Former watchdog: State could do more to contain electricity prices

Märt Ots.
Märt Ots. Source: Ken Mürk/ERR

The government should protect consumers from soaring energy prices, and allow more flexibility to buy from the market during periods when the universal service is more expensive, former Competition Board head Märt Ots said.

"I believe it has benefited the consumer," Ots, who advised Estonia's entrepreneurship minister when the instrument was being developed, said of the universal electricity service on the ERR "Otse uudistemajast" webcast. "It is a fact that electricity is a core service, commodity, and it is clear that the government needs to protect consumers when its price grows manyfold inside a single year," he added. "Imagine the price of liquid fuel, gasoline growing sevenfold!"

Ots said that he believes the universal service that offers consumers a fixed price has served its purpose, while consumers are also free to switch back to the market or an alternative fixed service package.

"Whom should the market serve? It needs to cater to consumers, not producers. And a market is supposed to ensure the best possible price. Such measures are highly appropriate in situations where it fails to do that," Ots said, adding that the cost price of generating electricity has remained virtually the same in a situation where prices have grown many times in Estonia.

Ots agreed with the current head of the Estonian Competition Board Evelin Pärn-Lee in that removing the CO2 price component would help bring down the price further.

"She is correct in that the CO2 component counts for almost half of the universal service price, while the price of CO2 has grown threefold to €80-90 per ton."

Ots also said that a price ceiling could be introduced for home consumers, which is allowed by a European Commission regulation.

Universal service could become more flexible

Märt Ots suggested that Minister of Entrepreneurship Kristjan Järvan is working on complementing the universal service.

"One alternative would be a package based on the universal service price that reverts to the average market price if the previous day's market price is less than the universal service price," Ots said. Another proposed solution would see consumers switched to the market price on an hourly basis automatically if it is below universal service price.

"The most important message is to offer as many alternatives as possible, without overlooking consumer protection," Ots remarked.

Asked whether TSO Elektrilevi should be separated from national energy company Eesti Energia, Ots suggested it is not the most burning issue today.

He said that while he cannot say whether the TSO would be better off in or outside Eesti Energia, the latter virtually gutted Elektrilevi during its reform, cutting the staff down from 600-700 to just 20-30, which he described as abnormal considering that Elektrilevi is in charge of making sure Estonia has power.

Ots said that if this situation can be reversed inside Eesti Energia, the TSO could remain part of the group, while the companies should be separated if the former disagrees.

On the subject of transmission fee hikes, Ots said that a few extra euros per megawatt-hour would go virtually unfelt in the conditions of current prices and would be a small price to pay for robust distribution services.

The former head of the competition watchdog said that consumer protection is currently very weak in Estonia, while competition supervision has improved and there are no major violations to be seen.

Märt Ots will take over as the head of the Estonian Safety Investigation Bureau in February.


Follow ERR News on Facebook and Twitter and never miss an update!

Editor: Mait Ots, Marcus Turovski

Hea lugeja, näeme et kasutate vanemat brauseri versiooni või vähelevinud brauserit.

Parema ja terviklikuma kasutajakogemuse tagamiseks soovitame alla laadida uusim versioon mõnest meie toetatud brauserist: