Govt to enact law to regulate retail electricity prices during crises

The government proposed a new act to create a framework for regulating retail electricity prices during an electricity price crisis, Ministry of Economic Affairs and Employment in a press release.

The amendments are expected to enter into force in spring 2027.

The regulation aims to lower electricity costs for households during an electricity price crisis.

The legislative proposal relates to a package of regulatory measures concerning the European Union’s electricity market model.

If the Council of the European Union declares an electricity price crisis in a Member State by means of an implementing decision, that Member State may, at its discretion, introduce measures to regulate electricity prices for households.

The Council, acting on a proposal from the Commission, may declare an electricity price crisis if prices in the wholesale and retail electricity markets rise substantially and are expected to remain high for an extended period.

The purpose of the government proposal is to establish a legal and technical framework in advance so that price regulation can be applied in the event of an electricity price crisis declared by the Council.

Under the proposal, the Government would decide on the introduction and duration of price regulation during an electricity price crisis, within the limits of the appropriation allocated by Parliament. The legislative proposal would enable rapid decision-making if necessary.

“In recent years, we have seen how global events have shaken Europe and driven up energy prices. The electricity market should primarily operate on market terms, but we must also be prepared for exceptional circumstances. The Government wants to ensure that effective measures can be introduced quickly to moderate electricity prices for households during a price crisis,” said Minister of Climate and the Environment Sari Multala.

Price regulation would only apply to the share of subsidised consumption specified in the Government decision (up to 80 per cent of the household’s median electricity consumption or, secondarily, its actual consumption). Market-based prices agreed in the electricity contract would always apply to the remaining share of consumption.

As a rule, the amount of subsidised consumption (kWh per month) would be calculated on the basis of the household’s median electricity consumption in the corresponding calendar month of the previous year and in the calendar months immediately preceding and following it.

The price paid by the end user to the electricity retailer for subsidised consumption, i.e. the regulated price, would be determined on the basis of the basic price (at least 18 cents/kWh, excluding tax) and the subsidy ceiling (cents/kWh) set in the Government decision.