OSLO, Nov 28 (Reuters) - Denmark, Norway and Sweden are pressing ahead with plans for a new system to balance electricity supply and demand in the region, leaving out Finland after negotiations with their neighbor broke down.
Finland and the three Scandinavian countries trade power on the Nordic power market but, when there is an imbalance between booked supply and demand, the grids must currently agree unanimously how to smooth out the flows.
Earlier this year, Scandinavian grid operators proposed taking decisions by majority vote, a change they say will ensure the future reliability of supply as demand grows.
Finland opposed the idea, saying it is illegal under European Union rules. Five months of negotiations failed to find a solution.
Stripped of a veto, Finland is concerned it may have no say on who produces the balancing power, possibly favoring Scandinavian power plants, as Finnish ones tend to be costlier.
If the Scandinavian plan wins EU approval, it could make it more difficult for Finland to deal with short-term fluctuations in demand.
The Swedish grid operator announced the decision on Tuesday to press ahead without Finland.
"In the new Scandinavian balancing model... Svenska Kraftnat and (Norwegian grid operator) Statnett will maintain the current coordinating role for operation of the power system," Svenska Kraftnat said in a statement.
"We regret that Fingrid has decided not to join the new cooperation... the Scandinavian TSOs (transmission system operators) aim for collaboration, not isolation," it added.
Fingrid will submit its own proposal that suggests keeping the current Nordic system unchanged for some time, its senior vice president Asta Sihvonen-Punkka told Reuters on Tuesday.
Finland imports up to a fifth of its electricity consumption at times of peak winter demand, and being alone could create uncertainty for its security of power supply, crucial for its energy-hungry industrial sector.
To make matters worse, Finland will soon see many of its combined heat and power plants, that produce about one third of its electricity and shielded the country from blackouts during cold winters, reaching their end of life.
Having two competing proposals means Nordic regulators will not be able to decide on the matter and will have to escalate the decision to the European Union's Agency for the Cooperation of Energy Regulators (ACER), which would act as mediator.
If that fails, it could ask for the European Commission's help to break the deadlock.
The deadline for making a common single proposal between the Nordic grid operators is Jan. 14 and Fingrid hopes there might still be room for a deal before then.
"It is still possible to find a way in the meanwhile, our proposal is a starting point, we are ready to explore other options," said Sihvonen-Punkka.
If the Scandinavian bloc's proposal prevails, Fingrid will still seek some form of international cooperation to balance its power, she added. "We will not be isolated. There will be contracts and agreements." (Editing by Terje Solsvik and Adrian Croft)