The rising cost of construction and electricity affects Elektrilevi as well
Similarly to the rest of the economic environment, the cost of construction as well as electrical equipment and materials has significantly increased. Just like the overall inflation, which exceeded 20% in May, the cost of works carried out in the power grid has also increased. The cost of grid construction has gone up by nearly 25% since the end of 2021 alone. The price increase of metals and materials arising from the war in Ukraine has had a particularly major impact.
The rising cost of materials and construction has a direct impact on the cost of power grid construction. Due to the rapid price increase, the ampere-based connection fee of Elektrilevi will increase from 14 July in a fixed area, i.e. within 400 metres from a substation. Further away, the connection fee continues to be based on actual costs. This change does not affect customers who have submitted a connection contract or an application before 14 July or those whose connection is already being prepared or who are waiting for a contract offer. The ampere price, which has not been changed since 2015, is currently 156 EUR/A, and will after the price increase be 198 EUR/A.
“The price of ampere-based connection has not changed for the last seven years,” said Mihkel Härm, chairman of the management board of Elektrilevi. “Unfortunately, the war in Ukraine and the overall fickle situation in world markets have also affected us and contracts with our partners. Increasing the ampere price is essential to ensure the quality of the service. We will do everything in our power to ensure that the ampere price remains stable over the next years.”
In addition to the increased cost of construction and materials, Elektrilevi is also affected by the persistently high cost of electricity. With a consumption of around 300 GWh of electricity per year, which is necessary to operate the power grid, Elektrilevi is one of the largest electricity consumers in Estonia. Compared to current coordinated network fees, the price of electricity has increased by 27%. Therefore, the Competition Authority approved a 3% increase in network fees starting from 1 October 2022. The change in network fees is the same for all customers regardless of their package.
The price list, which will take effect on 1 October, has been published on Elektrilevi’s website.
“The power grid must be equally reliable everywhere in Estonia and the price of the network service must be reasonable for our customers,” said Härm. “Fulfilling this goal requires consistent investments to upgrade and develop the grid. Electricity, construction and materials whose cost has increased by more than a fifth combined with more and more frequently occurring storms do not allow us to carry out the necessary works at current network fees.”
Elektrilevi is constantly contributing to improving the quality of the network service. In 2021, Elektrilevi reconstructed more than 600 kilometres’ worth of power lines and 200 substations. Major renovations of the medium-voltage grid are planned for this year in Riisipere, Jõgeva, Põltsamaa, Pärnu in the Papiniidu area, as well as in the vicinity of Mustvee, Türi, Nõva, Varbla, Audru, Lõpe, Kihelkonna, Orissaare, Elva, Tõrva, Nuia, Vigala and Võru. By the end of 2021, the proportion of Elektrilevi’s weatherproof grid increased to 72%. Investments in the power grid amounted to 100 million euros in 2021, which improved the security of supply of 70,000 customers. So far in 2022, nearly 2200 new electricity producers have joined Elektrilevi’s grid, which has increased the capacity of electricity production by 60 MW. Elektrilevi’s grid includes a total of 12,800 electricity producers with a production capacity of 546 MW.
Elektrilevi is the largest network company in Estonia, managing approximately 63,000 kilometres of power lines and 25,300 substations. The company has more than 533,000 customers. By the end of 2021, the proportion of Elektrilevi’s weatherproof grid increased to 72%. Investments in the power grid amounted to 100 million euros in 2021, which improved the security of supply of 70,000 customers.