Last July, Estonian transmission system operator (TSO) Elering proposed that following desynchronization from the Russian power grid in February 2025, the production and consumption fee be raised for both producers and consumers from 4 cents to €5.31 per megawatt-hour (MWh), or €0.53 per kilowatt-hour (kWh).

Electricity producers were unhappy with the proposal, and in July took the Competition Authority, which had approved Elering's proposal, to court.

Now, the Ministry of Climate has dropped plans to charge producers a balance service tariff, Postimees reported Friday (link in Estonian).

In an appearance on Vikerraadio's "Uudis+" on Friday, Jaanus Uiga, a deputy secretary general at the Ministry of Climate, said that the ministry has indeed suggested that Elering review their methodology.

"When it became evident that the initial proposal was to divide it proportionally and equally between producers and consumers, it also became clear that Latvia and Lithuania weren't quite planning on doing the same," Uiga explained.

"True, we haven't finalized this yet," he continued. "We need to ensure that our electricity producers' competitive position in the Baltics doesn't worsen. Accordingly, we've proposed that Elering review the methodology."

According to Uiga, Estonia is currently seeing a shortfall in electricity generation.

"We're preparing reverse auctions to obtain new electricity production," he said. "We have to make sure that our competitive position compared to the other Baltic countries doesn't worsen from the producers' perspective."

The total cost resulting from Estonia and the other Baltic countries having to maintain frequency in their own power grids after disconnecting from Russia, which would need to be covered by the balance tax, is €60 million a year, the ministry official noted.

Asked whether consumers would then have to bear the full cost of this if producers aren't charged the balance tax, he did not provide a clear answer.

"It's roughly distributed across all consumption, around €7-8 per MWh," Uiga said.

"The finalized solutions aren't in place yet; we still need to go through the methodology, public consultations and several approvals," he continued. "It needs to be confirmed by the Competition Authority, which will monitor its compliance with EU law. What the ultimate solution will end up being will be determined once the methodology is approved and various solutions are on the table."

According to the Climate Ministry deputy secretary general, the most likely scenario will involve a transitional solution while the Baltics try to achieve a harmonized solution.

"Understandably, this will take time, and we're also still awaiting input regarding what solution Latvia and Lithuania are currently moving forward with," Uiga added.

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