Amendments to the Natural Gas Act and Electricity Market Act

Due to the geopolitical situation in 2022, the probability of the interruption of gas supplies from Russia increased. If this risk would have materialised, there would have been an increased risk of an emergency according to Regulation (EU) No 2017/1938 of the European Parliament and the Council, concerning measures to safeguard the security of gas supply. This means that it is not possible to guarantee natural gas supplies to all consumers, which is why the Natural Gas Act was supplemented in 2022. The supplements introduced a regulation into the law to ensure the viability of the gas system during a long-term gas supply disruption and to cover the costs of managing the strategic gas stock. In the event of a long-term disruption of gas supplies, the Natural Gas Act effective at that time did not regulate activities in a sufficiently efficient way and with the consideration of the needs of market participants. There was also no regulation to cover the costs related to the management of the strategic gas stock. The changes ensured the supply of gas to protected consumers and specified the activities related to the supply disruption in such a way that the gas in the system could be used optimally after the disruptions of gas supplies from Russia. The Competition Authority was also given the ability to issue a compliance notice to persons who do not comply with the restriction measures.

In relation to the adoption of Directive (EU) 2019/944 of the European Parliament and of the Council on common rules for the internal electricity market, several important amendments to the Electricity Market Act entered into force in 2022 with the definition of new terms, eg active user of network services, storage of electricity, energy storage unit, recharging point, flexibility service, regional coordination centre, non-frequency ancillary service etc. Among other things, the law tightened the requirements for managing the distribution network if at least 100,000 consumers are connected to the distribution network. In addition, a requirement was introduced that distribution network operators must submit a ten-year network development plan every two years, which provides planned investments for the next five to ten years. The obligation to apply for a trust mark for a tool used to compare the offers of electricity sellers was also introduced.

As another important amendment, the Electricity Market Act was supplemented with the regulation of universal service, which established an option to household consumers, to micro and small undertakings that comply with the requirements provided by law, and to local governments to buy electricity under an approved universal service. To ensure this, a regulation was established according to which a producer whose generating installation located within the territory of Estonia has a capacity that exceeds 150 MW (Enefit Power AS) is obliged to sell electricity, for the purpose of providing the universal service, on equal terms, to a seller of electricity at a price that has been approved by the Competition Authority. Also, a seller of electricity that belongs to the same group as the owner of said generating installation or holds a market share of at least 50% of the sale of electricity within the territory of Estonia (Eesti Energia AS), is obliged to buy electricity from the aforementioned producer at an approved price for resale to universal service consumers. Other sellers may also provide universal service to their relevant consumers.

The principle of price setting of electricity sold under the rules of the universal service was also set out in such a way that instead of the hourly market price, during the validity of the universal service regulation, the price of the universal service must be used as the base price of the universal service in the future, and that the Competition Authority may, in cases provided by law, establish a temporary production price or sales price for the electricity sold under the rules of the universal service.