Riigikogu to discuss electricity market reform at extraordinary sitting

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Electricity transmission line.
Electricity transmission line. Source: Siim Lõvi /ERR

The government decided on Thursday to submit the draft of the Electricity Market Reform Act for discussion at an extraordinary sitting of the Riigikogu, which will take place on August 31. The act will oblige state-owned energy provider Eesti Energia to supply electricity at a controlled price as a universal service for household consumers over the next four years.

"Russia's war in Ukraine is largely behind the enormous rise in energy prices," said Prime Minister Kaja Kallas (Reform) in a press statement on Thursday. "With the electricity market reform, the government and I want to create the opportunities for household consumers and housing associations to buy electricity at a controlled price, from October 1 until the end of April 2026," said Kallas.

"Before the next heating period starts we want to reassure the people of Estonia that they don't need to worry about unpredictable increases in their electricity bills. With the reforms to the electricity market we, as a government, want to make it possible for household consumers and apartment associations to purchase electricity at a controlled price from October 1 this year through to the end of April 2026."

Minister of Entrepreneurship and Information Technology Kristjan Järvan (Isamaa) said, that the livelihoods of many families have been affected by the recent increases in energy prices and that the state must intervene.

"Exchange prices and fixed electricity packages have become more and more expensive and some consumers didn't manage to fix their price when it was more favorable to do so, which is why we're now offering a universal service to help them out and give them the chance to keep their electricity bills under control," said Jarvan. "Looking ahead, winter is likely to be hard, but we're not going to leave anyone to fend for themselves – we'll be helping them not just with a more affordable electricity package, but also with energy support payments," he added.

Under the draft law, which is an amendment to both the Electricity Market Act and the Competition Act, the basis for creating universal service will be outlined. Other electricity traders will also be able to offer universal service to their customers and will be entitled to buy the electricity they need from the Eesti Energia.

Universal service is essentially an electricity package to which all private consumers and housing associations can subscribe voluntarily. Under the bill, electricity providers will not be able to charge consumers a penalty if they switch from their existing package to universal service. Under the proposal, universal service would be valid for a period of four years, however, consumers will have the ability to opt out earlier if they wish.

The draft does not regulate the price of universal service, which can only be set by the Competition Authority after the law enters into force and Eesti Energia's subsidiary company Enefit Power submits a price proposal. The final price offered to consumers will cover production costs, a reasonable profit for the electricity producer and the sales costs for the electricity company. Prices should be known by the end of September at the latest.


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Editor: Michael Cole

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