Russia to halt electricity exports to Finland over failure to pay & without giving reason - UPDATE

Anna Pruchnicka
Reuters
Fri, 13 May 2022 07:37 UTC

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Russian state-owned utility Inter RAO (IRAO.MM) will stop exporting electricity to Finland from Saturday because it has not been paid, the company's Finnish subsidiary said on Friday.

Inter RAO has not received payments for electricity sold via pan-European power exchange Nord Pool since May 6, the subsidiary said, without giving any reason.

"This situation is exceptional and happened for the first time in over twenty years of our trading history," RAO Nordic, said in a statement.

Power imports to Finland will be halted from 1 a.m. local time on Saturday (2200 GMT on Friday) "for the time being," Finnish grid operator Fingrid said in a separate statement, citing RAO Nordic.

Fingrid added there was no threat to Finnish supplies and that power from Russia accounted for some 10% of Finland's total consumption.

"Missing imports can be replaced in the electricity market by importing more electricity from Sweden and also by domestic production," it said.

Comment: Perhaps, but is it more expensive? With energy prices are soaring across much of the planet and one would think that citizens should be informed as to why they're paying more for the same product.

Fingrid three weeks ago prepared for the prospect of Russia cutting electricity flows to Finland by restricting the transmission capacity by a third.

Fingrid said RAO Nordic had told it that it would halt imports because it had problems receiving payments from Nord Pool.

"Nord Pool is the one paying for them. Fingrid is not a party in this electricity trade. We provide the transfer connection from Russia to Finland," Reima Paivinen, Fingrid's senior-vice president for operations, told Reuters.

The halted payments were also reported through urgent market messages (UMMs) used by market participants to share information.

A spokesperson for Nord Pool said the company did not comment on information reported in UMMs.

Asked whether payments had been required to be made in roubles, the spokesperson told Reuters: "We have never had settlements in roubles, only in euros, Norwegian crowns, Swedish crowns and Danish crowns, in line with our standard procedures."

Speaking generally, the spokesperson said Nord Pool was "a safe counter party for all its customers" and that it always settled the trades.

Comment: So, rather than openly admit that it was going to refuse to pay for the electricity it uses in rubles, as per the new contract, and which it knew about weeks in advance, Finland simply stopped payments without notifying Russia:

• 'Insufficient grounds': Switzerland backtracks and will release $6.3 billion in frozen Russian assets
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UPDATE 14/05/2022: Russia doesn't bluff:

Electricity supplies from Russia to Finland were halted on Saturday, RAO Nordic said in a statement, explaining that it had received no payment for power provided to the country in May.

"Unfortunately, we are forced to note that for the volumes which have been sold on the Nord Pool exchange since May 6, funds have not yet been credited to our bank account," said the company, which is a subsidiary of Russian state energy corporate Inter RAO.

The firm expressed hope that the situation would be resolved and trade could resume. RAO Nordic had reportedly been trading on the Nord Pool exchange for more than two decades.

"We hope that the situation will improve soon and the electricity trade with Russia can resume," the corporation said.

On Friday, Finland's transmission system operator Fingrid said there was no threat to electricity supply in the country as a result of the move. The grid company added that electricity imported from Russia accounted for around 10% of the nation's total consumption.

"The lack of electricity imports from Russia will be compensated for by importing more electricity from Sweden and by generating more electricity in Finland," said Reima Paivinen, Fingrid's senior vice president of power system operations.

In April, it announced plans to reduce electricity imports from Russia in cross-border connections, saying it would import more from Sweden instead. At the same time, analysts say that cutting electricity purchases from Russia would increase Finnish power prices by 30%.

The country's media also reported that Russia could stop providing Finland with natural gas on Friday over the nation's bid to join NATO. Russia has not confirmed the reports.

That 10% shortfall from Russia seems to be having an out-sized effect on Finnish power rates. Some good old-fashioned price gouging going on? Yay capitalism!