Universal electricity service bill passes third Riigikogu reading

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Lighting (picture is illustrative).
Lighting (picture is illustrative). Source: Siim Lõvi /ERR

A bill reforming the electricity market, so far as domestic consumers are concerned, has passed at the Riigikogu. Customers may need to contact their electricity supplier to ensure the service is put in place for them, depending on what type of package they use and with what company.

The price electricity will be supplied at under the scheme will be known at the end of the month, though consumers on a fixed-term electricity contract who wish to avoid being hit with a fine for making that switch have a year by which to do so.

The bill was presented late last month by IT and Foreign Trade Minister Kristjan Järvan (Isamaa), and on Thursday passed its third reading (of three), meaning all that remains is for the head of state to give his assent.

The Riigikogu was still on its summer recess while the bill was processed, but given the urgency of the issue as fall arrives, extraordinary sessions were called for its debating and processing.

The actual price at which the universal service will provide electricity to householders is still to be set, and is the responsibility of the Competition Authority (Konkurentsiamet).

The service will be in place far beyond heating season, however.

The bill amends to existing pieces of legislation, the Electricity Market Act and the Competition Act, and obliges state electricity generator Eesti Energia to sell electricity to domestic consumers, and all electricity distributors, as a universal service, from October until the end of April 2026.

Other electricity sellers can also offer universal service to their customers and obtain the right to purchase the electricity capacity needed for this from Eesti Energia. 

If a customer wants to switch to a universal service, they may need to contact the supplier direct.

The bill requires that the Competition Authority determines the price of the service, taking into account the electricity production costs and a producer's reasonable profit expectations. 

Once the law enters into force, Eesti Energia subsidiary Enefit Power is to submit an application for approval of the price of electricity produced for universal service to the authority.

The Competition Authority must approve the electricity production price by the end of September, and electricity distributors have the right to add an additional cost to that figure when providing the service, in order to cover the costs related providing the service.

Competition Authority head Evelin Pärn-Lee, told ERR that, since the authority received initial data on September 7, with more arriving yesterday, Wednesday, the final universal service price has not been calculated yet.

She said: "Our team, which consists of quite a few people, is working to calculate this price every day and night. It will take time before we can formalize it as a decision and then state it publicly," adding that the authority had to be satisfied what it had calculated correctly, and noting it was fully aware of public expectations and the need to come up with a figure as soon as possible.

Both private consumers and apartment associations can voluntarily join the universal service, in the same way as they would choose an electricity package. 

Electricity suppliers may not fine a customer on a fixed-term electricity package if they switch to the universal service, until the end of September 2023.

Customers who use a general service will see their bills priced as of the universal service from October 1 this year, 2022.

The scheme is distinct from a government-enacted support measure for electricity, natural gas and district heating bills, which runs only during heating season (October 1 to March 30 inclusive).

Kristjan Järvan recently estimated the electricity price under the new system at no higher than €200 per MWh on average per month.

This piece was updated to include comments from Competition Authority director Evelin Pärn-Lee.


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Editor: Andrew Whyte

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