Competition Authority: Compensating network discounts viable and welcomed

The Competition Authority.
The Competition Authority. Source: Siim Lõvi /ERR

Competition Authority director Märt Ots said the state has no obstacles in its plan to compensate network providers for lower-income customer discounts and it is a simple and welcomed solution amid the inflation shock.

"We have advised that lowering network charges is possible and can be done in a manner that maintains approvals made by the Competition Authority when it comes to network charges," authority director Märt Ots said.

"Network providers earn revenue as agreed to, the only difference will be that the state will pay a part of the bill instead of the customer," he added.

Ots said the main question is technical, meaning how to reflect the state compensation on the bill, which reaches the consumer. "I would recommend writing it in under a 'compensation' line. It is easily doable technically, since all electricity consumption in Estonia is handled online, all of our network companies have a good network," he noted.

The largest network provider in Estonia is Elektrilevi, which holds close to 90 percent of the market. Smaller providers are Imatra and VKG Elekter, for example.

"As long as all groups are treated equally and no one is discriminated against, it is on the basis of equality and a support scheme, which is very welcomed in the light of this electricity price shock. The European Commission has also recommended it, it is a reasonable act," Ots said.

Minister of Economic Affairs and Communications Taavi Aas (Center) said compensating network providers for lower-income customer discounts put in place amid soaring energy prices will cost around €75 million for the half-year in which it is planned.

The government is planning to use the surplus income from CO2 emission credits trading and resources from the state reserves to compensate for the electricity price discounts.

Electricity and natural gas prices have reached record levels in recent weeks and look set to continue to rise. Overall CPI inflation is running at a high also, while fuel prices have also exceeded previous figures.

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Editor: Kristjan Kallaste

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