District heating prices will be lower this winter than last year

Heating plant in Tallinn.
Heating plant in Tallinn. Source: Siim Lõvi /ERR

Estonia's district heating companies are coordinating prices with the Competition Authority ahead of the coming heating season. The latter's assessment is, that Estonian consumers will not be faced with extremely high prices this heating season, when compared to last winter.

Kertu Saul, head of the Competition Authority's price regulation department, told ERR, that when forecasting prices for the new heating season, it is important to look at what has been happening to prices up to now.

"Compared to the previous heating period, prices have fallen significantly. In network areas using 100 percent gas for example, prices have even fallen as much as three times over, or more," Saul said.

Prices have reached the level of €100 per megawatt-hour (MWh). In district heating areas where wood chips are used to produce heat, the fall was by as much as 40 percent or more. "Of course, there are areas where these decreases have been smaller," Saul added.

According to Saul, in Estonia, heat is predominantly produced from wood chips. So the price of wood chips in summer is an important factor.

"They will be conducting these tenders in the summer period and have probably already started. So looking at the trend so far, there's still room for the prices to come down," Saul explained.

Eesti Gaas management board member Raul Kotov also said, that gas deals made for the fall and winter are at significantly lower prices than a year ago.

"Here, the price level is between €45 and €55. We do not foresee a huge price increase like the one a year ago," said Kotov.

Applications submitted by Tallinn cogeneration plants to bring the marginal price down are currently being processed. Meanwhile in Paide, Järva County, the marginal price was already reduced some time ago.

According to Saul, the Competition Authority has also approached the operator in Tallinn with the aim of lowering prices for consumers.

"If there is a change in fuel prices during the coordination process, then we will take that into account when we are coordinating the final price," Saul said.

Vändra Municipality in Pärnu County, which is notorious for its expensive district heating, switched from gas to shale oil last winter, with the promise of providing a more affordable service for district heating users. Vändra's application for this year is also currently pending.

"The marginal price will be around twice as low as it was last time, when it was over €200 per megawatt-hour. I think it was around €108. So an application to of this sort has been submitted and is now in the final stages of being reviewed. Prices in the Vändra region are coming down, but the company has already sold heating at well below the marginal price," Saul said.

Margus Kasepalu, head of the Competition Authority's energy infrastructure department, advised consumers to keep monitoring the market in any case. According to Kaseplau, people should pay attention to all the terms stated in their contracts and be cautious about signing up for long-term fixed-price deals.

"We have some bad examples on the electricity side, for instance. You sign a contract for a very long time and then, after nine months or a year it maybe turns out that the prices are going to be even lower. However, it is really expensive to get out of the old contract," Kasepalu said.


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Editor: Michael Cole

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