The prices of electricity futures for the beginning of the year rose by more than 50 percent in October, according to recent reports. The reasons behind this increase have been attributed to several factors, including the breakage of the Balticconnector pipe and the re-inflamed situation in the Middle East. In mid-October, the electricity futures price for January-March was almost 9.5 cents, but on November 16th, trading had dropped to just under seven cents for the same time period.
According to Pekka Salomaa, director responsible for the electricity market at Energiateollisuus ry, future prices are not reliable forecasts as they only indicate what price protections will be made at a particular moment. However, he believes that significant fluctuations in electricity prices will continue in the future. While prices are currently lower than they were last winter or a year ago, they are still higher than before a few years ago. On Monday, updated hourly prices indicated that the taxable price of stock exchange electricity would be as high as 96 cents per kilowatt hour on Tuesday.
In recent weeks, stock electricity prices have been relatively high for this time of year and temperature. During the third week of November (November 11-17), the average price of electricity on the exchange was over 10 cents per kilowatt hour on most days, with a daily average price of no less than 16.3 cents on Thursday 16th November. The price of exchange electricity did not drop significantly even at night when it is typically cheaper.
Salomaa advises consumers that fixed electricity contracts without a consumption effect may not always be favorable in the long run due to risk premiums charged by energy companies for their uncertainty about when customers consume their electricity. These risk premiums must be factored into contract pricing decisions to ensure profitability for energy providers while still providing affordable options for consumers.
