Alexela, Eesti Energia natural gas also breaks €4-per-cubic-meter mark

An Eesti Gaas fueling station.
An Eesti Gaas fueling station. Source: Priit Mürk/ERR

While the major natural gas supplier in Estonia, Eesti Gaas, saw a significant rise in price at the end of last month, this was also seen with natural gas as provided by state-owned electricity generator Eesti Energia, and by fuel retailer Alexela, who have also both hiked their prices above the €4-per-cubic-meter mark.

Given the suspicion applied to electricity suppliers, namely that they may have been acting in common purpose as a cartel, could be inferred to apply also to natural gas suppliers, little encouragement can be gained from the fact that Estonian current law renders it difficult for the Competition Authority (Konkurentsiamet) to intervene, also.

While all three companies are affected by the soaring price of gas on the world market – the price rise in August will start to make its effects known in October - Alexela offered some hope for a fall in price level in November.

The news comes at a time when support measures are being processed in time for heating season (October to March) for all three main types of energy used by domestic consumers – natural gas, electricity, and district heating.

In the case of natural gas, some obfuscation, at least for the average user, has also arisen in the form of standard measurements used - while electricity prices are generally quoted in MWh (or Kwh), for natural gas, both MWh and cubic meter measurements are used.

Külli Haab, head of the regulatory service at the Competition Authority called a situation whereby natural gas prices have doubled with all suppliers, in a short period of time and in the lead-in to heating season, "worrying".

Since Estonia is, as is the case virtually all continental Europe, a civil law jurisdiction, the relevant legislation has to be leaned upon in the current situation, but the corresponding act – the Natural Gas Act – in fact bars the Competition Authority from intervening, in areas of competition relating to the gas market.

"However, we are currently looking for ways to do so via the Competition Act," Haab went on.

Kalvi Nõu, portfolio manager at Alexela, said that the four-euro-per-cubic-meter level, by October, was inevitable, as of the end of August, given price levels, though added that current trends suggest the price will be lower in November.

August's high prices, while influenced by the conflict in Ukraine and the need to de-couple from Russian natural gas supplies, was somewhat of an "overreaction", Nõu said. "The condition of natural gas storage facilities in Europe as a whole is quite good, and the demand for natural gas has also shown signs of falling," he said.

At Eesti Energia, primarily an electricity generator, and state owned, spokesperson Armen Kasparov noted that natural gas cost €245 per MWh in August this year, a rise of €200, or 444 percent, on the preceding August, shortly before the present energy crisis began.

Eesti Energia is beholden to world natural gas prices, which have been breaking and re-breaking record this year, he noted, and adjusted according to the Netherlands-based Title Transfer Facility (TTF) market price index. 

When the TTF falls, customers on variable rate contracts will see their gas bill fall – just as those on variable rates with electricity will follow the Nord Pool exchange – though those customers who have fixed their contracts will see no effects of either rises or falls in price.

Eesti Gaas, the largest supplier of natural gas, has no option for a fixed package, per its website, ERR reports.

State support is likely to apply once the monthly average price of natural gas exceeds the €80-per-MWh level, to the tune of 80 percent of that excess, up to 2.6 MWh consumption in a month.

This will only apply to domestic consumers, during heating season; while businesses, the larger consumer of natural gas, are appealing for support, counter-arguments include claims that they pass on the rising prices, in an inflationary spiral, to their own final goods or service prices.


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Editor: Andrew Whyte

Source: Karin Koppel, ERR

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