Of openness of the Estonian gas market and price policy

Lately, media has paid a lot of attention to new operators on the gas and electricity market. Some urban legends have already evolved which we would like to disprove at this point.

Estonia has had open gas market since 1998. Eesti Gaas presented other entrepreneurs with the possibility to construct gas lines and sell gas already at the beginning of the 2000s and it has been done. Estonia had 40 network operators and gas sellers already in 2007. Exclamation of several market players as if the gas market is opening up only now is nothing else than a good way to gain attention.

Price noise disturbance is easy to form in the present situation where the companies offer both electricity and gas. However, one should be very careful when comparing prices. It is actually quite common for a customer to compare a price that includes with prices that do not and get a wrong impression that the price difference is significant.

From our company’s perspective, we feel that it is important to stress three aspects.

Firstly, Eesti Gaas follows the principle under law that when the purchase price of natural gas develops into more favourable one than originally estimated and considered in pricing, we refund the residential customer at the end of the year. There is no other gas seller who shares its price gain with its customers this way. The customer should note that this kind of netting will not take place if he/she has no valid gas contract with Eesti Gaas at the end of the year.

Secondly, the amount of profit Eesti Gaas may earn from our residential customers under law is limited. Other gas sellers have no such frames and are free to overcharge the customer as much as they should want.

Thirdly, Eesti Gaas is moving from standard price list towards personal pricing. As of the new year, gas price of a residential customer will depend on his/her gas consumption and own choices. The principle is that the higher the consumption volume and the more the customer uses the services provided by Eesti Gaas, the lower the price of individual services. For instance, if a customer purchases his/her electricity also from Eesti Gaas, his/her gas prices will be more favourable than without an electricity contract. His/her gas price also depends on how he/she chooses to settle the accounts with us. So, we don’t offer type prices and type packages but communicate with and consider each customer personally. It is economically reasonable for an Eesti Gaas customer to purchase both gas and electricity from Eesti Gaas.

Our company has 42 000 residential customers, about half of them use gas also for heating. Natural gas is the most favourable heating source today. Gas heating expenses are about three times lower than those of oil and electric heating.

Gas price has decreased during the last three years. Events on world oil and gas market will determine the developments of the future. We can predict price increase in 2017 to some extent due to oil prices that have increased by today, but the increase will affect everyone on the market.