What does the opening of the electricity market mean?

In eight months the era of monopoly electricity will end in Estonia. This means that the consumer can choose which electricity seller to buy electricity from. If you want to benefit from this change then you need to act this autumn.

You will need two service providers for electricity to reach your home. One will sell you electricity and the other provides the network services necessary for the transmission of electricity. It is like roads and traffic: the different makes of car driving on the roads are like the competing electricity sellers and the road network is like the network service where electricity is transmitted from point A to point B. Electricity sales and the network service have until now been bundled together, but this will change in the open market. The open market will create competition and the ability to choose for one service but the other service will remain a natural monopoly.

It is important to know that the open market only affects the electricity in your bill. For example, the average electricity bill for Eesti Energia's residential customers is 26 euros. Almost eleven euros of this is the network fee, electricity costs seven euros and eight euros goes to the Estonian government in taxes and fees.

In 2013 the open market will create competition for the electricity part of the bill. This means that customers will be able to choose the electricity seller they would like. Also in 2013, the national fixed electricity price will be replaced by the exchange price, set on the power exchange where 350 major electricity producers and sellers from the Baltic Sea region trade.

The open market does not create competition in the network service for the practical reason that it is very expensive for a country to build and maintain multiple competing power networks, so network operators across the world act as natural monopolies. This means that if your household is connected to the Jaotusvõrk network that belongs to Eesti Energia Group, then after 2013 you can choose between different electricity sellers, but Elektrilevi will remain as your network service provider.

In addition to the network service, the state taxes and fees such as the renewable energy fee, electricity excise and VAT will still be regulated by the government on the open market.

The full opening of the electricity market is only a few months away and so now is the right time to learn about the open market and the changes coming up. A good place to start is the Eesti Energia website We have launched a site dedicated to 2013 where you can watch a short video clip about the open market, read about the power exchange and market prices and view the current electricity exchange price. You can easily check what percentage of your costs you pay for electricity on your electricity bill.

The next newsletters will explain who can choose their electricity seller, what they need to do to manage this, and who regulates the price.