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ms the proper incentives to make appropriate investment in generation? Are these investments done at the right time? The price mechanisms, especially for households, are they at a fair level and do we have confidence in them?

Electricity deregulation does not mean that the industry will be completely abandoned by the oversights, it means the increase of activity in the markets or more use of the markets in the electricity industry.

In the Finnish electricity market, there were state owned companies alongside private ownerships. Government regulation was relatively weak, which was one of the characteristics of the Finnish electricity market. In place of this were the yardstick regulation and the self enforced club regulation. Electricity generation had always been a multi buyer business in the industry with the present Fortum (formerly IVO), dominating the industry. Smaller utilities also had their mark before deregulation, of which they had a capacity of almost 4000MW. Electricity production was also done by the distribution companies then.[3]

The national grid company, Finnish Power Grid Plc controlled 99.5% of Finnish transmissions. It also organized its major interconnections. With a total of over 13.50 km of transmission lines, the national grid company has the responsibility of assuring that the Finnish transmission was technically functioning. Services are sold on equal terms to all the the parties involved in the electricity market. Part of it is state owned, and the other parts belonging to a private power company and a group of National insurance companies namely Henki Fennia, Sampo Group Ilmarinen, Pohjola, Varma Sampo and Tapiola Group. State of Finland (Pohjolan Voima) owns 25%, Fortum (25%), State of Finland (12%) and the national insurance companies (38%) of the Finnish grid. [4]

There was partial competition in the Finnish energy markets before the European Union directive came into force (before 1997). The “Electricity Market Act” of March 17th, 1995 was the legal statue that took effect from June 1995. Before the deregulation, consumers had the freedom choice especially for those who bought more than 500 kilowatts. There was also better utilization of decreasing cost effects by small scale users and the choice to choose among suppliers and get better services from competition.[5]

There is a general belief that deregulation bring about the markets giving better incentives than that of the regulators. This has been seen or experienced in few parts of the electricity industry. Organization of the electricity industry in the traditional manner was believed to incur more cost than it necessarily would have been, which resulted in the transferring of these high to consumers. In a market where there is the existence of competition, firms have find and react to the wants and problems of its customers, by doing this there is no assurance that they can make up for cost of making bad decision. Hopefully the market ready to welcome fresh ideas, if they are positive then both consumers and innovators stand to gain.

There is a huge difference between the early 19th century and what is happening presently in the Finnish economy and its electricity industry which has led this research to look into the growth of the Finnish electricity market from the point of industrialization to its deregulation. There will also be a study of how Finland has gain