Elektrilevi is requesting a reduction in network fees
The largest Estonian network company Elektrilevi sees an opportunity to once again reduce network fees from next year and has submitted paperwork to the Competition Authority for assessing the expenditure and revenue of the company. The average reduction of the network fee may turn out to be approximately 8 percent, but the price impact will vary by package.
The reduction of the network service fee is possible due to increased consumption volumes, favourable interest rates and Elektrilevi’s increased efficiency – savings on fixed costs. The price is also influenced by the completion of the installation of remotely operated meters and thereby stabilized investment volumes.
Fixed fee dependent on the size of the main switch i.e. the pricing that was changed from last year has had a beneficial effect on the price as well. “Within the past year, 3% of unused network capacities have been dropped and more than 1000 network contracts have been terminated in places where there was no electricity consumption. Thanks to that, Elektrilevi no longer has to maintain and service idle network resource. Therefore the fixed fee has already had a beneficial effect on network service consumers as a whole,” explained Priit Treial, Elektrilevi business development field manager.
Based on submitted paperwork, the Competition Authority will carry out a preliminary analysis of Elektrilevi’s costs and benefits, following which Elektrilevi will submit a price reduction application to the authority. “This is why we cannot yet talk about final numbers, but we have estimated that the average price reduction might be approximately 8 percent,” said Treial and added that the price change will not be uniform in all packages.
The new price is expected to take effect from the beginning of 2019. Price lists must be disclosed at least three months before the price change.
Average network service fee decreased approximately 9 percent in total with two price-cuts for Elektrilevi’s customers in 2017.
Network service fee is cost-based and in case of changes in company’s cost or income bases the price is adjusted accordingly. The price is supervised by the Competition Authority.