The Government and Electricity Sellers to Seal an Agreement of Good Faith concerning the Opening of the Electricity Market

The government has invited electricity sellers to sign an agreement of good faith to help smooth the opening of the electricity market on 1 January 2013 and to ensure fair communications with consumers.

The Ministry of Economic Affairs and Communications and Elering, the Estonian transmission system operator, will send an invitation to all distribution network operators and electricity sellers operating in Estonia asking them to join in the agreement of good faith for the opening of the electricity market.

The agreement will be formally signed on Tuesday 6 March, but the document will remain open after this date so that other market participants can also join the agreement later.

Ando Leppiman, Director of the Energy Department at the Ministry of Economic Affairs and Communications, explained that signing the agreement of good faith was voluntary for all market participants. “By signing the agreement, market participants undertake to give electricity consumers comprehensive and honest information in order to help make the market opening smoother after 1 January 2013”, he said. “We have discussed the text of the agreement of good faith with electricity sellers and distribution network operators, and many of them have said they are ready to sign it”.

Elering CEO Taavi Veskimägi said that the agreement, like other measures planned to clear obstacles from the market opening, is very important. “The opening of the electricity market at the start of next year will mean that electricity sellers will have to work harder than ever before and it will lead to full and open competition in the marketplace. The production and sale of electricity will happen under market rules from the new year, and this is a major step for our energy industry and business environment”, he said. “The agreement of good faith will certainly offer electricity consumers more security in their choice of electricity seller, because a company that has signed the agreement has promised to abide by the principles of fair competition and to keep their consumers fully informed of changes relating to the opening of the market.”

Market participants that have signed the agreement can use the official logo of the market opening and will be listed on the official government website about the market opening, which is being created this month.

The full opening of the Estonian electricity market to all consumers from 2013 was agreed in Estonia’s accession treaty to the European Union. Every consumer will be able to choose the electricity seller and price package that is best for them. The market opening will affect the price of electricity, which makes up one third of the electricity bill. Consumers who do not choose a seller will be supplied as now by their network operator, but after 1 January they will still not be able to choose the network operator who delivers electricity to their home or office, as this will remain the same as it is now for all consumers.

The full opening of the electricity market will mean that electricity sellers operating in Estonia will have to work much harder than before to attract and keep clients in conditions of full market competition. Each electricity consumer will be free to chose which company to buy electricity from and when to change seller. The opening of the electricity market is a key condition for Estonia’s integration into the European and Nordic electricity systems, which will be important for ensuring security of supply and energy independence from Russia. If the market were not to open, it would not be possible to create sufficient cross-border electricity connections nor to gain the investment needed for many different electricity generation options in Estonia. The electricity market in the European Union opened fully in 2007, but Estonia’s accession treaty gave it a transition period until 1 January 2013.