TALLINN - The Energy Market Inspectorate decided on Aug. 30 not to satisfy a request for a price hike by the state-owned Eesti Energia's transmission grid.
The inspectorate said it rejected OU Pohivork's (Transmission Network) request since the grid could save 156 million kroons (10 million euros) in costs annually by cutting operating costs. Particularly, the inspectorate found that the grid could outsource service and repair works, as well as servicing a capacity reserve, at a lower price.
"Also, the transmission network has not searched for more rational solutions to buy services at a more favorable price in order to save costs," the state regulator said.
The inspectorate further added that besides saving costs, the transmission network had the potential to reduce electricity losses by 23 gigawatt-hours, or 10.4 million kroons, annually.
The higher transmission charges submitted for approval are part of an overall price rise planned by Eesti Energia, though the inspectorate's decision this week only concerns Transmission Network.
The company has also requested an increase in the prices charged by its distribution network subsidiary, OU Jaotusvork, and its sales subsidiary, but it has not moved for new prices for the generating of electricity at Narva Power Plants.
Eesti Energia filed its request for the higher transmission and distribution charges and the price of electricity on Feb. 27. The inspectorate's decisions about the latter two are expected to follow shortly.
The management boards of Eesti Energia and Transmission Network decided as a result to withdraw their requests for a price hike, effectively ending the pursuit they began in February.
"We will continue a serious and rational dialogue with the Energy Market Inspectorate on grounded prices for electricity," Eesti Energia CEO Gunnar Okk said.
A transmission grid company official said the company wanted to avoid appealing to the courts on the matter and would first try to determine whether it was possible to follow the cost-saving instructions.
Since transmission charges make up a part of the price rise planned by Eesti Energia, the regulator cannot approve new tariffs for the end consumer as long as it hasn't endorsed the price of power transmission.
By law, network and retail costs that make up the price of electricity must be reviewed separately.
If the energy monopoly's request had been approved, the average price of electricity for consumers would have risen about 15 percent.