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Investors sue Finland for attempt to curb power transmission prices
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Investors sue Finland for attempt to curb power transmission prices
Oct 2, 2024 11:20 PM

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)

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