On 1 July 2023, the new Public Water Supply and Sewerage Act entered into force, establishing the bases for planning, organisation and use, the rights and obligations of the state, water undertaking, local government and consumer, state supervision, and liability for violation of the requirements. The bill sets out the principles and bases of pricing the public water supply and sewerage services. Compared to the previous Act, a new regulation regarding the procedure for the management of hazardous substances was introduced in order to ensure that there is an overview of hazardous substances from their place of origin until their treatment. The grounds for suspension and termination of the contract arising from breach of contract and the principles of sustainability of service provision were also supplemented. The principles of the methodology for the pricing of water, which were previously set out in a guideline prepared by the Competition Authority, were also brought to the level of law. One of the important changes was also the provision of a time limit for eliminating the price difference for legal and natural persons – a water undertaking, if it has set different prices for public water supply and sewerage services for legal and natural persons, is obliged to bring the prices in line with the principle of equal treatment within three years from entry into force of the Act. Therefore, prices should be harmonised by 1 July 2026 at the latest.
However, the Estonian water sector is facing a situation where European Union subsidies are decreasing drastically, but the sector will continue to need large-scale investments in order to continue providing quality water and sewerage as a vital service. It is the task of the Water Services Steering Group convened by the Ministry of Climate to find out how by 2025 to reorganise the Estonian water sector. Technical support for the impending work will be provided by the European Commission’s Directorate-General for Structural Reform Support. The parties involved in the water reform have confirmed their willingness to cooperate to prepare a reform plan – the heads of the Ministry of Climate, the Competition Authority, the Association of Estonian Cities and Rural Municipalities, the Estonian Waterworks Association, the Estonian Central Union of Homeowners [Eesti Omanike Keskliit], the Health Board of Estonia and Environmental Investment Centre signed a goodwill and cooperation agreement.
More specific proposals and news related to the water reform are expected in particular during the second half of 2024.
With regard to energy, it can be noted that the main changes in the electricity and natural gas sector relate to 2022, when the amendments relating to the transposition of common rules for the internal market for electricity of Directive (EU) 2019/944 of the European Parliament and of the Council entered into force in the Electricity Market Act, which led, inter alia, to the tightening of the requirements for management of distribution networks and laid down a requirement to formulate a plan for network development. However, taking into account the geopolitical situation of 2022 in which the likelihood of a halt in gas supplies from Russia increased, the Natural Gas Act was supple[1]mented by a regulation 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. 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.
Taking into account the need and objective to accelerate the transition to renewable energy and create conditions conducive to its promotion, the possibility for network opera[1]tors to purchase wasted power as energy produced from renewable sources and to reduce the pressure on the increase in connection costs was set out in the Electricity Market Act in 2023. The Act also specified provisions concerning the benefit instrument for local communities regarding wind energy. According to the bill, which has now passed its first reading in the Riigikogu, provision of the universal service will cease from May 2024 and a legal regulation for the introduction of a mechanism for electricity reserve capacity will be established. In addition, with the amendment of the Act, administrative costs related to the LNG extraction dock and infrastructure are included in the strategic gas stocks payments in order to increase Estonia’s security of natural gas supply. It also provides that, in an emergency, the network operator must deliver gas to the consumer at the same price at which it was purchased from the strategic stock. As a result of the amendments, the Competition Authority has the right to initiate misdemeanour proceedings if it becomes clear that the seller has resold the gas purchased from the strategic gas stocks to the consumer at a price higher than its purchase price.
The Competition Authority has been actively involved in the development of legislation governing the aforementioned areas of activity of the Authority, proposing amendments and supplements to the legislation.
There were no other changes in 2023 to the Competition Authority’s tasks regarding other areas over which the Authority exercises supervision (district heating, rail, post, ports and aviation).