New proposals by the Commission expedite electricity market integration in Europe

Fingrid does not consider it necessary to establish a new Nordic independent system operator. Fingrid regards that the most important issue is to implement the decided priority cross-sections in the Nordic countries on schedule, hence creating preconditions for electricity market integration in Northern Europe.Co-operation between European transmission system operators (TSOs) and their ownership structures have been subject to an energy policy debate this autumn. The European Commission published its energy package in September, containing a proposal concerning shared electricity market rules for Europe. In the same week, the Nordic energy ministers appointed a work group to survey the establishment of a single independent system operator (ISO) in the Nordic countries.

“The regional ISO suggested by the energy ministers raises more questions than what it provides answers to issues pertaining to market integration. The initial standpoint of the suggestion is also outdated, considering the developments taking place within the European Union,” said Jukka Ruusunen, President and CEO of Fingrid, in commenting the ongoing study in a meeting with journalists today.

In the ISO model, the grid would be owned by one or more companies, but its operation and planning would be decided by a third party.

“It is very difficult to implement a model such as this, because it calls for great changes in the legislation of the various countries. What we need is not a separate ISO but committed co-operation. I think that co-operation between the present Nordic TSOs within Nordel is sufficient, cost-effective and very concrete,” Jukka Ruusunen said in referring to Nordel’s major grid projects.

The Nordic TSOs have agreed on constructing priority cross-sections with a total value of one thousand million euros. Once complete, these will reduce significantly market segregation in the Nordic countries. On top of this, Nordel has agreed on separate action, aiming among other things at increasingly efficient grid engineering processes, improved grid operation, effective use of reserves, and harmonisation of balance service. One important step was the decision to increase significantly transparent market information on the TSOs’ own websites and on NordPool’s Internet pages.

“All this provides an example to the new ENTSO (European Network for Transmission System Operators) which will be established in the future and which will have a crucial role in the EU’s legislative process concerning the electricity market. I am glad about the way in which the Commission consolidates co-operation between European TSOs, where the TSOs have been given a great role and responsibility in the development of the electricity market.”

According to Jukka Ruusunen, the energy package of the EU Commission contains several positive proposals, and he feels that Fingrid will manage well in the changing operating environment.

“Fingrid has worked actively to abolish market obstacles and been committed to impartiality and neutrality. This is indicated by the lowest grid tariff in Europe, excellent system security in electricity transmission, and our input in grid and market development.” Capital expenditure growing rapidly Fingrid’s capital expenditure in the Finnish grid is growing very quickly. The capital expenditure will grow from an annual level of approx. 40 million euros to 100 - 200 million euros per year in the next few years. The capital expenditure will grow because electricity consumption is increasing, the ageing transmission grid needs to be renewed, and cross-border transmissions between countries need to be strengthened further in order to promote the market mechanisms. Moreover, Fingrid has to boost its own reserve power capacity. Transmission capacity between Finland and Sweden will be increased by the Fenno-Skan 2 submarine cable, which will give 800 megawatts of additional capacity. The estimated costs of this project are about 300 million euros. “After Fenno-Skan 2 and other reinforcements of the Finnish grid, Finland and Sweden will be practically always of the same price area. The situation is good even now, with the market being the same for 99 per cent of the time. In fact, the worst bottlenecks in the Nordic countries exist on connections between Denmark, Southern Sweden and Southern Norway,” Jukka Ruusunen stated.
Further information:
Jukka Ruusunen, President & CEO, tel. +358 (0)30 395 5140
Fingrid in brief
• Established on 29 November 1996
• Started operations on 1 September 1997
• Owns the Finnish transmission grid and all significant cross-border connections
• A total of 13,950 kilometres of transmission lines and 106 substations
• Customers comprise electricity producers, major industrial enterprises, and regional and distribution network companies
• Number of transmission customers at the end of 2006: 100
• Revenue 351 million euros (2006)
• Balance sheet total 1,513.8 million euros (2006)
• Owns 20 per cent of electricity exchange Nord Pool Spot AS
• Number of personnel at the end of 2006: 233. Owners:
• 12% Finnish state
• 25% Fortum Power and Heat Oy
• 25% Pohjolan Voima Oy
• 38% institutional owners.