Elering Submits Annual Tariff Adjustment Data

Elering submitted annual tariff adjustment data to the Estonian Competition Authority. When approved, the tariff adjustment will add 41 cents per month to the electricity costs of the average household.

Under the methodology for calculating the electricity network charges approved by the Competition Authority transmission system operators have to submit an adjustment application for network charges once a year for the respective three-year tariff period. The adjustment is to reflect any investments made during the last 12 months, changes in the volume of power transferred, network losses, as well as other income and expenses associated with the management of the transmission grid.

As much as 96.7% of the increase in Elering tariffs is based on the investments performed. The second main reason for this year’s adjustment is the new price regulation for energy losses found in the amended “Unified methodology for calculating electricity network charges”, according to which the basis of the price of energy losses is the price of electricity in the Estonian region on the Nord Pool Spot exchange, as well as the weighted average price over the last 12 months calculated by taking into account the volume of network losses. This is caused by the fact that starting next year, transmission system operators will not be able to acquire electricity at regulated prices, and will have to pay actual market prices for the energy used to cover network losses. Acquisition of such electricity on the market accounts for 26.6% of the increase of tariffs. More information on the amendments to the regulations for energy losses and its effects is available in the joint transmission system operators’ press release.

Other income and expenses related to the management of the transmission system will actually decrease the tariffs in 2013 by 23.3% due to 3.2 million euros of profits earned by Elering from cross-border trade operations.

According to the application submitted by Elering, starting from 1 January 2013 average tariffs are to increase by 0.154 cents per kilowatt-hour. Elering estimates that the tariff adjustment will bring an increase of 41 cents per month in the electricity costs for the average household (based on the annual consumption of 2500 kilowatt-hours of electricity, and the average of 7% in losses in the transmission system).

Taavi Veskimägi, the CEO of Elering, said that the tariff growth is effectively caused by the increase in the volume of investments in the development of the Estonian electricity system – EstLink 2, the emergency power plant and construction of a 330-kilowatt Tartu-Viljandi-Sindi power line. “Next year, Elering is to invest 149 million euros, which is an all-time record. The investments correspond to the level previously approved in the three-year plan,” adds Veskimägi.

Elering is the Estonian Transmission System Operator, whose main duty is to ensure high-quality supplies of electricity to consumers at all times. To achieve security of supply, Elering maintains and develops the national transmission grid and international connections. Elering manages the Estonian electricity system in real time, ensuring the operation of the transmission network, and the balance between production and consumption.

More information on the tariff adjustment is available here (in Estonian).