Competition Authority approves first change in network charge necessary for construction of Balticconnector

The long-planned change to the gas transmission tariff to ensure the co-financing for construction of Balticconnector alongside the European Union’s 206 million-euro subsidy and the creation of a reserve for protected consumers as envisioned in the EU regulation will increase the end price of gas for consumers by an average of two per cent from 1 July 2018.

The Estonian Competition Authority approved a gas transmission tariff of 2.236 euros per megawatt-hour, which will make up about seven per cent of the final gas price for consumers. Thus far, the transmission tariff made up around five per cent of the final price.

 The change in the tariff is linked to upcoming investments in the gas network and compliance with legal obligations on the one hand, and on the other, reductions in gas consumption volumes.

 “According to the European Union’s independent gas market regulator, ACER, Estonia’s gas transmission tariff and network charge as a whole has thus far competitively been the lowest in Europe. This was possible for as long as we agreed on a situation whereby all of our gas came from Russia and it was supplied by Gazprom. Previously, we paid Gazprom twice as much for gas as we do now. To achieve a functioning regional market, interconnections and security of supply, and thereby cheaper gas, more needs to be invested in infrastructure than before,” explained Chairman of the Elering Board, Taavi Veskimägi, on the changes being made.

 “Today’s network charge price change has long been known and will not be the last such change. In the coming years, the tariff will be gradually added to the co-financing necessary to finance the construction of Balticconnector alongside the European Union’s contribution of 206 million euros. It is important for us that the Competition Authority made a decision before the conclusion of Balticconnector’s major construction contracts,” added Veskimägi.

 Following the opening of the gas market to competition, Elering has been given a number of additional tasks for the development of the gas market, including the creation of a reserve for protected customers, the improvement of the gas network’s maintenance to required levels, the construction of Balticconnector and the strengthening of the Estonia-Latvia interconnection.

 The amendment to the gas transmission service tariff approved by the Competition Authority will come into force on 1 July of this year.