UPDATE 1-Finland-Estonia power cable at least a week late

Thu Nov 30, 2006 3:13pm GMT

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HELSINKI Nov 30 (Reuters) - An undersea power cable between Estonia and Finland is expected to start commercial operations next Wednesday, a week later than had been scheduled, an official at power firm Pohjolan Voima (PVO) said on Thursday.

Due to delays in the testing process, the aim is now to launch commercial operations of the cable on Dec. 6, PVO's head of energy procurement, Risto Makinen, told Reuters.

The 350-megawatt, 105-km (65 miles) Estlink cable will be the first link between the Baltic States and the joint Nordic electricity market.

"The scheduled start of commercial operations was yesterday, and we did not quite make it. But we have to remember that we are striving for a world-record time here," Makinen said.

The cable project is being carried out by Nordic Energy Link, in which Finland's PVO and Helsingin Energia jointly own 10.1 percent stake, with Baltic power companies owning the rest.

The project is unusual as a cross-border link in being an entirely business-based enterprise. Finnish papermakers UPM-Kymmene (UPM1V.HE) and Stora Enso (STERV.HE) own a combined majority of PVO.

PVO has said the link is expected to have a limited impact on power prices in the two regions, at least in the short-term, but it should have a balancing effect. The direction of the power flow through the two-way cable will be determined by the price of electricity in the respective regions, PVO says.

The cable is in the short-term seen as politically significant for the Baltic States, formerly part of the Soviet Union, as it is the first direct link backing up Estonia, Latvia and Lithuania with Western European power supply.

In the first phase, the cable will be used mostly to sell Baltic power in Finland, but PVO has said this could change if Lithuania needs imports after a planned 2009 shutdown of its Ignalina nuclear plant.

The cable will act as a buffer until Finland's fifth nuclear reactor is ready in 2010 and the cable's capacity will then be sold to Finnish and Baltic grid operators.

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