The Estonian Competition Authority announced it had established that the network fees charged by distribution network operator Elektrilevi OÜ were not cost-based, and ordered the company on Dec. 22 to lower them.
The Competition Authority demanded that the charges be lowered by 6.7%. Since network charges make up 50-55% of the consumer price of electricity, the price of electricity for the average consumer should drop by 3.6% as a result, the Competition Authority said on Tuesday.
The main reason why the price of the network service needed to decline were lower network losses. By now, losses to the operator had dropped to 4.5%, partially as a result of the switch to remote-read electricity meters.
In addition, the value of the losses has become smaller as a result of the significant drop in the price of free market electricity in recent years. The third reason why the network charge has to be lowered are lower interest rates, which serve as basis for calculating the size of the profit earned by the company.
The Competition Authority said it expected Elektrilevi to come up with an application by Jan. 31, 2017 to endorse network charges that are cost based and in line with the aforementioned changes.
In its response, Elektrilevi announced that it would file an application by the established deadline to lower the price of its service.
“Elektrilevi has made significant progress in increasing efficiency in recent years – we have managed to keep the company's fixed costs unchanged for the past five years despite the environment around us becoming more expensive,” Elektrilevi spokesperson Maret Reinumägi said.
She added that investments in remote-readable power meters and smart technology had cut network losses by one-fifth.
“We would like to bring the achieved result and cost-effectiveness to the consumer through lowering the price of the network service,” Reinumägi said.
Editor: Editor: Dario Cavegn