The Minister of Economic Affairs and Infrastructure Kristen Michal replied to the interpellation concerning the correlation between the profit of Elering and network charges (No. 190), submitted by members of the Riigikogu Tarmo Tamm, Erki Savisaar, Mihhail Korb, Kersti Sarapuu, Andrei Novikov, Kadri Simson, Siret Kotka, Viktor Vassiljev, Märt Sults, Mailis Reps and Enn Eesmaa on 21 March.
The interpellators referred to the audited annual report of Elering of 2015, according to which the enterprise had gained a 41.6 million euro operating profit and a 25.1 million euro net profit, while the revenue had amounted to as much as 132.4 million euro. At the same time, the enterprise is planning to pay 31 million euro as dividends to the state this year, which is 11 million more than a year earlier. The Chairman of the Management Board of Elering has said that the reliability indicators of the transmission network managed by Elering were at all times best level last year.
The interpellators noted that it is difficult for ordinary electricity consumers to understand all that while at the moment the network charge constitutes 45 per cent of the electricity bill. The interpellators wished to know why network charges account for nearly a half of the consumer’s electricity bill, and if the Minister considers it normal in a situation where the enterprise pays 31 million euro as dividends.
Michal noted that Elering operates in a regulated business, and the Competition Authority monitors the allowed amount of profit, that is, justified profitability. He added that there is nothing abnormal in the payment of dividends. Dividends are used to fund state budget expenses, that is, the services provided to the Estonian people.
The network tariff indicated on the electricity bill of the final consumer contains both the transmission service and the distribution service tariff. Michal explained that the share of distribution service constitutes circa 2/3 of the network tariff, and circa 1/3 is the transmission service, or Elering’s share. The Elering network charge, however, constitutes circa 1/6 of the electricity bill.
“The rise of the Elering network charge has been caused in the first place by investments into connections with Finland and into the reserve power stations necessary to support connections. Indeed, thanks to these investments it can be stated, as has been stated here before, that the network charge accounts for a half of the electricity bill because, thanks to Estlinks, the electricity price has been 30 euro per MWh and slightly more, and not 50 euro per MWh and more, in Estonia over the last two years,” Michal said. He said in justification that, without Estlinks, the electricity price in Estonia would have been the same as in Latvia and Lithuania, and the network charge would have seemed relatively small next to that. “The investments into Estlinks have been good and profitable investments for the Estonian society,” the Minister noted.
Michal explained that, when making a decision on dividends, Elering first determines the amount of the investments necessary to maintain the quality requirements of the power network, and then chooses a reasonable proportion between the dividends paid and the reduction of the net loan burden. At the same time, it is observed that the financial ratios provided for in loan agreements are met.
Network charges are calculated on the basis of the methodology of the Competition Authority, and the expenses included in network charges do not have a dividend component. “The Electricity Market Act and the methodology for the calculation of electricity network charges of the Competition Authority allow to include in network charges the investments and expenses that are directly related to power transmission and that are justified.
The Minister of Economic Affairs and Infrastructure also replied to the interpellation concerning the future of the LNG terminal and Balticconnector (No. 199).
The Minister of Education and Research Jürgen Ligi replied to the interpellation concerning the substitution and workload of teachers (No. 180).
The Minister of the Environment Marko Pomerants replied to the interpellation concerning the protection of the interests of the state (No. 192).
The Minister of Foreign Affairs Marina Kaljurand replied to the interpellation concerning a free trade agreement between the European Union and the USA (No. 191).
The Minister of Social Protection Margus Tsahkna replied to the interpellation concerning the sustainability of women’s shelters (No. 179) and the interpellation concerning investment support for special welfare (No. 185).
The Minister of Justice Urmas Reinsalu replied to the interpellation concerning economic criminal offences (No. 182) and the interpellation concerning the covering of the costs related to the implementation of the amendments to the Code of Criminal Procedure (No. 184).
The Minister of Entrepreneurship Liisa Oviir replied to the interpellation concerning dishonest trade practices used with regard to Estonian small producers (No. 178), the interpellation concerning the wasting of money on “Logo of Estonia” contests (No. 188) and the interpellation concerning the halting of peripherisation and the situation of enterprise (No. 195).
The sitting ended at 9.35 p.m.
Video recordings of the sittings of the Riigikogu can be viewed at https://www.youtube.com/riigikogu
(NB! The recording will be uploaded with a delay.)