Record natural gas prices affecting both companies and regular consumers

A radiator.
A radiator. Source: ERR

The price of natural gas hit a new record on Wednesday, reaching a price of €160 per MWh. The price of natural gas has grown sixfold in the past year, affecting both companies and household consumers.

Tatjana Gassova's family bought a place to live in a terraced house in Laiaküla in the vicinity of Tallinn a few years ago primarily because it was cheaper to maintain with gas heating.

Gassova has now been notified by her current service provider that their gas bill will be four times as large in November as it has been previously. "I have been pleased until now, because our bill was only €50 for February. But now with this price increase, we will certainly have to switch providers, because the bill will increase and come to €200," she told ERR.

"Providers have all certainly already raised their prices, but since I have done a lot of research, I have already found a cheaper offer and we are now considering how simple it would be to switch providers," Gassova added.

Market leader Eesti Gaas provides gas to a total of 42,000 private consumers and apartment associations. Nearly half of Estonian households are heated with district heating, the prices of which are regulated by the Competition Authority.

Data from the Estonian Power and Heat Association shows that 60 percent of thermal energy is produced from wood chips, but a fifth of district heating stations also burn natural gas. Most heating stations dependent on gas are in Pärnu and Põlva counties, according to the association's chief Siim Umbleja.

Tarmo Kirotar, head of Põlva Soojus, a regional heating company, said producing 30,000 MWh of heat consists of a third of natural gas and two thirds of wood chips.

"In the summer, the Competition Authority coordinated a price formula with Põlva Soojus, where each cost component is reflected and we are glad to admit that natural gas at its price is valid until the end of next year. This will not change our prices until the end of next year," Kirotar said.

Eesti Gaas board member Margus Kaasik said the price of natural gas stayed at €20 per MWh for a long time and began increasing in spring. It was around €50-60 up until a month ago.

Wednesday's record price meant the price of natural gas has gotten eight times more expensive. "I really hope what we saw [on Wednesday] is the peak of the market and we see it normalizing fast. Looking at market estimates on future transactions, we will go back to €40 in April or May and hopefully even lower from there. Prices should go down after the first quarter," Kaasik said.

He added that the winter will be a tough one for Estonian consumers and some households will see their heating bills get four or five times more expensive.

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Editor: Kristjan Kallaste

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