Maintaining strategic gas reserves to hike the price of gas in the future

The Inčukalns underground gas storage (UGS) facility in Latvia.
The Inčukalns underground gas storage (UGS) facility in Latvia. Source: ERR

The price of natural gas will go up by 5 cents per megawatt-hour from the new year as a result of a higher gas reserves fee as outlined in a Ministry of Climate bill. The effect of the first hike should be negligible for home consumers.

The Ministry of Climate gives lower gas consumption as the reason for the hike as the cost of maintaining a strategic gas reserve needs to be shouldered by a smaller number of consumers.

The ministry wants to hike the fee from the current €0.4/MWh to €0.45/MWh from January 1. The new price would remain in effect until April 30 after which the fee is forecast to grow again as Estonia's soon-to-be-created capacity to receive FSRUs will be factored in to the cost of maintaining a strategic gas reserve. It is estimated to cost €700,000 annually to maintain the docking infrastructure.

Draft legislation in question reveals that Estonia had 47,969 home consumers of natural gas in 2022 who consumed 392.5 GWh of gas. Business consumers numbered 14,225 and consumed 3,514.94 GWh.

The changes will have a greater effect on business consumers, which may result in slightly higher prices of goods and services, while the "effect on the Estonian economy is negligible," the bill's explanatory memo reads.

For home consumers, the new strategic reserve fee would make up just 0.5 percent of their gas bill or hike the price by 50 cents annually.

The fee was first laid down when Estonia created its strategic gas reserve of 1TWh kept at the Inčukalnsi gas storage facility in Latvia in April 2022.


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Editor: Mait Ots, Marcus Turovski

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