Andres Sõnajalg: Return of the energy monopoly a disaster for everyone

Andres Sõnajalg.
Andres Sõnajalg. Source: ERR

If Estonia used to have an oil shale monopoly in charge of the local electricity price, it has simply been replaced by a renewable energy monopoly now, entrepreneur Andres Sõnajalg writes.

For years, people knew in their sleep that power comes from the Narva Power Plants courtesy of the national energy monopoly Eesti Energia. The emergence of renewable energy changed things, but only a little. Wind farms that cropped up here and there did little to thwart the dominance of electricity generated from oil shale.

The situation has changed by now as European climate policy has rendered oil shale electricity unable to compete and the Narva stations are standing idle. Estonia's energy independence is but a memory and the only way that lights will stay on is if our neighbors sell us their electricity and/or if we have enough local renewable production capacity.

The rather tragic twist in this story lies in the fact that in the shadow of the collapse of Estonia's oil shale empire, Eesti Energia has taken control of almost all of Estonia's renewable energy capacity – refuse burning, wind farms, solar farms… In other words – the monopoly is back.

It requires no lengthy explanation that even though the triumph of renewable energy is welcome from an environmental point of view, a renewable energy monopoly is no better than an oil shale one from an economic perspective and constitutes a loss for every Estonian.

That is why we can describe as superficial this week's news headlines that told the story of "the defeat of brothers Sõnajalg" in connection with the legal dispute over whether Eesti Energia's takeover of Nelja Energia was legal or not.

It is true that companies owned by us were among those who challenged Nelja Energia's takeover and are trying to reverse it or leave room for other market participants by keeping the monopoly from expanding further. However, should those efforts fail, every Estonian stands to lose.

The fact that only one mega company is allowed to generate industrial quantities of power in Estonia, cannot stand competition and is doing everything in its power to make sure no competitors crop up serves no consumer's wallet. A monopoly is always against competition and the little man.

News agency BNS was the most accurate in its title, stating rather laconically: "Administrative court: Enefit Green and Nelja Energia merger legal." This allows the reader to draw two important conclusions even without knowing the context. Firstly – it was the first instance ruling and secondly that the matter concerned the merger of the two companies (one of which is owned by Eesti Energia).

The remaining news portals that are locked in a battle over who can come up with the most colorful headlines wrote about the defeat of the Sõnajalg brothers in the most finite form imaginable, as if the ruling was handed down on judgment day. Nothing could be further from the truth.

First of all, we need to recall that the administrative court exists to protect private persons in resolving disputes with the state and that statistics shows that the first instance of administrative court usually sides with the state, acting as an annoying rubber stamp to verify a decision already made. In this case, it was the Competition Board's decision to greenlight the takeover of Nelja Energia.

Unfortunately, one must pass through the first instance even if one knows the ruling beforehand. We have even been told of a judge who in disputes between the state and a citizen has never ruled in favor of the latter.

And how could things have been different this time, considering the administrative court initially refused to even hear the matter. It was finally put on the agenda after a decision came down from circuit court.

A few months from now will mark two years since Eesti Energia's show of force was made official by the competition watchdog, while the challengers only now reached the first court instance that, of course, produced the anticipated result. Whom does this kind of stalling benefit? You get three guesses and are right every time.

What the Estonian consumer did not learn on Monday is that we will definitely appeal the ruling and give rule of law a chance to demonstrate its presence in the next court instances.

Talk by Eesti Energia and the Competition Board of how Eesti Energia cannot be a monopoly in Estonia is nonsense. Their main argument is that Estonia (Eesti Energia) is part of the Nordic energy market and busy competing with other producers!

As an example, they claim that Estonian and Finnish electricity prices are usually the same, a claim that was diligently picked up by court news on Monday. Again, nothing could be further from the truth.

We no longer hear of front line reporters who used to diligently analyze Nord Pool prices in Estonia and elsewhere. And why take Finland? Are Latvia and Lithuania not our neighbors? The answer is that prices in Estonia and Finland happened to be similar at the time of the takeover, while those in Latvia and Lithuania differed greatly.

What is the significance of the price at a random point in time in energy where investment decisions are made for decades in advance? The Estonian state does not have to be so shortsighted and gullible as to rubberstamp the creation of a new monopoly, effectively perpetuating the situation for decades based on a price comparison made during a handpicked moment.

The national energy monopoly has fooled both the Competition Board and the administrative court judge who at best is simply unversed in the ways of energy. Estonia has two energy links to Finland, but that is not a synchronized energy market that would operate as a common price area. A fact anyone can verify at any time by visiting the Nord Pool website.

In summary – If Estonia used to have an oil shale monopoly dictating the local electricity price, it has now simply been replaced by a renewable energy monopoly.

Let us recall other moves by Eesti Energia to make sure they would get the Tootsi wind farm and for it to receive renewable energy subsidies for over a decade to come and it becomes clear that unless someone does something, the ordinary consumer will spend years paying hefty sums to the reborn monopoly, while reading in the paper how it was a "defeat for the Sõnajalg bothers."


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Editor: Marcus Turovski

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