Kaisa Tahvanainen

Supplier relationships in regulated industries: longitudinal study on energy distribution

The article attempts to analyse the transformation of procurement management with Finnish electricity distribution network operators regarding the maintenance and construction of distribution networks. We aim to provide insights into their portfolio frameworks the dynamics of which are illustrated using a longitudinal case-based study. The case study is based on archival analysis and interviews. The article demonstrates how the competitive changes through regulation, supply market evolution and supply decisions are interlinked. The appropriateness of: 1) the strategic value of functions; 2) transaction risks; 3) the performance view of portfolio models is evaluated from a theoretical viewpoint. Our findings suggest that supply management changes along with relationship management on high strategic value, comparative performance and the transaction costs of externalised activities. Indeed, the study shows that procurement management becomes less sensitive to portfolio attributes if specialised service providers are able to build attractive offerings.

Assessment of regulatory risk in the finnish electricity distribution business

Regulation of electricity distribution business in Finland has redefined the profitability of the business by regulating the allowed rate of return. The principal regulation regime has remained the same, but the added incentive schemes have changed the level of risk that companies are exposed to. Typically the risk is realized in case of disturbances in electricity supply. The Finnish regulation has also been defined by court rulings that have had an effect on regulation parameters. In this paper the study on changing risk level for Finnish distribution companies is done using case examples as well as based on theoretical discussion. The accumulating experience from regulation will give some indication on the future development of risk exposure stemming from regulation.