Fortum updates on the turbulent situation in the Nordic power commodity market
FORTUM CORPORATION STOCK EXCHANGE RELEASE29 AUGUST 2022 AT 11:23 EEST
Release category: Other information disclosed according to the rules of the Exchange
In conjunction with the company’s half-year 2022 financial statements release last week, Fortum stated that the ongoing energy crisis in Europe due to Russia’s decision to use energy as a weapon, now also affects the Nordic power market. Dramatically increased spot and futures prices for power in the Nordics have led to unprecedentedly high collateral requirements for utility companies that hedge their power sales on the market.
At the end of last week, power prices continued to rise in the Nordics. At market close on Friday 26 August, Fortum’s standalone (excl. Uniper) collaterals tied up on Nasdaq amounted to approximately EUR 5 billion, having increased by around EUR 1 billion in a week. The company has sufficient liquid funds to meet the current collateral requirements. Fortum follows the situation closely and communicates if material changes occur.
To be prepared for continued exceptional price developments, Fortum is in talks with its majority owner, the Finnish State, on how to secure the company’s liquidity needs until the hedged power contracts go to delivery and collaterals are released. Fortum’s main exposure relates to Nordic system 2023 futures contracts. Fortum’s subsidiary Uniper is responsible for covering its own collateral requirements.
Fortum has also reached out to the Nordic market regulators and authorities, and urges them to take immediate action to stabilise the market because a default of even a smaller market participant would be difficult to manage under the current extreme price levels and could cause severe disturbances to the Nordic power system. In the longer term, regulatory changes are necessary to the implementation of the EU EMIR-regulation (The European Market Infrastructure Regulation), which set the legal framework for margining and collateral requirements. The current implementation does not distinguish between requirements for power generators and pure financial counterparties. Review of the EMIR is crucial to restore stability and predictability for both energy producers and users.
Fortum Corporation
Ingela Ulfves
Vice President, Investor Relations and Financial Communications
For further information:
Investors and analysts:
Ingela Ulfves, VP, IR and Financial Communications, tel. +358 40 5151 531
Rauno Tiihonen, IR Manager, tel. +358 10 453 6150
Carlo Beck, Manager, Investor Relations, tel. +49 172 751 2480
Media:
Fortum News Desk, tel. +358 40 198 2843
Distribution:
Nasdaq Helsinki
Main media
www.fortum.com
Fortum
Fortum and Uniper form a European energy group committed to enabling a successful transition to carbon neutrality for everyone. Our 50 gigawatts of power generating capacity, substantial gas import and storage operations, and our global energy trading business enable us to provide Europe and other regions with a reliable supply of low-carbon energy. We are already Europe’s third largest producer of CO2-free electricity, and our growth businesses focus on clean power, low-carbon energy, and the infrastructure for tomorrow’s hydrogen economy. In addition, we design solutions that help companies and cities reduce their environmental footprint. Our 20,000 professionals and operations in 40 countries give us the skills, resources, and reach to empower the energy evolution toward a cleaner world. fortum.com; uniper.energy
