Latest developments in
Estonia
Märt Ots
Estonian Competition Authority
Baltic Electricity Market Forum
Kuressaare 4.06.2010
Market developments (1)
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Transitional period of opening of the electricity
market in Estonia
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Until 2009 market opening level was 12%. Eligibility level 40
GWh.
From 1.01.2009 35%. Eligibility level is 2 GWh.
From 2013 100%.
The price cap on non-eligible customers tariff is set
by the regulator.
Until 01.04.2010 the eligible consumers have had the
right to purchase electricity with regulated price.
Since 01.04.2010 the eligible customers have no
right to purchase electricity with regulated price.
Market developments (2)
The Nord Pool Tallinn power exchange
has started by 01.04.2010.
 Today's market price is some how higher
the regulated price.
 The full market opening scheduled by
01.01.2013. Expected abandon of all type
of price regulation (except network tariffs).
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Estlink (Finland-Estonia)
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Estlink 1 (365 MW).
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In operation since 2006 as a commercial link.
TPA regime for capacity of 250 MW today.
Estlink 2 (650 MW)
Planned as a part of TSO-s with TPA. 100 million € support from
the EU. Positive decisions made by the Finnish and Estonian
TSO. Should be in operation by 2013.
The links to well-functioning Scandinavian market are
essential for the market developments in Baltic's.
Ownership unbundling of TSO
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Since January 2010 the Estonian TSO is an
independent company.
The shares of the company have been
transferred from Eesti Energia AS to the Ministry
of Economic Affairs and Communications.
Since 100% of the shares of Eesti Energia AS
are owned by the government, the final goal is to
transfer the shares of Eesti Energia AS and TSO
to the different ministries.
New tariffs for TSO
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Main reason for increased tariffs
 The
drop in transmission volumes due to the
economic recession by 8%.
 Higher return on capital invested WACC
7,56% instead of 6,27%
 Tariff increase 11%. But average tariff
increase since 2005 1,6%, which is lower than
inflation.
New generation capacity

Opening of two new wood and peat CHP units in
Tallinn and Tartu. 25 MWel each.
 30
% of heat supply in Tallinn and 95% in Tartu relies
now on wood and peat.
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Opening of 39 MWel wind park in Aulepa
(western part of Estonia).
New 25 MWel CHP plant in Pärnu, using of wood
and peat. In operation in the beginning of 2011.
But all of those investments are heavily
subsidised by green energy tax.
Subsidies on renewables and CHP-s.
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High levels subsidies paid to renewables and
CHP-s
 Renewables
(wood, wind, biogas) 53,7 €/MWh +
market price.
 CHP-s (peat, gas, waste) 32 €/MWh + market price.
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8,1 €/MWh paid the by each of electricity
customers as green energy tax, 20% from the
generation cost.
The Competition Authority has started a market
analyse on the size of green energy subsidies.
Using of competition act for the
energy issues
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The electricity sector is regulated by sector (electricity
market) and general (competition) acts.
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In the electricity sector the network business is very well
regulated by electricity market act.
The abuse of market dominant position in generation and
supply is not well regulated by sector legislation.
The definition of the market dominance:
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the position enables to operate in the market to an
appreciable extent independently of competitors, suppliers
and buyers;
market share of 40% by turnover
9
Proceedings according to the
competition act.
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In the energy sector a number of proceedings were
commenced under the competition act.
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The abuse of market dominating power by Narva Power Plants
(the daughter company of Eesti Energia AS). The precept was
issued by ECA, the fine was imposed to the company.
Third party access to the district heating network.
Applying of dissimilar conditions to equivalent agreements with
the gas customers by AS Eesti Gaas (market dominating
entrepreneur, the single gas importer). To the similar customers
gas was sold with different prices.
Imposing unfair trading conditions to the secondary gas market
by AS Eesti Gaas.
Thank You for Your Attention!
Further information
www.konkurentsiamet.ee