The Finnish homeowners’ association questions electricity transmission fees


Reduction of electricity transmission fees

The Finnish Homeowners Alliance, Omakotiliitto, launched a citizens’ initiative demanding amendments to electricity market legislation to make electricity transmission tariffs more equitable.

Over the past decade, transmission tariffs in Finland have doubled, weakening Finnish citizens purchase as much as half a billion euros per year. The current electricity market law has encouraged the distribution network companies to make oversized investments without any monitoring of the efficiency of these investments. The distribution network companies are thereby able to generate unreasonable profits thanks to the current calculation model.

Since 2012, Finnish citizens can submit their initiatives to Parliament for the enactment or drafting of new legislation, with justifications and to a particular matter. It can also concern the amendment or repeal of existing legislation and the signatures must be collected within a period of six months. Then the Parliament must consider the initiative, although they can approve it or not, with or without amendments.

This citizens’ initiative aims to demand the government to commit in its programme to containing transmission tariffs. Amendments to the legislation are needed to moderate the profits of the distribution network companies and requires that those companies make cost-effective network investments.

“In our civic initiative, we demand that Finland adopt the calculation model used broadly elsewhere in the world, so that the companies’ profits are calculated according to real numbers,” says Janne Tähtikunnas, Executive Director of the Omakotiliitto.

“There are no obstacles to this at the EU level. As pointed out in a report from Dr Kaisa Huhta, from the University of Eastern Finland, it is possible for EU Member States in their legislation to provide in their legislation some additional conditions or goals, generally without precluding the exercising of powers of the regulatory authority,” says Tähtikunnas. 

The distribution network companies have a monopoly position, and operational risks are initially low. Low risks normally mean low rates of return. According to the current computational model, a reasonable profit would be approximately 7%, whereas the actual return of the distribution network companies’ equity committed to the network service is 32%.

“Why does a distribution network company, occupying a monopoly position, make up to three times the profit of listed Finnish companies? Citizens have been demanding changes for a long time now, and we are ready here at the Omakotiliitto to work to move this forward until the political decision-makers hear our voices”, Tähtikunnas stresses.

In a survey on electricity transmission conducted by Omakotiliitto in spring 2020, 95% of those answering demanded more robust action to halt the growth of electricity transmission fees and are ready to sign the citizens’ initiative. The Omakotiliitto has 72,000 members.

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