A bakery for example will produce bread at a loss if they have a contract and the value of the contract is higher than a temporary increase in electricity. If you allow market prices to rise unlimited, the price will increase to the point where breaking a contract is cheaper than not producing. Some companies in the last crisis did invoke force majeure when prices got too high, which as a society is a very poor way to incentivize behavior.
The result is that voters will elect a government that solves the problem, rather than change behavior. We have also seen that in eu for the last few elections. The Swedish elections in particular has been dominated around the topic of energy.
Hydro energy would help to keep the market stable in Sweden if the value of the natural resource would also stay in Sweden. Right now that resource is being primarily sold off by private actors through exports to countries like Germany and Denmark, thus doing little to keep the market stable for Swedish consumers. The government could nationalize that resource, deeming it as a natural resource owned by the Swedish citizens and thus any revenue gained from selling electricity would automatically go to Swedish citizens to pay their energy bills.