HELSINKI, Sept 30 (Reuters) - Investors in Finland's
largest power distributor Caruna are taking the Nordic country
to arbitration, the Finnish foreign ministry said, due to the
Finnish Energy Authority's attempt to curb rising power
transmission prices for ordinary consumers.
Investors including U.S. investment firm KKR,
Swedish pension fund AMF and Canadian Ontario Teachers' Pension
Plan (OTTP) have filed two first-of-a-kind claims against
Finland at the World Bank's arbitration body International
Centre for Settlement of Investment Disputes (ICSID).
The investors in Caruna, which holds roughly 20% of
Finland's power networks, accuse Finland of breaching its
commitment to stable energy regulation under the 1998 Energy
Charter Treaty (ECT) that allows energy companies to sue
governments over policy changes that damage their investments.
In May, European Union countries including Finland agreed
that the EU will quit the ECT over climate concerns.
"We have received a mediation request filed via the ICSID in
Washington in August and are now looking into its contents,"
senior adviser Maria Pohjanpalo of the Finnish foreign
ministry's trade policy unit told Reuters.
She declined to say if Finland, too, planned to exit the ECT
separately from the EU.
Finland's Energy Authority changed from the beginning of
this year the way of calculating the maximum profit power
transmission grid owners as natural monopoly holders can
collect, in an attempt to curb rising transmission pricing which
has angered Finnish consumers for years.
The authority, which declined to comment on the dispute,
justified the decision in January by saying the previous
regulation bloated existing grids' valuation and led to
unfounded transmission pricing.
"The Finnish Energy Authority's abrupt and significant
changes to its long-standing energy regulation have undermined
stability and breached Finland's obligations under the Energy
Charter Treaty," OTPP wrote in an emailed statement to Reuters,
with KKR echoing the message in a similar statement.
A preliminary estimate puts the size of the investor claim
at around 2 billion euros ($2.24 billion), a source familiar
with the matter told Reuters.
The Energy Authority estimated that the regulatory changes
will lead to overall power transmission sales continuing to grow
in Finland but at a 4 to 10% lower pace by 2031 than under the
previous regulation.
"We seek remedy for the losses sustained by us, and by
extension our pension savers," AMF said in an email to Reuters.
If the ICSID takes on the requests, processing could take
several years.
($1 = 0.8939 euros)