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Finland caps electricity distribution tariffs

Finland’s utilities return on equity rate will be cut to 4% next year from 5.73% in 2020 (Morris Mac Matzen / Reuters).

The Finnish government has just announced its approval of a law aimed “at curbing the rise in electricity prices and reducing the profits of distribution companies by amending the electricity market law and the law on supervision of the electricity and natural gas market.” “

The new measures will take effect on August 1, 2021, according to a statement released last week.

“Legislative changes will affect sales prices in a short time. This ensures a reliable electrical system. Reasonable electricity prices and good network reliability should go together. It is important for citizens that changes in electricity tariffs begin to be felt as early as next year, ”said Finnish Minister of Economy Mika Lintilä in a statement.

The new legislation will affect the maximum allowable profit of distribution companies. It will also limit the scope of price increases. “A reasonable rate of return on equity for distribution companies will be reduced to 4% next year from 5.73% in 2020,” the same source said.

Ministry [des affaires économiques] By 2022, it is estimated that the profits of authorized distribution companies will fall to a record low of about 40% compared to 2020 levels. Starting next year, companies will be able to charge customers about 350 million euros less than in the previous year. This will be reflected in customer prices.Mika Lintilä, Minister of Economy of Finland

In addition, the annual ceiling for tariff increases is almost halved. It goes from 15 to 8%. “This limits one-off price increases for customers,” reminds the Finnish government.

According to the Finnish government

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