Electricity futures prices have seen a dramatic increase of more than 50 percent in October, according to recent reports. The reasons for this hike have been attributed to the breakdown of the Balticconnector pipe and the re-escalation of tensions in the Middle East. However, despite this rise, electricity futures prices for January-March were almost 9.5 cents in mid-October, but trading at just under seven cents on November 16th for the same time period.
According to Energiateollisuus ry’s director responsible for the electricity market Pekka Salomaa, the fear effect that had previously driven up electricity futures prices has now dissipated. While he acknowledges that future prices are not reliable forecasts and only indicate the price at which protections are made, he believes that there will still be significant fluctuations in electricity prices in the future. Despite a lower price compared to last winter or a year ago, electricity remains higher than before the past few years.
Salomaa also notes that while the supply situation in Finland is now better than it was a year ago, there have been concerns about high temperatures and low water levels leading to potential power shortages. In fact, during the third week of November (November 11-17), the average price of electricity on the exchange was more than 10 cents on most days, with Thursday 16 November’s daily average price reaching an alarming 16.3 cents per kilowatt hour. Additionally, despite it being nighttime when electricity is typically cheaper, exchange electricity did not drop significantly.
Given these factors, Salomaa advises consumers against fixed electricity contracts without consumption effects as they may not be financially beneficial in the long run due to risk premiums charged by energy companies for their uncertainty over when customers consume their electricity.