On the last day of the previous year, distribution network operator Elektrilevi received a rejection from the Estonian Competition Authority regarding its request to raise network fees. The request was driven by an increase in fees for network services the DSO purchases from the transmission system operator, Elering.

Elektrilevi CEO Mihkel Härm told ERR that as a result, Elektrilevi is paying Elering more than it can recoup from consumers through network fees.

"Put simply, it's akin to a gas station selling fuel to retail customers at a price lower than the wholesale cost. It can be done, but then those expenses must be covered from other sources. The same applies to Elektrilevi. Since we have to pay invoices to Elering by the end of January at levels not covered by our own tariff, we will have fewer resources to spend on network maintenance and preventive repairs than initially planned," Härm explained.

He added that all faults will continue to be addressed, as those costs cannot be cut.

Külli Haab, head of the Competition Authority's regulation department, stated that network operators have the right to design different network fees or pricing packages, provided their basis is justified. The authority has previously noted that by changing pricing packages, Elektrilevi could reduce the costs of network services purchased by approximately €5 million.

When asked why the authority approved Elering's price changes but not Elektrilevi's, Haab explained that Elering's application only involved changing pricing packages, without altering the operational costs, depreciation or justified profitability that underpin the network fees.

"The authority reviewed the basis for the pricing packages and granted approval on September 24, 2024," Haab said, adding that Elektrilevi and other Elering customers have the option to change their network pricing packages before the new pricing takes effect.

Haab pointed out that Elektrilevi has already utilized this option twice – at the end of 2023 and in the first half of last year – to manage costs more efficiently.

Mihkel Härm explained that such changes have minimal practical impact since Elering adjusts tariffs to recover its costs regardless of the chosen package. Last year, Elektrilevi selected a more cost-efficient package, but Elering quickly implemented higher tariffs, negating any potential savings.

Härm emphasized that Elering's costs are independent of Elektrilevi's choices, and all expenses must eventually be covered. Elektrilevi will continue to make package decisions biannually, focusing on maximizing cost efficiency within Elering's framework.

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