Once the agreement enters into force, Adven's customers will be supplied by Utilitas with the prices harmonized for both companies' customers in Tallinn. The merger needs to be approved by the Competition Authority.

The aim of merging the district heating network zones is achieving a sustainable solution in a situation where record natural gas prices have created massive differences in price in different network zones, the companies said.

The competition watchdog issued Adven a precept warning in late January where it requires the heating provider to find a way to lower prices in three of its district heating zones that are heated using natural gas (City Center-Pirita, Nõmme and North Tallinn).

The companies have sent the watchdog preliminary agreement documents. Should the authority approve the agreement, the networks are to be merged in the fall of 2022.

It is too soon to forecast the price of district heating after the merger is completed as it depends mainly on fuel prices, the companies suggested.

"There are no simple and rapid local solutions in densely populated Tallinn that would be convenient for residents, while customers understandably want prices to be brought down quickly. Considering all aspects, merging the district heating zones seemed like the fastest solution, said Juhan Aguraiuja, head of Adven Group's Baltic businesses, adding that the merger heralds a drop in price for Adven's Tallinn customers.

"Joining Adven's smaller district heating grids and local natural gas-based solutions to Utilitas' district heating network will make it possible to apply a common approach in most of Tallinn in the future," Robert Kitt, head of Utilitas' district heating companies, suggested.

Utilitas and Adven operate four heating zones in Tallinn, catering to most of the capital's district heating customers. Utilitas mainly uses biomass and residual heat, using gas to cover peak periods. Adven only uses natural gas today.

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