Energy, Estonia, EU – Baltic States

The opening of the market will affect companies consuming more than 2 GWh per year and will involve 35% of the electricity market.

“No big company will start waiting to see how the exchange would operate to then conclude a contract. The electricity contracts will be concluded earlier and that means that it will be concluded with no one else but Eesti Energia. Thus there is a big danger to conclude an unfavourable contract,” said representative of large electricity consumers union, finance manager of Viru Keemiagrupp (VKG) Ahti Puur.

“The question emerges, where the consumers would be pushed from April 1? No one has understood who are those competitors who offer electricity at that market,” said Puur.

Puur said that by the time the market is opened, all rules should be set, but now, large consumers are pushed into the open market the same minute the electricity exchange is opened.

Still, Puur does not oppose free market. “Everyone has understood that the free market must come. It is also clear for everyone that the price of electricity would increase in connection with the free market. But they don’t take into consideration that pushing free consumers by force to the market should take place when the market operates to some extent.”

Puur says that the exchange could start on April 1, 2010 like planned but companies could have a 9-month transition period and start buying electricity on January 1, 2011. The corresponding proposal was rejected by the economy and communications ministry.

Puur said that opening the market from April 1, 2010 is also unsuitable since the economy should start recuperating next year. “Opening the market will bring a 40-50% price increase, this is yet another blow to entrepreneurs,” he said.

Over the past year, prices at the Scandinavian electricity market have considerably fallen and are around 10% higher than the regulated price of Narva Power Plants, said Estonian economy and communications ministry deputy chancellor Einari Kisel.

He said that the potential volatility that local companies haven’t had experienced will be a big question mark and the activities of sellers via the exchange will certainly cause confusion.

Kisel refuted claims that opening the market is a goldmine for Eesti Energia. He said that in addition to the abovementioned price fall at the Scandinavian market, there is a possibility that Russian electricity could be sold at the exchange and thus the price pressure of competitors should keep activities of Eesti Energia also under control.