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Elektrilevi steeply raises prices of connection services

Estonia’s state-owned electricity distribution network operator Elektrilevi announced on Friday that from Sept. 1, 2024, the price per ampere, which forms the basis for connection charges in designated areas, will be set at 331.15 euros excluding VAT.

The transmission capacity of the Estonian electricity network is becoming exhausted, and changing consumption habits will require a significantly more powerful network in the future. The current methodology for network charges and the pricing of connections no longer allows Elektrilevi to make the necessary investments to facilitate new connections to the desired extent. Elektrilevi, in cooperation with the Ministry of Climate and the Competition Authority, is looking for ways to reform the current methodology and thus improve the availability of connections, it said in a press release.

An analysis of connection services at today’s prices shows that the current price per ampere has not covered the justified costs of connection investments for connection contracts completed either last year or this year. To continue enabling connections to the electricity network from Sept. 1, 2024, the price per ampere, which serves as the basis for Elektrilevi’s connection charge for low voltage connections within a designated area, that is,  within a radius of up to 400 meters from a substation, will increase from 226.23 euros to 331.15 euros, excluding VAT.

The connection charge for areas beyond 400 meters from a substation will continue to be based on actual costs. This change will not affect customers who have submitted a connection application before Sept. 1, 2024, nor those whose connection is already in progress or awaiting a contract offer. The new price will apply to connection offers made based on applications received from that date onwards.

The network charge, approved under the current methodology, does not fully account for the need for capacity-enhancing investments required to achieve electrification-related objectives. Therefore, the costs of these investments are reflected in connection charges, which will significantly increase the costs associated with both consumption and production connections.

“Elektrilevi has also highlighted solutions in its development plan that would allow the network to be further developed if the current method for calculating connection charges is changed so that the customer would only bear the costs associated with constructing the specific connection point, allowing Elektrilevi to keep the price per ampere at a consistently low level. We are working with the Ministry of Climate and the Competition Authority to find ways to reform the current methodology and thus improve the accessibility of connections,” said Ardi Ratassepp, member of the board of Elektrilevi.

Elektrilevi said its goal is to provide a quality network service at the most affordable price possible. To achieve this, Elektrilevi must invest where the impact of investments on reliability growth is greatest. However, in recent years, the costs associated with connections have grown faster than the revenues from connections, forcing Elektrilevi to direct an increasing amount of investment funds specifically towards constructing connections.

To ensure a fairer distribution of costs in fulfilling connection contracts and network contracts, a change in the cost of connections is necessary. To ensure the provision of network services, continuous investment in the electricity network is required. Without changing the price per ampere, Elektrilevi would be unable to fulfil its development obligations imposed by law, as the connection charge under the current methodology does not provide sufficient funds to meet the development obligations related to connections, Ratassepp added.

Source: BNS

(Reproduction of BNS information in mass media and other websites without written consent of BNS is prohibited.)

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