Power company CEO: Planned frequency reserve fee 10 times higher than in the Nordics

Electricity suppliers have expressed concerns that Elering, Estonia's national grid operator, has not clearly explained why it plans to impose significantly higher balancing fees on both producers and consumers compared to Finland or Sweden. These fees are intended to fund the operation of Estonia's electricity system independently from Russia.
Disconnecting from Russia's electricity system means that Elering, Estonia's national grid operator, must purchase frequency reserves from the market. To fund this, Elering plans to impose a balancing fee of €5.31 per MWh on both electricity producers and consumers.
Elering CEO Kalle Kilk explained the calculation behind the fee. He said, "The tariff is calculated based on an estimate of the total cost of reserve services from all power plants and storage facilities in the Baltic region for the year 2025. We've conducted market modeling and found that various types of power plants, depending on their fuel, will likely require compensation. We've summed these costs for the year and estimated that Estonia will need approximately €60 million to cover what reserve service providers might demand."
Kilk emphasized that this is only a forecast: "Obviously, it could be wrong, but we don't know in which direction."
In the future, Elering plans to publicly disclose the exact cost of purchasing reserves, and the fee will be adjusted accordingly. "Our goal is not for Elering to profit but to pass the full cost demanded by reserve service providers onto electricity producers and consumers," Kilk added.
However, electricity producers have questioned the rationale behind setting the balancing fee based on the forecast. Martti Hääl, CEO of Alexela, highlighted the discrepancy: "The forecasted fee of €11 per MWh, split between consumers and producers, is about ten times higher than in the Nordic countries, where it is around €1 per MWh."
Kilk argued that electricity is cheaper in Scandinavia, making reserve purchases there less expensive.
Hääl pointed out that Elering has not clearly explained its forecast to market participants. He stated, "No consumer or energy company disputes that independence from the Russian electricity system is a positive development, but public charges like these must be clearly regulated and transparent. These numbers can't just come out of a black box; they must be clear and verifiable."
The energy company CEO emphasized that neither electricity producers nor consumers should accept such high costs without question. He argued that maintaining competitive business conditions in Estonia is impossible if costs are ten times higher than in neighboring countries.
Electricity sellers have suggested that the new fee should be clearly specified in the law and listed separately on electricity bills so that consumers understand what they are paying for. Kilk agreed, stating, "The plan is to introduce a legal amendment so that balancing operators can include this reserve service fee component as a separate line item in electricity sales contracts. This makes it clear and trackable, ensuring transparency in costs related to energy independence."
Kilk assured that the debate over the size and format of the balancing fee will not affect the pace of disconnecting from Russia's electricity system.
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Editor: Valner Väino, Marcus Turovski