District heating plants can be found in and around Estonia's towns and cities and involve hot water – natural gas is often used in the heating process, but other fuel sources such as wood chippings have been pressed into action when gas prices are high – being piped centrally to larger apartment buildings, during the winter months.

The District Heating Act would require thorough amendment, Competition Authority regulation services manager Külli Haab, said, given this last happened over 20 years ago.

In the meantime, new types of heating tech have come on at pace, and the market has changed, she said.

For instance, properly renovated apartment blocks require district heating to guarantee rooms are warm enough only in the very coldest periods.

The rest of the time, district heating would be superfluous.

Air pumps and solar energy are other increasingly used innovations.

On the other hand, older and non-renovated apartment buildings lean on district heating more; in any case district heating providers have to ensure the systems work

Levels of renovation, which include not only cosmetic aspects but also changes which would exert a major effect on the heating profile of an apartment – for instance, insulation – are very unevenly distributed across the country, being at quite a high level in, for example, Rakvere, but lagging far behind in parts of Ida-Viru County.

The Competition Authority says it is also reasonable to apply a fixed connection fee in respect of district heating, for this reason, ie. to cover maintenance.

This approach is common in the Nordic countries, Haab said.

Whereas the pre-existing network connection fee on electricity bills can make up to 40 percent of the total, in the case of district heating, the proportion would be a bit lower, at around a third, the head of one firm engaged in that sector said.

Siim Umbleja, CEO of Eesti Jõujaamade and Kaugkütte Ühing, split the bill into three equal parts: Labor, system maintenance, and purchasing materials – including the fuel used in heating the water.

So the second of these three categories could be covered by the proposed connection fee, he said.

The need for a connection fee also varies for instance in proportion to the size of a settlement and a provider's service area, he said.

Umbleja added that the legislation already ensures that district heating firms' profits are stipulated, and that companies would therefore not reap in any additional profits from the fee once in place.

Haab meanwhile said the precise proportion allocated to the connection fee would need to be the subject of discussion. Since the fee would be payable year round, this will make overall prices more stable, rather than seeing a sharp peak in bills as charged in the winter months, she said.

The primary goal is, nonetheless, to redistributed the costs of maintaining heating system more equitably among consumers – ie. the fixed cost applies however much you use district heating.

"Otherwise, a situation may arise where apartment owners who have acquired an additional heating system will essentially use district heating for a short time only and in exceptional situations, while the costs of maintaining the system will be borne by the everyday consumers," she went on.

The fixed fee will not become mandatory everywhere, but producers will be able to introduce it after the new law comes into force, Haab added.

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