirto Oy (Pohjolan Voima’s subsidiary). Fingrid’s ownership has been divided: State of Finland 12%, Fortum Power and Heat 25%, Pohjolan Voima 25%, insurance companies 38%.

There are 90 DNOs and 13 regional network companies in Finland. Ownership of these companies is fragmented into private owners and municipalities. Fortum, Vattenfall (fully owned by state of Sweden) and Helsinki Energy (owned by city of Helsinki) are the biggest DNOs. The competition legislation limits the market share of an individual DNO to 25% of energy delivered to the customers at 0.4 kV level.

Pricing of network services is regulated by the Energy Market Authority

In Finland traditionally both private and municipal companies participates in electricity retail (no licence requirements). There are currently about 70 retail companies. Most of the retailers have also network business and/or electricity production at the same group of companies. There are only a few fully independent electricity retailers.

Major players are Fortum, Vattenfall and Helsinki Energy.

All natural gas consumed in Finland is imported from Russia. There are no production or storage facilities in Finland.

Gasum Ltd is the sole importer and wholesale supplier. Its ownership is divided between the State of Finland, Fortum Plc, E.ON Ruhrgas and Gazprom.

There are 32 local distribution network operators and one transmission system operator, Gasum Ltd. Approximately 80% of Finnish DSOs are wholly or mainly owned by municipalities. The rest 20% of DSOs are owned by other company’s from the industry.

Pricing of network services is regulated by the Energy Market Authority.

The size of the natural gas retail market in Finland in relation to the total consumption of natural gas is small.

The retail supply of natural gas covers only about 5% of the total amount of natural gas used in Finland. The share of the top three retail suppliers is about 50% of the total volume.

The first regulatory period for electricity network pricing regulation started in 2005 and will end by the end of 2007. The Energy Market Authority is preparing the new pricing methodology for the next regulatory period of 2008-2011.

The first regulatory period for natural gas network pricing regulation started in 2006 and will end by the end of 2009.

Teollisuuden Voima Ltd (private company) is building up a new nuclear power plant unit, the Olkiluoto 3, which will be commissioned in 2009.

The Finnish and Swedish TSOs has decided to construct a new cross-border electricity transmission line between Finland and Sweden. The submarine cable will be ready in autumn of 2010 and the TSO’s will share the ownership and investment costs of the cable.

Finnish and Baltic energy companies are building up a commercial electricity transmission line between Finland and Estonia. The commissioning of the Baltic-Finnish submarine DC cable is scheduled to the end of 2006.

DNOs, whose annual delivery to the customers at 0.4 kV level have been at least 200 GWh/year during past three years, have to legally unbundle their network business from other electricity businesses by January 1, 2007. This requirement covers 32 DNOs and 85% of energy delivered to customers.

The TSO, Gasum Ltd, has plans to expand its natural gas transmission pipeline to the western part of Finland. Additionally, the TSO has launched together with Gazprom, Eesti Gaas and Latvijas Gaze a project to examine the feasibility of constructing a pipeline to link Finnish, Estonian and Latvian natural gas networks.

Legislation available here:

Electricity Market Act (386/1995) (unofficial translation)

Electricity Market Degree (518/1995) (unofficial translation)

Natural Gas Market Act (508/2000) (unofficial translation)