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OSLO (Reuters) - Swedish utility Vattenfall posted a 21% drop in first-quarter operating profits as grid congestion negatively impacted power prices, the company said on Friday.
Underlying earnings before interest and tax (EBIT) fell to 9.5 billion Swedish crowns ($968.2 million) from 12.1 billion crowns in the first quarter of 2021.
"Vattenfall's results came in lower than last year as transmission bottlenecks continued to exert a major negative impact on achieved prices," the company said.
Net profit for the January-March period fell to 6.1 billion Swedish crowns from 10.4 billion crowns a year earlier.
Vattenfall achieved a price of 20 euros per megawatt hour (MWh) for its Nordic power production in the first quarter, down from 33 euros/MWh in the same period in 2021.
The benchmark Nordic system price for wholesale power averaged 110.06 euros/MWh in the first quarter of 2022, up from 42.13 euros/MWh a year prior, in line with higher European prices following the war in Ukraine.
"We are getting the higher price impact on our wind power in Europe and on our nuclear operations in the south of Sweden, but we get the impact of the lower prices for all our hydro production in the north part of Sweden," Vattenfall CEO Anna Borg told Reuters.
Prices in northern Sweden averaged 24.80 euros/MWh following mild, wet and windy weather in the first quarter, compared with 111.33 euros/MWh in the southernmost of Sweden's four price zones, according to data from power exchange Nord Pool.
"There used to be a good correlation between the prices in the different price areas and the sales price in the Nordics, which is what you use for hedging," Borg said, adding she would like Swedish grid operator Svenska Kraftnaet to accelerate its plans to build out the grid.
($1 = 9.8116 Swedish crowns)
(Reporting by Nora Buli, editing by Terje Solsvik)