Finance minister wants to weigh ending universal service two years early

Source: Siim Lõvi/ERR

Should low electricity market prices persist, the Ministry of Climate proposes automatically removing the remaining customers from Estonia's universal service. The minister of finance, meanwhile, thinks they should weigh potentially ending the universal service two years early.

Last year, when the average monthly market price for electricity reached more than €0.30 per kilowatt-hour, hundreds of thousands of customers switched to the country's universal service, many of them automatically. While market prices this year have fallen, nearly 100,000 customers remain on it.

"We can imagine that many such consumption points are either summer houses or garages with just a single lightbulb hanging from the ceiling," said Timo Tatar, undersecretary at the Ministry of Climate. According to Tatar, universal service customers' consumption totals less than 100 gigawatt-hours a month.

"But we at the ministry believe those consumers should also have the opportunity to buy electricity for cheaper," he continued. "That they shouldn't necessarily have to buy electricity at universal service prices."

In a recently published draft regulation, the Ministry of Climate proposed taking people off the universal service in the event that the average market price for electricity remains below the universal service price for three consecutive months. These customers would be switched over to Eesti Energia's general service, as with other customers who don't sign up for any one specific plan.

The draft regulation would update the state-owned energy group's general service itself as well. Last year, the price of the general service was tied to that of the universal service. The ministry's bill would once again peg it to the average market price.

"As people were automatically switched over to the universal service at one point, then it would be logical for us to automatically switch those clients who have been unable to decide yet and are customers of the universal service to the market price-based general service," Tatar explained.

Võrklaev: Universal service wasn't wise in long run

Nonetheless, under the Climate Ministry's proposal, the universal service itself wouldn't actually be going anywhere. Some customers may decide after being notified that they nonetheless want to remain on the universal service. Likewise, the right would remain for anyone to rejoin the service.

Customers would not, however, automatically be signed up for the universal service even if market prices should once again skyrocket.

"The goal of the regulation is still to achieve a situation where people themselves actively think things through and make [their own] choices," the undersecretary said. "If you look at what type of fixed-rate plans — both those including contractual penalties and those without contractual penalties — currently being offered by electricity sellers, then actually there's a pretty wide range to choose from, and the prices being offered by electricity sellers are already cheaper than the price of the state-regulated universal service by now."

Minister of Finance Mart Võrklaev (Reform) likewise said that people should be directed to choose suitable energy plans for themselves so as not to remain at the mercy of the general service.

"That one minute the price is low, the next it's high and then people are in trouble again," Võrklaev explained. "In other words, it's actually a matter of awareness — which we as legislators should be directing people toward anyway — for them to choose themselves and decide for themselves."

In retrospect, the Reform minister is critical of the universal service drawn up under the previous government. He noted that in the long run, it didn't prove reasonable for either producers or consumers.

Tatar recalled the solution dating back two winters, where high electricity prices were figuratively reimbursed on energy bills.

"I think that may have been more efficient than the universal service solution," the undersecretary admitted. "There's certainly a grain of truth to that, and I absolutely understand why the Ministry of Finance has reached such a conclusion."

According to the law passed last year, the universal service mechanism is slated to remain in place through spring 2026. Võrklaev believes the state should consider moving the service's end date up by two years. Nonetheless, he does believe that the universal service option should remain in place over the coming winter.

"This winter may also provide us with confirmation on whether something like this is needed or not," the minister said.


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Editor: Aili Vahtla

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