Clients not yet dropping universal service as electricity market prices dip

Electricity transmission lines.
Electricity transmission lines. Source: Siim Lõvi /ERR

According to experts monitoring the electricity market, several factors are contributing to the fall in the price of electricity, including relatively mild weather as well as a drop in the market price of natural gas. According to electricity sellers, clients in Estonia nonetheless have yet to start unsubscribing from the universal service.

The average market price of electricity in Estonia to date in January has been just under €95 per megawatt-hour. Just last month, the average had stood at just over €263 per megawatt-hour, and nearly €219 per megawatt-hour in November.

The price of the universal service being offered by Estonian state-owned energy group Eesti Energia, the country's largest electricity seller, is 19.24 cents per kilowatt-hour.

The average market price thus far this month, however, has been nearly ten cents cheaper than that at 9.5 cents per kilowatt-hour. On weekdays last week, the price remained below 10 cents per kilowatt-hour primarily late at night, overnight and in the early morning hours.

According to Eesti Energia board member Agnes Roos, they're not currently seeing clients drop the universal service in favor of market price-based plans; she noted that only a handful of customers have made such a move.

Roos doesn't think enough time has passed either. "Clients are certainly taking into consideration as well that electricity prices are traditionally down starting around Christmas due to decreased electricity consumption: industrial enterprises are on Christmas vacation and household consumers are the primary consumers," she said.

"Another key factor that has now brought the price of electricity down is an unusually warm winter," she continued. "We've had wind, there's been an increase in hydropower, and on top of that [the new Olkiluoto 3 (OL3) reactor at Olkiluoto Nuclear Power Plant (NPP)] has been working very well during test runs and produced quite a lot of electricity for the market."

Alexela likewise hasn't noticed clients dropping the universal service in favor of other plans in light of the recent dip in market prices.

Customers can opt out of the universal electricity service free of charge at any time. According to Roos, Eesti Energia likewise doesn't charge a termination fee for its market price-based plan; it does for its long-term fixed-price contracts, however.

"[The size of the termination fee] depends on consumption; it's calculated separately for each client," the board member explained. "Also taken into account is time remaining until the end of the actual contract period. In other words, how much electricity there is that on one hand the client had as though purchased, but on the other didn't consume."

When the universal service was implemented last fall, nearly 130,000 Eesti Energia household customers automatically received offers to join it. Of these, nearly 12 percent opted to remain on their current plan instead.

The remaining 2/3 of customers had already fixed their electricity prices at cheaper rates than that offered by the universal service.

As of the end of December, Eesti Energia had 149,000 universal service customers and 20,000 customers on market price-based plans.


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Editor: Aili Vahtla

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