Ministry: Competition Authority to keep eye on gas prices to households

Natural gas terminal.
Natural gas terminal. Source: Eesti Gaas

While planned state support for soaring natural gas prices to consumers will not see a price ceiling, sellers in Estonia will also be subject to Competition Authority (Konkurentsiamet) scrutiny, if suspicions are arisen that extortionate prices are being charged or that suppliers are gaming the support measures system.

Ministry of Economic affairs and Communications spokesperson Kadri Laube said Friday that: "If there should be any doubt that gas sellers are not asking for a fair price, the Competition Authority in Estonia deals with market supervision," said Laube.

Unlike with electricity prices, the draft legislation dealing with natural gas prices sets no ceiling on price, in case levels reach many times their already high position.

As reported by ERR News, if the legislative amendments pass, the state will reimburse householders for their natural gas consumption to 80 percent of the total beyond €80 per MWh as a monthly average price – in other words, in the event of a price of €100 per MWh on average per month, the state would provide €16, meaning the consumer would pay €84. A €300 per MWh level would mean the state would provide €176 in support and the consumer would pay €124 etc. (all figures exclusive of VAT).

However, a consumption limit is placed on consumption of natural gas, to the extent that it would be supported – set at 2.6 MWh, adjudged to be the average household consumption level, during heating season (October to March inclusive). Householders consuming more than 2.6 MWh of natural gas within a month would pay the full whack for all gas consumed beyond that threshold.

In early 2021, natural gas cost around a fifth of the current level, while at the end of August, monopoly supplier Eesti Gaas announced a hike in natural gas prices to households to €4.10 per cubic meter, up from the €2.65 per cubic meter earlier quoted, itself a rise in price.

Presumably the mixing of prices quoted, between MWh and cubic meter, is intentional and not issued with the average consumers interests, and their level of knowledge of the energy market, as uppermost in mind.

Eesti Gaas, whose parent company reported €18.9 million profits for 2021, said Thursday that it will not take advantage of state measures put in place to boost its profits further.

The support measures noted above are subject to approval by both executive and legislature, will only apply to domestic customers, as things stand, and will only run during heating season, and do not take into account VAT chargeable to consumers.

Last winter, by which time record natural gas prices (at the time) had already been attained, two rival support measures were rolled out by the two parties in office at the time, Reform and Center. The latter is now not in office.

Measures applied to natural gas included striking off the network connection fee, while energy support measures early on in the crisis required customers to apply for the support, with the administration being passed off to local government.

The new measures, if they come into effect, will be automatically applied to bills.

In terms of natural gas sourcing, Estonia is in the process of transitioning to Liquefied Natural Gas (LNG) for its annual consumption, estimated at 5TWh, in an effort to eradicate altogether purchases of gas provided by state-owned Russian firm Gazprom.


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Editor: Andrew Whyte

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