Kinect trader's $55 mln error behind Finland's 'Black Friday' power discount

By Anne Kauranen

HELSINKI, Feb 29 (Reuters) - An erroneous offer that caused havoc in the Finnish power market in November was down to human error by a substitute trader, Kinect Energy, the company making the bid, said as part of an investigation into the incident.

Day-ahead power prices in Finland fell to as low as -500 euros/MWh for delivery on Nov. 24, in what some described "Black Friday" for the power market as it coincided with the bargain shopping day.

The bid was placed by an unnamed substitute trader of Kinect Energy Sweden, a unit of New York-listed World Kinect Corporation WKC.N, Kinect said in a response to a Finnish Energy Authority investigation seen by Reuters.

The trader's error, the total cost of which the parent company estimated to be up to $55 million (50.8 million euros), overestimated by a thousand-fold the production of a Finnish wind power park still under commissioning, the company said.

Instead of buying power in the market, Kinect ended up offering 5,787 megawatt hours (MWh) of power every hour for Nov. 24, equalling roughly half of the country's power demand that day, it said.

This sent prices plunging to negative levels, with some consumers effectively being paid for their electricity use while some vowed on social media to turn on their electrically heated saunas, a popular Finnish pastime, for the discount hours.

National consumption hit an annual record and system operator Fingrid took additional measures to balance the market.

The Energy Authority continues to investigate the matter and agreed to Kinect's request to not share all the details it revealed in its statement publicly, Antti Paananen, its deputy director general, told Reuters.

It was too early to comment on the liabilities from the incident, if any at all, he added. Penalties could be substantial, however.

"For a company, the maximum penalty is 10% of the company's previous year's turnover," Paananen said, adding a single trader could also be found liable and sanctioned with a penalty of up to 100,000 euros ($108,290).

($1 = 0.9234 euros)

(Reporting by Anne Kauranen in Helsinki; Editing by Nora Buli in Oslo and Jan Harvey)

((anne.kauranen@thomsonreuters.com; +358401895560;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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