General electricity consumers to be switched to stock market prices

Electricity pylon (photo is illustrative).
Electricity pylon (photo is illustrative). Source: Mark Bishop / Unsplash

General electricity customers, referring to those who do not have a contract with a specific supplier, are to be switched back from the current universal price set last year, to a cheaper, exchange-based pricing.

The universal service was put in at a time of soaring energy prices, but since then, the price of electricity has dropped, meaning the price level on the NordPool exchange has often been lower than that set as the universal rate.

The legislation to make the change back to an exchange-based package is currently being prepared, with a view to completion in the fall.

The electricity exchange price this week stood at 6.7 cents per Kwh, compared with a universal service price of 19 cents, including taxes, ie. nearly three times more. Despite this, more than 21,000 electricity consumers are still on the universal service.

Rein Vaks, head of the energy department at the Ministry of Economic Affairs and Communications, told that such customers mostly concerned "metering points ... where the consumption volume remains small, which means that the cost associated with energy consumption is also very small."

"This is the same contingent that today, for various reasons, has not yet gone down the route of concluding a new contract and receiving electricity under more reasonable conditions of consumption," Vaks went on, speaking to ETV news show "Aktuaalne kaamera" (AK) Friday.

Armen Kasparov, head of energy products at state-owned generator Eesti Energia, told AK that: "Actually, there has been quite a large draining of customers," referring to the universal service.

"We have spoken to our customers; we brought100,000 away in March, but there are still some customers who have not made the move," he went on.

Furthermore, there are 80,000 customers without electricity vendor contracts to whom Eesti Energia sells electricity as a general service.

While customers with a specific electricity supplier could choose a universal service, users of the general service were automatically transferred to the price of the universal service in the fall. 

Now, the plan is to make the general service cheaper again, following the relevant legislation being passed.

Vaks added that: "We will be changing the law in such a way that we no longer have the price of the universal service as the basis of the general service, that is, the service of those consumers who don't have a supplier contract, but instead, this price would equate to the price on the stock exchange; exactly as the price is formed on the stock exchange in fact, which the margin that we have had until now will be added to in the same way."

The required legislative amendment could be completed and come into effect in the autumn and before the start of the heating season, when electricity costs inevitably start to rise again, Vaks said.

Armen Kasparov said the change was only useful for general service customers and should be rolled out to all.

"Our solution is that the universal service must be terminated altogether, and all customers must be offered the best, cheapest possible package on the market, which today is twice as affordable as the universal service," he said.

Rein Vaks said this was the case due to no general agreement being found at political level, adding that in any case opting out of the universal service is viable as things stand, by switching suppliers.


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Editor: Andrew Whyte

Source: AK

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