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Elektrilevi has submitted an application to reduce network fees

24.09.2018

Today, the network company Elektrilevi submitted an application to the Competition Authority for the reduction of the network service price starting from next year. If the application gets approved by the Competition Authority, the network service fee for the customers of Elektrilevi will decrease by 8 percent on average. The price change will vary by package.

A price reduction is possible due to Elektrilevi’s increased efficiency and a favourable economic environment: increased consumption volumes and low interests in financial markets. Changed pricing and a fixed fee that took effect last year have made the utilization of the power grid more efficient. Over the past year, the customers of Elektrilevi have renounced 3% of unused network capacities and terminated more than 2,000 network agreements in points where electricity was not consumed. “We are pleased to be able to bring these benefits in the form of decreased costs and a price cut to the customers,” Jaanus Tiisvend, the Chairman of the Board of Elektrilevi said.

He added that since 60 percent of the lines are kept operational in the network of Elektrilevi just for the consumption of 5 percent, then the search for efficiency is of critical importance. “Digitalization, remote administration of devices and streamlined working processes have helped to make the management of the power grid more efficient. This way, we have managed to keep operating expenses at a stable level regardless of the appreciation taking place in the surrounding environment. In addition, pricing that takes into account the network capacity being kept on stand-by for the customer contributes to a more efficient use of the grid,” Tiisvend said.

According to him, an increasingly more efficient network service helps to keep the price of the network service at a level as low as possible also in the future. “While our northern neighbours, for example, have taken the direction of a top-quality network through a substantial price increase, then here in Estonia, we are looking for solutions on how to provide a good-quality service at a reasonable price,” Tiisvend explained. The network service fee will decrease more for larger consumers and the change will be smaller in consumption points with lower consumption of electricity. Such pricing more proportionally corresponds to the expenses made by Elektrilevi to maintain a network connection. The network service fee for household customers will decrease by 6 percent and for businesses by 9 per on average.

Elektrilevi presented the data on the revenue and expenditure of the company to the Competition Authority this March, which was followed by a thorough analysis of operational and financial indicators, and a justified price level analysis. Today, Elektrilevi submitted an application for the reduction of the price together with the planned price list. If the Competition Authority coordinates the application, Elektrilevi will release the new price list 90 days prior to its entry into force. Presumably, the price cut will become effective from the beginning of 2019.

Last year, the average price of the network service decreased a total of 9% with two price changes for the customers of Elektrilevi. The network service fee forms an average of a third of an electricity bill. Read more information about the formation of the network service fee and the share of it in electricity costs.

Elektrilevi is Estonia’s largest distribution network company, which manages a total of approximately 60,000 kilometres of power lines and 24,000 substations.