Elektrilevi OÜ asked the Chancellor of Justice to assess whether the Competition Authority had complied with good administrative practice when it exceeded the statutory deadline for coordinating network charges.

According to Estonian law, the Competition Authority must coordinate the network fee within 90 days of receiving a valid request, though in exceptional cases the deadline may be extended to 180 days. However, the procedure for the approval of Elektrilevi OÜ's network fee took 554 days.

"Such a long delay is not in line with good administrative practice. Although the law allows for extensions and suspensions, the aim must be to complete the procedure within the timeframe set by the law," Madise said in a letter to Elektrilevi.

"Otherwise, the statutory time limit will become meaningless, as new circumstances may always arise in the course of the procedure, which would suspend the deadline and delay the decision," Madise said.

In addition, Madise said, during a lengthy procedure, the circumstances upon which the original application was based may change and so the application may need to be amended again. This could lead to an even longer delay, which would appear to be of the applicant's own making.

Madise said the Competition Authority must have sufficient capacity to comply with these requirements and principles.

"This capacity has to be ensured by the Competition Authority, as the network operator also pays a significant monitoring fee, which is imposed to increase the Competition Authority's capacity," Madise said.

According to the Competition Authority, the procedure for approving Elektrilevi's network charges was time-consuming for a number of reasons, one being the rapid price increases.

At the end of 2022 and in 2023, the increase in Estonia's Consumer Price Index (CPI) was unusually high. To clarify whether the costs for the provision of the network service were also justified, it was necessary to carry out a more in-depth analysis of Elektrilevi OÜ's operating costs.

Second, the Competition Authority disagreed with Elektrilevi on the cost of the network losses used as a basis for calculating the network charges. The application had been based on electricity prices in 2022, while in 2023, electricity prices fell, meaning the actual cost of waste electricity was lower.

A third factor was that Elektrilevi changed its working arrangements during the procedure and so the justification for the costs of this restructuring had to be verified and the estimated costs subsequently revised. It took the network operator a considerable amount of time to respond to the request for explanations related to these changes.

Elektrilevi OÜ is the network operator with the largest share of electricity consumers in Estonia on its network area, meaning it also has a significant socio-economic impact in the country. Therefore, the Competition Authority said, it was crucial to thoroughly examine and analyze all the facts related to the request.

Starting on October 1, 2024, Elektrilevi's network charges increased by an average of 7.1 percent, with the average tariff at 4.4 cents per kilowatt-hour.

According to Elektrilevi, the price increase as due to the rise in the costs of maintaining, repairing and operating the electricity network.  

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