HELSINKI, Nov. 8 (Xinhua) -- Finnish electricity company Lumo Energia filed for bankruptcy on Monday, citing the "difficult electricity market situation." Around 8,000 customers will be affected by the closure.
"Lumo Energia, unfortunately, does not have the conditions to continue its operations, and we are unable to continue supplying electricity to our customers," it said.
News of power company bankruptcies in Finland is becoming a regular occurrence, with electricity prices soaring due to the energy crisis.
Finnish national broadcaster Yle has reported that Lumo Energia, founded in 2015, submitted its application for bankruptcy to the Helsinki District Court on Monday.
At the beginning of September, the power company stopped electricity deliveries and prematurely terminated all fixed-term electricity contracts.
Customers had to find new suppliers, with contracts sometimes costing many times more than those with Lumo Energia. The Finnish Competition and Consumer Agency (KKV) said Lumo Energia was in breach of contract with its clients, and negotiations were launched to provide them with compensation. However, KKV did not accept the compensation package of 3.7 million euros (3.7 million U.S. dollars) proposed by Lumo Energia, while the power company indicated it could not raise this amount any higher.
Finally, Lumo Energia broke off negotiations and announced its intention to file for bankruptcy at the end of October.
Two other Finnish power companies, Finergy Voima and Energia 247, also failed at the end of 2021. The closures came as freezing temperatures, and a lack of hydropower and wind power raised the stock market price of electricity to record levels.
In December, Energia 247 stopped supplying electricity to all 16,000 of its customers with only two days' notice.
Meanwhile, Finnish experts have speculated that yet more power companies are set to fall off the market.
Finergy Voima, Energia247, and Lumo Energia were all sales companies, which did not produce electricity but bought it from the wholesale market and sold it on to consumers.
Electricity purchased from the wholesale market must be paid for immediately, while customers are billed according to consumption. This means that companies are required to have enough liquidity while waiting for payments from clients.
Due to large price fluctuations, the situation on the electricity market is now very uncertain, director of the Finnish Energy Authority Antti Paananen told Yle. Much depends on how successful companies are in withstanding these price swings.
Electricity prices have been climbing in Finland since last autumn and soared even further after Russia cut power to Finland.
"Based on the derivative prices, it seems that the electricity prices will move even closer to 30 cents per kilowatt hour, i.e., very high prices, during the end of the year and the beginning of next year," Paananen predicted. (1 euro = 1 U.S. dollar) ■