Electricity Sellers Sign Good Faith Agreement with State for Market Opening

12 electricity sellers and network operators signed a good faith cooperation agreement with the state today, on March 6th, with a view to supporting the smooth opening up of the power market on January 1st 2013 and ensuring honest communication with electricity consumers.

The good faith agreement for the opening up of the electricity market was signed by the Ministry of Economic Affairs and Communication, the electricity system operator Elering, Eesti Energia, Latvenergo, Baltic Energy Services, Nordic Power Management, Eesti Energia Jaotusvõrk, the Ramsi Turvas network operator, Kuusalu Energia, VKG Elektrivõrgud, EPT Energia, Elveso, Maardu Elekter and the Estonian Electricity Industry Union. In addition, intentions to join the voluntary agreement were expressed by Imatra Elekter, Sagro Elekter and Livilla. The document will remain open for signature by any parties who wish to do so in the future.

According to Ando Leppiman, head of the energy department at the Ministry of Economic Affairs and Communication, the complete opening up of the electricity market affects all of Estonia’s power consumers, who will be able to select the most appropriate electricity seller starting from next year. “Market players who signed the agreement have taken on the obligation to provide the electricity consumers with complete and honest information in order to support a smooth opening up of the electricity market on January 1st, 2013,” said Leppiman. “The good faith agreement will undoubtedly become an additional guarantee for electricity consumers in their choice of a provider. The consumers can be confident that the electricity seller who has joined the agreement will not deceive them, and will offer a fair, market-based selection of packages and pricing.”

According to Taavi Veskimägi, Chairman of the Board of Elering, the complete opening up of the electricity market will force the electricity sellers operating in Estonia to try harder than before. “Until now, electricity sellers have largely enjoyed a monopolistic position, but on the open electricity market they will have to make a much bigger effort to win new customers or retain their existing client base in a competitive environment,” Veskimägi said. “Every electricity consumer is free to decide which company they buy their power from, and how often to switch providers.”

Market players who have signed on to the good faith agreement can use the electricity market opening logo, Avatud 2013 (Open 2013). Market players who are part of the agreement will also be added to the national website dedicated to the opening up of the electricity market, www.avatud2013.ee.

In accordance with Estonia’s treaty of accession to the European Union, the electricity market will open up completely for all consumers at the beginning of 2013. Everyone will be able to select the electricity seller and price package most appropriate for them. The opening up of the market affects only a third of the electricity bill – the price of power. If the consumer does not select an electricity seller, their power will continue to be provided by the regional network operator.

Existing distribution networks will continue to be used after the market opens up. Because of this, even after January 1st 2013 it will not be possible to choose the network operator that will be delivering the power to the home or office. The network service fee, which makes up a third of the electricity bill, will continue to be subject to approval by the Estonian Competition Authority following the market opening. In addition, approximately a third of the electricity bill is made up of various taxes, which also won’t be affected by the market opening.

The opening up of the electricity market is a precondition for Estonia’s integration into the European and Nordic power systems, which will ensure energy security and independence from Russian electricity. Without opening up the electricity market, it would not be possible to create a sufficient number of external power links and attract the necessary investment for diversifying the electricity production options in Estonia. The EU electricity market opened fully in 2007, while Estonia’s accession treaty gave it a transitional period until January 1st, 2013.

Press release by the Ministry of Economic Affairs and Communication

The contents of the cooperation agreement and the image gallery of the signing event can be found here (only in Estonian).