Sweden, Finland step in to avert Lehman-like situation for power companies after Nord Stream 1 pipeline shutdown

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State-controlled Finnish power company Fortum, which last week had urged Nordic regulators to take immediate action to avert defaults even among smaller players, praised the proposals made by Helsinki and Stockholm

“We appreciate Finnish and Swedish governments taking swift action to stabilize the Nordic derivatives market and support Nordic energy companies in time of crisis,” the company tweeted.

The guarantees aim to prevent ballooning collateral requirements from toppling energy companies that trade electricity on the Nasdaq Commodities exchange, an event that could in turn spread to the financial industry, the governments said. The rapid rise in electricity prices has resulted in paper losses on electricity futures contracts of power companies, forcing them to find funds to post additional collateral with the exchanges.

Nasdaq clearing is a Swedish company supervised by Swedish authorities, which is the main reason Sweden was the first country to step in to tackle the potential crisis.

 

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