Consumer Advocates Call for Price Ceiling in Estonian Power Market

Photo: Postimees/Scanpix
7/5/2013 4:17 PM
Category: Economy

Following a major price spike, the Homeowners Association has called for protecting power consumers by lowering the ceiling of the price of electricity on the Estonian exchange. Protests emerged from Latvian competitor Elektrum and the Estonian transmission system operator Elering, but the Ministry of Economic Affairs told uudised.err.ee that it would consider the idea.

The cap would be tied to Finnish rates until the opening next year of Estlink 2 eases demand. The idea was first floated last month by River Tomera, the head of Elektrimüügi AS, a power provider.

In an open letter to the ministry and the Estonian Parliament, the Homeowners Association says: "The goal of implementing a price ceiling is not to soil the free market, but to offer Estonian consumers electricity prices equal to those of Finnish consumers and to protect them from the manipulation of companies in the partially regulated Latvian-Lithuanian power market."

The letter continues: "It seems that Estonia has beaten up for its briskness because the Latvian and Lithuanian markets are still partially regulated and their power deficit has to be compensated by the wallet of the Estonian consumer. The southern neighbors have not put all their production capacity on the market, despite the fact that the respective agreement was signed several years ago."

The head of Elektrum, Raivo Videvik, criticized the proposal, saying a lower ceiling would conflict with the principles of a free market.

"It has been known for years, including from the Scandinavian experience, that prices can move up and down, and it shouldn't come as a surprise," Videvik told uudised.err.ee. "The consumer has always had the chance to choose a fixed rate service package," he said.

Elering director Taavi Veskimägi agreed.

"The price ceiling cannot be lower than the floating costs of the electricity produced by the most expensive power plant on the market. Otherwise it wouldn't be a free market,” Veskimägi said.

The Baltic power market raised eyebrows in June, when the cost of power dramatically swelled up to an annual daily record of 103.85 euros per megawatt hour - much higher than in Scandinavia. Officials blamed it on a power deficit in Latvia and Lithuania, due to seasonal and maintenance factors. The current price ceiling is 2,000 euros.


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