Businesses will incur fines when switching to universal electricity service

Electricity pylon.
Electricity pylon. Source: Siim Lõvi /ERR

Businesses switching to a proposed universal electricity service will, unlike their domestic counterparts, incur a fine in doing so, IT and Foreign Trade Minister Kristjan Järvan (Isamaa) says, ahead of a bill to roll out the service to companies and which is being expedited.

Praising the speed at which the bill had been drafted, Järvan said Wednesday in respect of penalties for switching packages that: "If we were to exempt domestic consumers from the contractual penalty [for switching accounts], business consumers have a higher duty of care and responsibility for the concluded contracts. In other words, we will not exempt the business consumer from this contractual penalty," said Järvan.

The universal service itself will work in a similar way to that put in place for households, with some differences, principally with regard to price – in the case of the domestic scheme, price is calculated based on the output of whichever three power station blocks operated by the state-owned Eesti Energia are most efficient, at that time.

In the case of businesses, this will not be the case due to the likely greater capacity needed to generate electricity for company consumption.

As to the progress of the bill, Järvan said it had: "Already been sent out to the coalition partners at the beginning of the week. Hopefully we can get to its first reading at the start of next week, while, hopefully it will enter into force at the beginning of November."

Eesti Energia's profits are to be utilized in order to pay for the universal service, both for companies and households, though it is not yet clear how much it will cost the state-owned generator, partly due to fluctuations on the Nord Pool market, and partly because it depends on the scheme's uptake from consumers.

Furthermore, electricity suppliers do not know the size of customer companies, for instance whether they are micro-enterprises, small-to-medium enterprises etc.

Overall, the universal price would be the same regardless of at what stage a company signed up to the service, the minister added.

The Riigikogu's economic affairs committee is likely to initiate the bill Thursday morning, with a view to its being ready for the cabinet to look at at its regular mid-morning meeting.

.The coalition agreed last week that companies with up to 50 employees or a turnover of up to €10 million will be eligible for the universal electricity service.

As noted, businesses who choose universal service will not be able to get out of their fixed packages without incurring a contractual penalty.

The price of the domestic universal service has not been set yet either; the Competition Authority (Konkurentsiamet) is responsible for doing so.


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Editor: Andrew Whyte

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