Maintaining security of heat supply

Ensuring reliability of heat supply to consumers is one of the most important obligations of the heating undertaking. Russia's war against Ukraine put the natural gas market under severe pressure throughout the European Union. For example, natural gas supplies to EU Member States have been reduced, and taking into account the demand to pay for gas supplies in rubles, which contradicts the sanctions against Russia imposed by the European Union, the sale of Russian gas to companies located in several member states has ceased.

In May 2022 the Ministry of Economic Affairs and Communications, similarly to Finland and Latvia, declared an early warning level for gas supply, which provides additional opportunities for securing gas supplies in a crisis situation according to European Union regulations5 . The Ministry also forwarded a letter to the Association of Estonian Cities and Municipalities and the Eesti Jõujaamade ja Kaugkütte Ühing [Estonian Power Plant and District Heating Association], in which they pointed out that the Estonian gas system has risk of gas supply interruption. The corresponding early warning level was announced in the Estonian gas system in spring. The letter stated that due to the difficult situation that has developed , it cannot be ruled out that there are district heating undertakings at the beginning of the heating season who will not be able to sign a gas supply contract for the winter. Therefore, without taking mitigating steps, there is a real risk of interruption of heat supply to some district heating areas. Against this background, it is important for district heating undertakings to proactively make the necessary preparations to secure heat supply – conclude gas supply contracts in good time or, in the absence of the possibility of concluding such contracts, prepare for the introduction of alternative fuels.

Technically, it is important to ensure that the heating undertaking's boiler equipment is capable of using shale oil or light fuel oil as the most common alternatives. Many newer gas boiler houses are not able to use these alternative fuels without upgrades, and in many cases there is no possibility to store liquid fuels on the territory of the boiler houses.

In order to find out the readiness of heating undertakings to secure heat supply in the new heating period, the Competition Authority asked heating undertakings whether it is possible to immediately replace natural gas used as the main or peak fuel for heat production with shale oil and what are the circumstances preventing the switch to shale oil. Also, what expenses/investments, together with the expected cost, would need to be made to switch to shale oil in each specific network area. The authority confirmed that reasonable and necessary investments related to securing heat supply in a critical situation and costs associated with switching fuel can be included in the cost-based maximum price of heat, which is approved by the Competition Authority.

We are happy to see that the heating undertakings have complied with the requirements for ensuring the reliability of the heat supply and the heat supply has not been interrupted.


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