Enefit Power puts Q4 2022 losses of €128 million down to universal service
Eesti Energia subsidiary Enefit Power experienced 2022 fourth quarter (Q4 2022) losses of €128 million, directly as a result of a universal service price put in place at a time of soaring electricity prices, the company says.
Outgoing Eesti Energia chief Hando Sutter said that the universal service had not been a great success, with a high administrative burden and costs and more and more consumers opting out in order to get their electricity at stock exchange price meaning that it has caused more harm than help.
The service does not allow Enefit Power to cover its own prodiction costs, hence the losses, Sutter added.
He said: "The universal service has not been very effective. /.../ It led to a lot of confusion among customers, which continues to the present. Now the (price) cycle has reversed, and customers understand that something must be done, that they must leave the universal service, and our advisers will therefore have a lot of work to do."
The service was put in place at the start of autumn, sponsored by IT and foreign trade minister Kristjan Järvan (Isamaa), initially for domestic consumers and later for business.
At the time, electricity prices on the NordPool exchange were far higher than they are now and, while the universal price was thus lower than the exchange price in the autumn, now this is no longer the case.
Unlike state support measures put in for all three main energy consumption types – natural gas, district heating and, again, electricity – through the course of heating season, traditionally taken to run from the start of October to the end of March, the universal price scheme is in place to April 2026, as things stand.
The legislation which enacted the service led to over 100,000 Eesti Energia customers being automatically switched over to the service – they could have opted out at the time – and over the past two months, many of these are leaving the package where possible, as exchange prices remain consistently lower.
Enefit Power's Q4 2022 losses of €128 million in fact equal Eesti Energia's profits for the whole of 2022, as announced Wednesday, though Enefit Power made a year-on-year loss set at €27.2 million, to 2022 as a whole.
Sutter said that the provisional electricity production price under the universal scheme – set at 15.4 cents per KWh – would have been better put to use as a price ceiling, with the difference between it and the market price to consumer, compensated for by the state.
Had that been the case, Enefit Power would have been in the black for Q4 2022, while Eesti Energia would have paid €64 million more to state coffers.
Enefit Power and the Competition Authority (Konkurentsiamet) have yet to strike a deal on the universal service's production price; as noted the provisional price was set at the end of September at 15.4 cents per Kwh, whereas Enefit Power said at the time, via manager Andres Vainola, this would not cover production costs, and counter-proposed a level of 18.18 cents per Kwh.
A University of Tartu study revealed that the introduction of the universal service had been followed by a 3 percent rise in electricity consumption – or as high as 10 percent in peak evening times, ERR reports.
Hando Sutter steps down as Eesti Energia CEO at the end of this month, after over eight years in the post, and will be replaced by Andrus Durejko.
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Editor: Andrew Whyte, Marko Tooming