Svenska Kraftnät offers the Commission commitments for case 39351

In June, the EU Commission made a preliminary assessment expressing the concern that Svenska Kraftnät’s management of internal congestion in the Swedish transmission system may have infringed EU competition law. The background was a complaint in 2006 from the Danish electricity supply association Dansk Energi.

– Svenska Kraftnät does not agree with the Commission’s preliminary assessment. We have nevertheless offered commitments pursuant to Article 9 of Regulation (EC) 1/2003 to meet the Commission’s concerns, says Svenska Kraftnät’s CEO and President Mikael Odenberg. Today the Commission has published Svenska Kraftnät’s commitments along with its intention, subject to a one month market testing period, to adopt a decision declaring the commitments to be binding. The key points of Svenska Kraftnät’s commitments are that we shall, by the latest July 1st 2011, subdivide the Swedish electricity market into two or more bidding zones for the Nordic spot market. Furthermore Svenska Kraftnät shall strengthen the so-called West Coast Corridor. After this no reductions of trading capacity with neighbouring countries shall be made in order to manage internal congestion (cross-section 1, 2 and 4) in the Swedish network. – The date, July 1st 2011, is offered because it is the earliest time practically possible. At the same time this is not uncontroversial, because on the power exchange financial hedging contracts (CfD) have been traded, which stretch forward in time until 2012. The Commission will however be able to pay attention to such and other objections during the one month’s consultation period preceding their decisi0n regarding making our commitments binding, says Mikael Odenberg. The subdivision of Sweden into several bidding zones will mean that different price areas can occur, i.e. the price of electricity will not always be the same throughout the country. But this means that the market will receive better price signals and that the need for network reinforcements will be more transparent. – The Nordic electricity market is already subdivided into different bidding zones which can result in different electricity prices. The problem is that except for Norway and Denmark the bidding-area limits follow the national borders instead of following the bottlenecks actually limiting the possibilities to transmit electricity through the network, concludes Mikael Odenberg.