Fingrid to maintain the current transmission prices in 2020
Fingrid will maintain the transmission prices of electricity in the main grid at their current 2019 level next year. Fingrid’s operations have a solid foundation and any changes are expected to be quite moderate in the future as well. Transmission fees in Finland’s main grid are the third lowest in the European reference group, and the benchmarking study of the Council of European Energy Regulators (CEER) found that Fingrid is one of the most cost-efficient transmission system operators.
At the beginning of 2019, Fingrid decreased electricity transmission fees in the main grid by an average of eight per cent. In 2020, Fingrid will maintain the unit prices of transmission pricing at their current 2019 level. Fingrid’s operations have a solid foundation, which is important in a changing operating environment. The company’s cost-efficiency has developed excellently and the company’s investments are made on a long-term basis. The electrification of society is rapidly increasing electricity consumption. For the above reasons, it is possible to keep transmission pricing at its current level.
The Electricity Market Act and European legislation lay down Fingrid’s obligations in terms of maintaining the balance of production and consumption and the development of the electricity markets and the national grid. The grid fee covers costs resulting from these activities. The current price structure is based on the “user pays principle” according to which the burden of the costs is allocated based on the demands that different customers place on the grid. Consumption fees focus on periods when the volume of electricity being transmitted is at its greatest and production fees focus on the grid capacity reserved by power plants. Fingrid’s operations and pricing are monitored by the Energy Authority.
In practice, fluctuations in grid fees are caused by changes in electricity consumption and production, and variation in the costs of loss energy and electricity system reserves. Inflation, interest rates and the price level of procured services and materials also affect grid fees. Fingrid’s goal is to keep price changes moderate in the future through a well-timed and well-designed investment programme, by further developing the market-oriented outsourced operating model and utilising the opportunities made available by digitalisation. This is also supported by an effective and long-term regulatory model. The main grid investment level has settled at just over EUR 100 million per year. The investments to be carried out in the next few years are due to the ageing of the national grid and the changes taking place in the power production structure towards a low-carbon energy system.
“We set the bar high for ourselves by significantly lowering our prices this year, which is something that few transmission companies in the world have been able to do. I am pleased to say that the company’s operations and cost-efficiency are at a level that will enable this price level to be maintained next year as well. Reliable electricity, affordable transmission prices and keeping Finland as a single price area on the electricity market are ways in which Fingrid can contribute to the well-being and competitiveness of its customers and society”, says Chief Financial Officer Jan Montell.
“The main grid is facing major challenges with the rapidly changing structure of electricity production. Even in this situation, we strive to develop the main grid systematically and on a long-term basis while also implementing the necessary grid investments in a cost-effective manner. The end result is reflected back to our customers in the form of stable and affordable transmission fees”, shares Jussi Jyrinsalo, Fingrid’s Senior Vice President responsible for customers and grid planning.
CFO Jan Montell, Fingrid, tel. +358 40 592 4419