Gas sellers are reducing the price of natural gas next month, although it will still remain significantly higher than the price of December futures on the gas market.
Estonian energy company Eesti Gaas is currently offering natural gas to household customers with flexible plans at a price of €2.85 per cubic meter, but is reducing its price to €1.75 next month — a drop of nearly 40 percent.
"Natural gas storage sites in Europe are full, and the weather has been warmer and consumption lower than expected," Eesti Gaas board chairman Margus Kaasik explained. "We've got our new gas suppliers and supply routes in place and have shifted entirely to LNG from Norway and the U.S."
At the same time, December futures prices on the Dutch Title Transfer Facility (TTF) natural gas market have remained in the €100-120 range per megawatt-hour. The European Gas Spot Index (EGSI) likewise currently stands at just over €101 per megawatt-hour.
Other gas sellers in Estonia are reducing their natural gas prices as well. Alexela and 220energia are both charging €1.75 per cubic meter under their changing price plans in December, while the state-owned Eesti Energia will be charging €2.10 per cubic meter.
From October through the end of next March, the Estonian government will be compensating household consumers 80 percent of the monthly average price of gas exceeding €80 per megawatt-hour exclusive of VAT.
Eesti Energia official: We have to notify 30 days ahead
Armen Kasparov, director of Eesti Energia's Energy Products Value Department, explained that customers are sold natural gas at markedly higher prices per cubic meter than futures prices because the company is required to notify customers on variable rate plans of the applicable price 30 days prior to the delivery period.
"The price depends on current market prices at the time of calculation," Kasparov said. "At the same time that the price is announced, Eesti Energia buys the amount of gas needed for its clients from the market as well. Market prices for natural gas have fallen recently thanks to warmer temperatures, which is why the difference in price is temporarily significant as well."
According to the official, the same can happen in reverse as well — prices on the gas market can go up within a short time, but this wouldn't affect clients, as their applicable price had been fixed 30 days prior.
"Such situations have come up in the past too," he confirmed.
Editor: Aili Vahtla