Suède : September 13, 2010

Sweden currently has only one electricity pricing area which covers the entire country.  However, this is about to change as Sweden’s system operator, Svenska Kraftnät, is intent on dividing the country into four price/bidding areas from 1 November 2011 thus bowing to pressure from the European Commission. 

The EU has alleged that Sweden might be breaching certain antitrust rules by limiting export capacity in order to improve internal bottlenecks on its domestic power grid.  This matter was originally taken up by the EU back in 2006 when the Danish Energy Association accused Sweden of frequently blocking electricity exports to Denmark.

The decision to break up the country into four distinct bidding areas is highly controversial as a number of electricity suppliers fear that the move will distort competition negatively affecting consumer trust, thus leading to increased premiums for consumers, hampering development of renewable energy production, and increasing market volatility especially making wind power investment more difficult.  However, Svenska Kraftnät favors the change arguing that it would lead to correct electricity pricing, contribute to the integration of the Nordic electricity market, and create a better balance between supply and demand in parts of the country. While no one knows for sure the affects of this change, most experts agrees that it will most likely result in higher prices for the southern part of the country.

As a result of the proposed change, many brokers have become more cautious when it comes to the variety of hedging programs they offer the consuming public.  For companies located in southern Sweden, pricing beyond November 2011 now takes into account the full impact of the change.