21.12.2023 16:03
Current News, Electricity Market

Energy Authority publishes decision on the collateral model for balance responsible parties

In late November, the Energy Authority issued a decision on the terms and conditions for balance responsible parties, which include the principles for how collateral requirements are determined. Balance responsible parties will be set collateral to cover the financial counterparty risk resulting from imbalances caused by the balance responsible parties.

The Energy Authority’s decision includes major changes to the current collateral terms and conditions and sets apart Finland’s collateral model from that used in other Nordic countries. Finland currently uses the same collateral model as in Sweden and Norway.

The most significant changes to the current collateral model concern accounting for negative prices, the collateral formula’s multiplier, the changing of the collateral requirements and the collateral ceiling. The Energy Authority’s decision approves the proposal that negative prices be replaced with the zero price in the collateral calculation formula. In deviation of the current collateral formula, the collateral formula’s multiplier has been set as the same for all balance responsible parties in the decision and, at the same time, the period covered by the set collateral has been shortened. In its decision, the Energy Authority did not accept deviations from the collateral formula in cases where the collateral formula does not correspond to the counterparty risk resulting from the party.

The Energy Authority obligated Fingrid to set a ceiling for the size of the collateral if needed and to propose how this should be done. Additionally, Fingrid must submit to the Energy Authority for approval a proposal on how production will be taken into account when determining the collateral.

The Energy Authority’s decision must be put into effect by 30 November 2024.   

Fingrid is considering appealing the decision.

Further information:

Jani Piipponen, Manager, Balance Services, Fingrid, tel. +358 30 395 4186
Emails are in the format firstname.lastname@fingrid.fi