Spas fighting to stay alive against power companies seeking to charge more

The swimming pool at Kalev Spa in Tallinn.
The swimming pool at Kalev Spa in Tallinn. Source: ERR

Continually increasing electricity prices are putting spas and water parks who have to maintain suitable temperatures and lighting at their facilities in a difficult position. Some electricity sellers are trying to terminate fixed-price contracts prematurely or else raise their prices.

Meeli Eelmaa, director of the water park at Kalev Spa, told ERR that on year, their energy costs have gone up some 70 percent. Another major cost driver in addition to electricity is heating the water.

Tallinna Küte provides the Tallinn water park with both heating and heat.

According to Kalev Spa's current electricity contract with Olerex, a fixed price accounted for 75 percent and market price the remaining 25 percent of the bill. The electricity seller, however, now wants to change the contract.

The spa is hoping they will manage to transition to a 100 percent fixed rate contract, although prices will certainly be higher than currently.

"It's important to us that we can 100 percent fix our rate, and for a period of years, so that we can anticipate our expenditures," Eelmaa explained.

According to her, the business' revenue and expenditures have reached their limit, although they haven't yet increased prices for their clients. What may come in January, however, the water park cannot say.

"Then we'll see the next discussions, and how to move forward, whether something needs to be restricted," Eelmaa said. "Right now we've done everything possible not to restrict anything on the client side; we've restricted our own needs. We can't build any additions, or increase employees' wages."

Should the business already have to pay market rates for electriciity, the water park director expects they'd have to start closing their doors.

Jaan Ratnik, director of Tervis ans Tervise Paradiis spas in Pärnu, said that compared with 2019, the last normal year of operations before the COVID-19 pandemic reached Estonia, electricity prices this August had quadrupled and a network fee had been introduced.

"Looking at next year, the outlook is much, much worse," he said.

Pärnu spa goes to court

The two spas Ratnik manages have purchased electricity at a fixed rate for years, and their current contract term was slated to expire at the end of this year.

Last fall, however, their power company unexpectedly informed them that it wanted to terminate or significantly change their contract. As Tervis and Tervise Paradiis could find no such clause in their contract which would permit such a unilateral termination, they would not agree to it.

"The point of a fixed rate is to fix the price for some period of time and mitigate future risks for that period," he said, adding that they wouldn't agree to it.

"But the [electricity] seller came back confidently in March [and said] either the contract will be terminated or they also offered a compromise that on top the current price, we'd also pay the price difference between Estonia and Finland extra each month," Ratnik recalled.

Unfortunately, this price difference was €100 in August, for example, meaning that a price of €100 per megawatt-hour was added on top of the fixed price, which was less than €40 per megawatt-hour.

The spa hotel did not agree to the change in contract and took the matter to court.

As the court has yet to issue a ruling, however, starting January 1, the two Pärnu spas will start buying electricity from the market, which Ratnik considers to be an especially ugly prospect.

"Right now we don't have much left to do anymore," he said. "There are no simple methods for saving energy; you can't turn down the lighting or temperature."

The spa director added that they've already long since employed all other energy saving measures and even installed solar panels on the roof.

"The next step will be to cut back on hours of operation," he acknowledged. "We don't have anything else left in our arsenal."

Nonetheless, Värska Spa director Vello Saar is a bit more optimistic than his professional peers.

The Setomaa spa's fixed-rate electricity contract expires at the end of the year, and they will have to make new decisions going forward. According to Saar, however, nothing can be forecast until both Estonia and the EU have made decisions regarding possible support measures for businesses.

"We're not waiting, hands outstretched for any sort of support, but in light of these policy decisions, electricity prices will likely have to start to change in some direction," he said. "Let's hope that's toward something reasonable and down, if they're talking about the implementation of all kinds of price caps."


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Editor: Aili Vahtla

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