About the network fee

How is the network fee calculated?

The price of the network service (i.e. the network fee) covers the expenses of maintaining and upgrading the electricity network. This includes the costs of the service provided by the transmission system operator Elering and distribution network operators, such as Elektrilevi. The price also includes a reasonable uniform margin established by the Competition Authority for all network operators.

The optimum way to transmit electricity is to have only one network operator in every area to avoid the costs of building overlapping networks. As the market for the network service is therefore not competitive, the costs of network operators and the price of their services are regulated. When the costs incurred by network operators change, they apply to the Competition Authority for approval of a new price.

There are over 30 network operators in Estonia. The costs of each operator depend on the character of their network, the density of consumers in the area, and the investment needs of the network, which is why different network operators apply different fees.

What does my electricity bill consist of?

The final price of electricity consumption for customers consists of three components: electricity, the network service, and state fees and duties. Based on the average network fee for all Elektrilevi customers and the electricity price for the universal service, electricity, network fee and duties each make up about a third of the final price. The proportions of these components vary depending on the customer category, package and consumption volume. For example, the network fee is proportionately smaller for business customers and larger for residential customers.

  • Network operators also have a duty to collect the renewable energy fee and electricity excise and transfer these to the state.

Breakdown of average electricity bill components for Elektrilevi customers as of January 2017

How have network bills changed over time?

Since 2005, when the price of the network service was first distinguished in electricity costs, the CPI and network service price have increased by 44% and 30%, respectively. This means that the network service has actually become 14% cheaper against the general cost of living. Elektrilevi has been more efficient than the rest of the economy in keeping its price at a reasonable level.

Main changes in the network fee and state duties/fees since 2005.

Network fees in Estonia and Europe

According to Eurostat, we are among the average when it comes to network service price for residential customers.

Average network service price for residential customers (cents/kWh). Source: Eurostat electricity prices overview, November 2016

Network fees in Estonia and neighbouring countries

There are differences in the prices of the network services provided by the network operators in Estonia and neighbouring countries, as the sizes of networks, volumes of consumption and the costs of network operators are different.

The network maintenance costs especially depend on the following factors:

  • Compactness of the electricity network
    The unit price depends on the size of the network relative to the number of consumers. As the network fee is often calculated from the kWh of electricity consumed, it also depends on the volume of electricity consumed per kilometre of power line.
  • Environmental conditions
    Costs are different depending on whether the network is located in an area highly dependent on the landscape or weather (e.g. forest) or in a city.
  • Network upgrade needs
    If the network has not been upgraded sufficiently in the past, the investments needed to improve its efficiency are larger.

We compared the network service price applicable to our average residential customer with the prices applied by similar network operators in our neighbouring countries. The data is accurate as of August 2016.

Network fee per kWh consumed

Residential customer in a detached house, 3000 kWh a year, Elektrilevi network package Network (Võrk 1)

Residential customer in a detached house, 18,000 kWh a year, Elektrilevi network package Network (Võrk 4)

Certain customer categories in Finland pay a smaller network fee than Estonian customers because a fixed fee has been established for all consumption points in Finland. Each consumption point thus contributes to maintaining the network connection readiness, while the kWh-based component of the network fee is cheaper.

A kWh-based network fee is currently prevalent in Estonia. This means that no network fee is received from places with zero consumption, and the circle of contributors to network maintenance is therefore smaller. Our network includes over 57,000 consumption points (nearly 10% of total) where the annual consumption is practically zero.