AS Tallinna Soojus, which has until now been owned by the city, is in charge of making sure Tallinn residents have heating. In a rental contract from 2001, Tallinna Soojus rented its assets, rights and obligations out to Utilitas Tallinn, called AS Tallinna Küte at the time.

Therefore, it has been the task of Tallinna Soojus to monitor compliance with the contract. The municipal firm's 2021 report reveals that capital rent was its only source of income at €3.1 million. Profit for 2021 came to €2.2 million, while the company's share capital was evaluated at €3.25 million on December 31, 2021.

The previous year's net profit of over €2 million and undistributed profit from earlier periods was transferred to the city budget as dividends in 2021.

Around one-third of all district heating customers in Estonia are on Utilitas' networks. Utilitas has not filed its annual report for 2022 yet, while its turnover came to €117.5 million and profit to over €4 million the year before. Utilitas Tallinn's assets were worth €234 million and its loan obligations totaled €159 million.

The net book value of principal assets rented from Tallinna Soojus was €88.8 million by the end of 2021. Utilitas' material assets include other assets tied to the rental contract the net book value of which at the time was €100.2 million. This concerns assets obtained during the rent period which Tallinn Soojus will have to compensate Utilitas for at the end of the contract period.

The contract also concerns unfinished structures and equipment worth €7.8 million, which Tallinna Soojus will also have to pay compensation for.

By late 2021, 62 percent of Tallinn's district heating network was new or reconstructed. A development plan, put together with the help of TalTech in 2020, provides that the old system, built before 1995, should be completely replaced by 2035. This would require 14-15 kilometers of piping to be replaced annually.

The group is made up of Utilitas Tallinn and Utilitas Estonia that offer district heating and cooling in the capital, Utilitas Tallinn Power Plant that turns renewable sources into heat and electricity, Tuulepealne Maa that has stakes in wind farm developments. It also has a 50-percent stake in renewable energy company Utilitas Wind. Utilitas in 2021 bought a 20.4-percent stake in water and sewage utility Tallinna Vesi for €58.6 million.

Tallinn said last week that it will sign a contract with Utilitas for a joint venture called Utilitas Tallinna Soojus. A third of the new joint company would belong to Tallinn, two-thirds to Utilitas that has been operating Tallinn's district heating network based on a rental contract since 2001.

Based on the current rental contract, Utilitas would have to return rented assets to Tallinn and the city compensate it for investments made. Based on investments made so far alone, Tallinn would have to pay Utilitas €250 million by 2031. The creation of the joint venture removes Tallinn's obligation to compensate Utilitas.

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