Ex-Eesti Energia chief advises against long-term fixed price contracts

Sandor Liive.
Sandor Liive. Source: Kirke Ert/ERR

Former head of Eesti Energia Sandor Liive said, that he would advise consumers to carefully monitor electricity prices and avoid signing long-term contracts at a price, which is only slightly lower than the cost of the universal service.

"I wouldn't advise anyone to sign a 7-10 year contract at 13 cents (per kilowatt hour – ed.), which would be a little below the universal service price (currently 15 cents per kilowatt-hour - ed.), and comes with heavy penalties (for cancelling -ed.)," Liive said on morning radio show "Vikerhommik." According to Liive, the early termination of this kind of contract would have cost him €7,500.

"To think that we will have a price of 13 cents or more for electricity all the time over the next seven years - I'm not so sure it should be that high," added Liive.

In Liive's view, some of the offers on the market are an attempt to exploit people's fears, which is why laws and the Competition Authority are in place to protect the interests of ordinary people.

Liive also said, that the average cost of the electricity he consumed in January based on the exchange price, would have come to 11 cents per kilowatt hour, which is four cents cheaper than the universal service price.

However, while the exchange price is currently cheaper on average than the universal service, Liive pointed out, that this was not the case between October and December, when the price of the latter was significantly lower for consumers.

In his view, the government's decision to introduce the universal service was the right one, as prices had risen to ten times their normal level. "Clearly, some measures had to be taken. These gas and electricity prices were a huge blow to people's pockets, we were talking about a ten or fifteen fold increase," he said.

Liive explained, that electricity costs had been brought down as a result of the fall in gas prices, which had in turn been caused by the relatively warm Estonian winter. However, he said, this winter is not yet over, and there is still a possibility that prices could rise once again.

Liive admitted, that he personally has already made an application to return to the exchange package.


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Editor: Michael Cole

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