Enefit Power submits new universal service price increase application

Enefit Power.
Enefit Power. Source: Ken Mürk/ERR

Enefit Power and the Competition Authority have not yet settled on a price for the universal electricity service. The power producer submitted a revised valuation request at the end of October. The competition authority estimates that it could take up to one month to determine the final production price.

The Competition Authority told ERR that Enefit Power submitted a revised application on October 28. This application is now under consideration.

When the competition authorities declared at the end of September that it had provisionally established the production price for the universal electricity service at 15.4 cents per kilowatt-hour (kWh), Enefit Power argued that this price did not cover their production expenses.

Andres Vainola, the head of the company, said that their estimate was at 18.18 cents. This was a temporary pricing and the Competition Authority and Enefit Power continued to negotiate.

Vainola was hesitant to say what the new valuation is, but it is definitely higher than the 15.4 cents: "We will put in every effort to guarantee that the competition authority receives thorough explanations and approves the pricing. It is not appropriate to provide price estimates at this time, as the universal service price includes variable factors, and hence may fluctuate over time," Vainola explained.

The Electricity Market Act stipulates that the competition authority has 30 days from receipt of the application to either approve it or deny it without explanation. In cases where requests for coordination are especially complex or labor-intensive, the competition authority may extend the due date by 60 days.

The production cost of a universal service includes operational expenses, capital expenditures, CO2 costs and a reasonable profit margin. The selling price includes also the seller's profit and tax.

Eesti Energia, for instance, offers a universal service at a price of 19.24 cents per kWh, which comprises the Competition Authority's producer price (15.4 cents per kWh), Eesti Energia's costs, risks, reasonable profit (0.63 cents per kWh) and VAT (20 percent or 3.21 cents per kWh). This is in addition to a monthly fee of €2.

The exchange rate for electricity has decreased since the implementation of universal service at the beginning of October. The average price per kWh (excluding VAT) in Nord Pool's Estonian price zone was 18.8 cents during the first week of October, 17.8 cents during the second week, 17.2 cents during the third week and 13.9 cents during the last week. The average price per kWh in October was 17.4 cents.

During the first week of November, the price was 16.1 cents. As a result, the price of universal service, as established by the competition authority, may be at least equivalent to and, most likely, larger than the price of electricity on the exchange.


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Editor: Kristina Kersa

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