Elering will cover the increase in expenses of network losses with the congestion income received from NordPool

Elering will cover the additional expenses arising from the increase in the price of network losses with congestion income, which will help avoid an increase of network fees for consumers.

“The high electricity prices in recent times have, on the one hand, rapidly increased the expenses of Elering when it comes to purchasing electricity from the exchange in order to compensate the physical losses arising upon the transmission of electricity, while on the other hand, they have increased the congestion income arising from the difference in prices between Estonia and Finland,” said Taavi Veskimägi, Chairman of the Management Board of Elering.

“In order to avoid an increase of network fees due to the increase in the expenses on network losses in the current situation of high inflation, Elering has received the approval of the Estonian Competition Authority to extraordinarily use the funds of the congestion income to cover the expenses arising from purchasing electricity for network losses,” explained Veskimägi.

Elering uses the congestion income received from NordPool to cover the difference in prices arising from the fact that the current network fee approved with the Competition Authority does not cover the increased expenses on network losses.

Elering continues to direct the majority of the congestion income towards covering investments related to cross-border interconnections, for example the current reconstruction of Latvia-direction power lines or the planned construction of the additional Estonian-Finnish Estlink 3 interconnection. The new interconnection with Finland is essential in order to equalise Estonian and Finnish electricity prices. “The current differences in prices with Finland are caused due the ‘bottleneck’, which means that cheaper electricity from the Nordics cannot reach Estonia through the existing two interconnections in a sufficient amount. Construction of the third interconnection will help alleviate the difference in prices,” noted Veskimägi.

Elering has to comply with certain rules in European legislation in order to use congestion income. These do not apply specifically to Elering or Estonia, but remain the same for all of Europe.