Eesti Gaas says fixed-price contracts should be binding for consumer

2022-01-21
BNS/TBT Staff

TALLINN – According to Estonian energy seller Eesti Gaas, the law should be amended in such a way that a fixed-price, fixed-term contract would be binding on the customer until the end of the contract term in both electricity and gas sales.

"With the current volatile prices, an energy seller can only offer a fixed price if he is satisfied that the customer will also fulfil the obligations assumed throughout the agreed term, or compensate the seller for the losses caused in the event of non-compliance," the CEO of Eesti Gaas, Ants Noot, said in a letter to the leaders of the state.

The CEO pointed out that Eesti Gaas has not concluded fixed-price energy sales contracts with household consumers on a large scale in the past either, as approximately 90 percent of their gas sales contracts for household customers are based on variable prices.

According to Noot, the risk of customer migration has now multiplied due to the large price fluctuations, depriving the company of a reasonable opportunity to offer a fixed price.

"On the other hand, there has been a clear increase in demand in society for fixed-price contracts that provide stability for consumers," he said.

Noot said that setting forth an opt out penalty in law would give Eesti Gaas confidence that it can fulfill agreements with suppliers and would ensure price stability for consumers at a much better price level than at present.

"For example, at today's prices and with the current regulation, we could offer a fixed price of 80 euros per megawatt-hour for a maximum of one year to customers who heat their home with gas. However, if the law allowed for an early termination fee, we would dare to make much better offers today: 73 euros per MWh for a one-year contract, 61 euros per MWh for a two-year contract and 52 euros per MWh for a three-year contract. The prices are exclusive of VAT," Noot said.

"When customers suffer due to high energy prices, energy sellers will suffer as well. We hope that through such a measure, which does not require additional funding from the state budget, we can all work together to bring energy prices for households to a reasonable stable level," the CEO of Eesti Gaas added.