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Requirements of Electricity Market Act strengthen Elenia’s strategy

One of the key provisions of the Electricity Market Act is that, in the future, distribution networks must be designed, built and maintained in a manner that prevents power outages caused by storms or snow from lasting for more than six hours in zoned areas and 36 hours in other areas. In the archipelago, the security of supply can be adjusted to local conditions. Electricity distribution companies must meet these requirements gradually by the end of 2028.

Elenia has developed its security of supply and supporting technology for many years. Elenia is prepared for the requirements of the Electricity Market Act and sees them as a positive development for the industry, customers and society at large.

Distribution network development plan

Elenia Oy submitted its distribution network development plan to the Energy Authority pursuant to the Electricity Market Act in June 2014. The development plan specifies measures that will produce systematic and long-term improvements to Elenia’s security of supply, the implementation of which will ensure that Elenia’s distribution network will fulfill the requirements of the Electricity Market Act regarding quality and security of supply. Going forward, the development plan will be updated and submitted to the Energy Authority every two years.

Preparedness plan for power outages

Pursuant to the Electricity Market Act, an electricity distribution company must engage in appropriate planning to prepare for ordinary disturbances as well as for extraordinary events as referred to in the Emergency Powers Act. Network operators must prepare a preparedness plan and participate in preparedness planning aimed at ensuring the security of supply to the necessary extent. The Electricity Market Act requires that the preparedness plan is updated at least every two years and whenever there are significant changes in the circumstances. The preparedness plan and any changes thereto must be submitted to the National Emergency Supply Agency.

Elenia has had a preparedness plan in place since 2001 and the plan has been updated regularly. The preparedness plan provides the foundation for the operations of Elenia and its partners during major disruptions and other situations that pose a threat to electricity distribution. The company submitted its preparedness plan to the National Emergency Supply Agency in June 2014 and actively participated in developing Finland’s security of supply in several national bodies. Elenia also continued to cooperate with the authorities on preparedness and measures related to major disruptions.

Security of supply incentive in the regulatory principles

The Energy Authority has taken the security of supply and preparedness requirements of the Electricity Market Act into account in the regulatory principles concerning electricity distribution business. The regulatory principles include a security of supply incentive, which will be applied during the second half of the third regulatory period (2014–2015).

Premature replacement investments and new maintenance and preparedness measures carried out to improve security of supply are taken into account in the security of supply incentive as follows:

  • the regulatory asset value (RAV) of prematurely demolished (i.e. if the asset is replaced prior to the end of its regulatory asset life) 20kV and 0.4kV overhead lines, pole mounted transformer stations (excluding transformers) and disconnectors is recovered through a reduction of adjusted actual profit in the year in which the asset is demolished; and
  • additional costs relating to tree clearance outside line corridors and the development and operational expenses of outage communication systems (e.g. SMS messages) are considered to be pass through costs in the calculation of adjusted actual profit for the respective year.

Preparation of regulatory principles for the fourth and fifth regulatory periods

The Energy Authority continued the preparation of the regulation principles to be applied in the fourth regulatory period (2016–2019) and the fifth regulatory period (2020–2023). Elenia has actively monitored and commented the preparation of the regulatory principles, among others, in the industry working groups.