Fr, 2.12.2022

Thousands of customers opt out of the universal service

Erkki Erilaid
Thousands of customers opt out of the universal service
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Household consumers still have a week to decide whether to switch to a universal service or to continue buying electricity in the old way.
Household consumers still have a week to decide whether to switch to a universal service or to continue buying electricity in the old way. Photo: Mihkel Maripuu
  • There is still a week left to opt out of the universal service.
  • People hope to receive cheaper electricity from the exchange.
  • It is no recommended to choose long-term fixed-price packages right now.

Thousands of customers have announced that they do not want to use the universal service and will continue with the previously selected electricity package. Some of them hope to save money with the exchange package.

The price of universal electricity service was revealed on Friday; the Competition Authority approved it at 15.4 cents per kilowatt-hour. The electricity sellers added their margin and VAT to this and the price rose to over 19 cents. The state reimburses six cents of this price, and thus the consumer of the universal service has to pay more than 13 cents per kilowatt-hour in October. Eesti Energia was the first to announce that the kilowatt-hour price of their electricity for home consumers, including state compensation, will be 13.24 cents in October.

Eesti Energia immediately started sending e-mails to customers on Friday night, in which they compared the cost of their July and August consumption with the price of the universal service. In total, they sent nearly 120,000 e-mails and nearly 11,000 printed letters to home customers.

If the universal service is cheaper for the customer, the electricity seller will transfer the customer to it automatically. If the customer does not want it, he must inform the electricity supplier. It is not necessary to notify the wish to use the universal service; it is automatically selected by the electricity seller for the silent customer.

“To date, about 2,500 customers have withdrawn from the universal service offer,” said Dajana Tiitsaar, head of Eesti Energia's Estonian market. “Approximately 2,000 customers who have not received our direct offer have joined the universal service on their own initiative.”

Customers have faith in the exchange

Electric Terminal operating in Tartu County offers universal electricity at a price of 19.11 cents per kilowatt-hour. They too have had customers who have opted out of universal service. “Customers believe that the stock market package is more affordable now. I am also considering giving up the universal service myself,” explained Electric Terminal board member Kuldar Assmann. 19.11 cents is the cheapest universal electricity price in Estonia so far.

Those giving up the universal service can be divided in two groups. Some believe that by staying with the exchange package they can control their consumption so that it would be cheaper. Others use a fixed-price package which costs a little more than universal electricity and prefer a fixed price to the variable price of the universal service.

Aarne Orgna, a civil engineer living in his own house, has monitored his electricity consumption and calculated how much universal service would be cheaper for him. In terms of monthly averages, the difference is not very big, because the house does not have electric heating and he has scheduled the use of other household appliances to the hours of cheaper electricity. However, he has doubts about the universal service.

“Eesti Energia offered a fixed price of 21 cents per kilowatt-hour for seven years. The difference with the universal service is small, and the state support also applies to it, and electricity will not get cheaper,” Orgna speculated.

Konrad Hanschmidt, co-founder and head of Gridio, the creator of the “Smart charging” mobile application and elektrikell.ee, analyzed the price of the universal service and found that it is basically like an insurance package in case power plants or cross-border energy links should break down and the price would rise.

“For the prices in Estonia, the biggest risk is that power plants need not remain in operation. If they should stop, the price can leap over one euro per kilowatt-hour or even four euros, as we saw recently,” he wrote on his Facebook page. “Therefore, I think that switching to 15.4 cents of the universal service is completely reasonable.”

According to Hanschmidt, long-term contract offers make use of the people's fears, and the sellers want to tie people up for years, but the price of long-term electricity contracts for 2024–2026 is already lower than ten cents. “This suggests that a seven-year contract at the price of the universal service is not reasonable,” said Hanschmidt. “I believe that the price will come down and prices above 20 cents should disappear.”

According to Eesti Energia's spokesperson Mattias Kaiv, offers are made based on current knowledge and no one knows what the future will bring. “In the case of the exchange package, you win in the first years, but in the last years you will pay more,” Kaiv did not rule it out.

The exchange price might fall

According to Hanschmidt, the 21-cent electricity price of Eesti Energia's seven-year fixed package is based on the assumption that the war in Ukraine will not end. “My gut feeling tells me that it may happen that the gas crisis will ease and the price of exchange electricity may still drop below the price of the universal service," Hanschmidt said.

According to the Ministry of Economy and Communications, 14 electricity sellers have announced that they offer universal service. These 14 cover 97 percent of all home consumers.

“The ministry recommends that home consumers whose electricity supplier does not offer universal service, be allowed to have general service, because even then the price of universal service will apply to them,” said Laura Laaster, head of public relations at the ministry. “It is important that the seller would not hold back the customer.”

In order to change the electricity supplier, it must be notified 14 days before the end of the month. Apartment cooperatives have a longer notice period: 30 days. A new contract can be concluded from the first day of the following month.

“We have encouraged the sellers to terminate the contracts earlier and to apply the universal service price for the whole month to the contracts signed in October,” said Laaster.

The electricity price of the universal service is not fixed and it may change as early as next month, because Eesti Energia continues negotiations with the Competition Authority to increase the price.

The universal electricity service is provided until April 30, 2026. One can join it until March 2026. One can cancel the use of the service at any time.

The gap between the most and least expensive prices is 0.61 cents

The most expensive universal service electricity is sold by Elektrum and the cheapest by Electric Terminal in Tartu County

Seller of electricity Consumer price (cents per kilowatt-hour)

Electric Terminal OÜ 19.11

AS Eesti Gaas 19.15

AS Alexela 19.19

220 Energia OÜ 19.19

Saku Maja OÜ 19.20

Eesti Energia AS 19.24

AS Elveso 19.69

Elektrum Eesti OÜ 19.72

Sources: the electricity sellers

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