Hassan Sherwani ROLE OF SALES AND MARKETING IN ... - Oulu
Hassan Sherwani ROLE OF SALES AND MARKETING IN ... - Oulu
Hassan Sherwani ROLE OF SALES AND MARKETING IN ... - Oulu
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16<br />
and distribution are considered to be as natural monopolies and price is being regulated<br />
by government (Tuomi & Lehto, 2013).<br />
For this reason, distribution companies operate on specific geographic area. According<br />
to Electricity Market Act, all the distribution companies are to connect customers in the<br />
area of network in order to deliver and maintain a reasonable price with certain<br />
compensation (Korhonen and Syrjänen, 2002). In addition, it was essential to supervise<br />
the distribution business and pricing so that an enterprise may define the cost level by<br />
efficient operations and that is why task of supervision was allocated to Energy Market<br />
Authority (EMA). The advantage of forming this authority is that if EMA finds that<br />
some company is not following Electricity Market Act, it can oblige the company to<br />
follow the Act. The company in response has to follow it but, if company is not satisfied<br />
with the decision it can appeal to Supreme Administrative Court. Therefore, there is a<br />
balance on both sides for the benefit of end consumer to have reasonable electricity cost<br />
and to counter the effect of monopolist nature of electricity distribution system (EREC<br />
Report, 2009).<br />
There are an increasing number of distribution companies within Finland mainly due to<br />
investment subsidies scheme on bioenergy in 2006. This abundance of companies has<br />
somehow created competitive environment and it may enable a relative efficiency<br />
comparison for customers. The problem is that companies work in different conditions<br />
and geographic area so it is not possible to compare companies ignoring these factors<br />
(Korhonen and Syrjänen, 2002).<br />
As discussed earlier, energy efficiency, cost and carbon dioxide emission was not an<br />
issue by the start of this century. Electricity was generated according to the cost of its<br />
consumption (Valocchi et al., 2010). In order to avoid power outages, reserve capacity<br />
was built in every country and it was assumed that there would never be electricity<br />
shortage. But, recent incidents of electricity cut off and environmental issues have made<br />
old coal-fired power plants taken out of use and there is a need for renewable energy<br />
utilization (LUT Report, 2011). For this need, Finland ranks among the top nations to<br />
use renewable energy especially bioenergy however, other renewable energy resources<br />
are less developed at this stage. Almost 20% of total energy consumption is fulfilled