The purpose of the analysis was to provide an overview of the organisation of the European electricity market by using Estonia as an example, the regulations and requirements regarding the market, and the flexibility granted to member states in terms of market organisation. An overview of electricity trading on the wholesale market, bilateral trade and market supervision was prepared.

The Competition Authority carried out supervisory proceedings concerning the activities of Elektrilevi OÜ in connection with the problem that arose in Hiiumaa, where producers could not connect to the network¹ . In January 2022 Elektrilevi OÜ announced publicly that due to network restrictions in Hiiumaa, they will refuse to issue connection offers to producers who want to provide their output to the network. The Competition Authority found that Elektrilevi still has to issue connection offers in Hiiumaa, despite the occurrence of network restrictions.

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 postal sector is characterised by changes related to digitisation, which have accelerated in recent years. Sending of traditional letters has decreased gradually yet significantly. The forwarding of postal items is accelerating due to the growth in e-commerce volumes.

The Competition Authority applies measures in the railway services market to eliminate discriminatory or otherwise unfair treatment. Another important task of the Competition Authority is to resolve complaints filed by railway operators.

In 2011 Directive 2009/12/EC of the European Parliament and of the Council on airport charges¹ was incorporated into the Aviation Act, the aim of which was to establish a general framework regulating airport charges in the European Union.

There is no competition in water supply services and the price is approved by the Competition Authority. A water undertaking is a company in a very strong monopoly position that owns important means. In terms of legislation, the water network is somewhat similar to the electricity network, where the construction of a parallel network is not reasonable and there are only very few examples of competing pipelines. In addition, the water undertaking is appointed by the local government in its territory.

Unlike the price of electricity and gas, the price of district heating is not formed in market conditions, but is approved by the Competition Authority. The district heating sector has undergone a very significant development during the last decade. For example, if in 2008 the Tallinn district heating network produced heat almost 100% from natural gas, now the share of gas in heat production has decreased to about 30%. Similarly, the consumption of gas and liquid fuel has also decreased in other district heating networks.

Gas consumption in Estonia has decreased over the years, and due to the high price, one can predict a continued decrease in consumption and a transition to alternative energy sources. Unlike in Western Europe, in Estonia natural gas does not play such an important role in heating buildings. In Estonia, the most common type of heating is district heating, where the use of gas has decreased over the years and continues in the same direction at the current high price. The consumer price of natural gas comprises three components: natural gas, network service and excise duty.

Estonia and the other Baltic States form a part of the European single electricity market. The European single electricity market means that there are several connections between different price areas and electricity is transferred from an area with lower prices (higher production) to an area with higher prices (higher consumption), in accordance with the connection capacity between different areas. The Estonian electricity sector is characterised by a very strong dependence on the power exchange, where bilateral contracts are not common.