The formulation of electricity prices to consumers in Estonia must be made more transparent, while the practice of automatically raising the price ceiling of the electricity exchange also needs to be reworked, Minister of Economic Affairs and Communications Riina Sikkut (SDE) says.
In a memo sent both to the European Commission, which set the maximum hourly rate at €4,000 per MWh but is to raise that ceiling to €5,000 and to the Nord Pool exchange, Sikkut noted that public trust and ability to deal with energy prices (which in recent months could not really be described as anything other than extortionate – ed.) must be improved.
"In order to achieve this, more information on offers made by suppliers on to the [Nord Pool] electricity exchange must be made public, including the origin, source and volume of said offers, should be made public. This will help to clarify whether the unexpectedly high price levels are caused by unfortunate coincidences, or whether the desire of some electricity producers to earn unreasonably high profits is behind it," Sikkut wrote.
"Alternatives must be found to ensure the interest of entrepreneurs in investing in increasing electricity production, but in such a way that it does not burden society at the same time," the minister continued, noting the "overwhelming" level of current electricity prices and their harm not only to private households, but also to business.
A mechanism whereby reaching the maximum price within the period of one hourly period, as happened between 5 p.m and 6 p.m. on August 17, triggers a higher subsequent ceiling as per European Commission rules, is problematic, she added, as is the slow notification system regarding market supervision.
Sikkut also in effect said. that she did not see the system itself as broken
"I understand the concern about the energy security in the coming winter, but if nation states start to limit the energy they will sell abroad, such steps should not be taken at the price of dismantling a common energy market (ie. the Nord Pool – ed.) which has been built up over the years," she said
Some other countries are planning to restrict trading in electricity and the availability of production capacities beyond domestic borders, Sikkut added, while the commission should deal with solving the situation across Europe, she said.
Power generating units not only in Estonia but also Latvia and Lithuania being offline simultaneously for maintenance, along with a claimed lack of renewables due to "no wind", prompted many to ask whether generators and suppliers had been acting as a cartel.
When Estonia first joined the Nord Pool market, in 2010, following an agreement with grid distributor Elering, this and the accompanying liberalization of the Estonian electricity market was touted as meaning lower prices would be on the way.
Editor: Andrew Whyte