ANNUAL REPORT 2010 - Konkurentsiamet
ANNUAL REPORT 2010 - Konkurentsiamet
ANNUAL REPORT 2010 - Konkurentsiamet
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Price regulation of heating undertakings<br />
Pursuant to the District Heating Act, a local government has the right to determine<br />
district heating regions within the boundaries of its administrative territory. The only<br />
permitted heating alternative in district heating regions is district heating (except for<br />
persons who did not use district heating at the time of determination of the district<br />
heating region), due to which reason the consumers cannot choose an alternative heating<br />
method and the heating undertaking enjoys a monopoly status.<br />
Based on the Establishment of Price Limitations to Monopolies Act, significant<br />
amendments to the District Heating Act entered into force on 01.11.<strong>2010</strong>. If at earlier times<br />
the Competition Authority and local governments carried out supervision of the District<br />
Heating Act and approved the maximum prices of heat sold by heat undertakings in parallel<br />
(both according to jurisdiction arising from the District Heating Act), then starting from<br />
01.11.<strong>2010</strong>, only the Competition Authority has the respective rights and obligations. The<br />
major objective of the amendments to the District Heating Act was to ensure more<br />
comprehensive and intensive supervision of the district heating sector, as compared to local<br />
governments the Competition Authority has significantly greater experience in the<br />
regulation and supervision of the district heating sector, thus contributing to a more<br />
homogeneous regulation and equal treatment of undertakings in the entire sector of district<br />
heating.<br />
In addition to the above, the approval principles of the maximum price of sold heat were<br />
changed so that the heating undertakings had more obligations to ensure the sale of heat to<br />
consumers for fair and reasoned prices. For this reason, a principle has been provided in the<br />
District Heating Act that a heat undertaking is required to monitor such circumstances,<br />
independent of its activities, that affect the price of heat to consumers, and submit a new<br />
limit price approval application to the Competition Authority within 30 days from the<br />
emergence of such circumstance that can affect the price of heat to consumers by more than<br />
5 per cent. Hence, a heat undertaking is required to harmonise a new limit price of heat with<br />
the Competition Authority, for example in case of a decrease of the purchasing price of fuel.<br />
Among the most significant amendments, the Competition Authority was given the right to<br />
invalidate a current approval of the maximum price of heat and establish a temporary sales<br />
price of heat to a heat undertaking if the heat undertaking sells heat for a price that does not<br />
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