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Tartu district heating producer pledges to reduce prices

District heating infrastructure (photo is illustrative).
District heating infrastructure (photo is illustrative). Source: ERR

A fall in fuel prices should translate into lower district heating bills in the "near future," one Tartu-based supplier says. The Competition Authority (Konkurentsiamet) recently reminded district heating firms that bills should be cut as input fuel prices fall.

District heating is a centrally-controlled means of keeping warm apartment blocks in larger population centers. Hot water is piped in, while the water itself is usually heated by natural gas.

Soaring prices in the latter case led to many providers relying on wood chip burning as an alternative fuel source, though prices here rose too.

Another source comes in the form of co-generation plants, for instance in Narva, where hot water produced as a by-product of electricity generation is used for district heating purposes.

AS Gren Tartu has hiked its district heating prices in the university town twice in the last six months, ERR reports.

However, the company's director, Margo Külaots, told ERR that falling input fuel prices should be followed by a concomitant fall in district heating bills – albeit as the warmer weather arrives in any case.

Külaots said: "We need to be proactive. We will agree on new fuel prices with our suppliers, sign new contract addenda regarding bio-fuels and natural gas, and deal with everything that would permit us to reduce these input fuel prices, then we can also start lowering the price of district heating."

As for fuel, at least wood chips – which can be burnt to produce the hot water – have seen a return to price levels of a year ago.

Argo Teral, board member at OÜ Renlog Eesti, said that if anything there is an over-supply of wood chips, while the price may fall further with the end of the heating season (traditionally taken as being the end of March, though the turn of the month was accompanied by a cold snap-ed.).

Fluctuations in the price of electricity and natural gas also have their impact on district heating prices, Margo Külaots said.

She was unable to say when and how big of a drop in the price of district heating can be expected, however, citing ongoing negotiations with fuel sellers. At the same time, in the crisis situation of the last winter, fuel stocks were purchased as a reserve, often at higher prices.

The price fall when it comes would happen ahead of the start of the next heating season (October), Külaots added.

In November last year, AS Gren Tartu hiked its district heating prices from €53 per MWh to €78 per MWh, and then raised the price again, to €86 per MWh, at the start of this year.

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Editor: Andrew Whyte, Merili Nael

Source: ERR Radio News

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