ANNUAL REPORT 2010 - Konkurentsiamet

Price regulation of heating undertakings
Pursuant to the District Heating Act, a local government has the right to determine
district heating regions within the boundaries of its administrative territory. The only
permitted heating alternative in district heating regions is district heating (except for
persons who did not use district heating at the time of determination of the district
heating region), due to which reason the consumers cannot choose an alternative heating
method and the heating undertaking enjoys a monopoly status.
Based on the Establishment of Price Limitations to Monopolies Act, significant
amendments to the District Heating Act entered into force on 01.11.2010. If at earlier times
the Competition Authority and local governments carried out supervision of the District
Heating Act and approved the maximum prices of heat sold by heat undertakings in parallel
(both according to jurisdiction arising from the District Heating Act), then starting from
01.11.2010, only the Competition Authority has the respective rights and obligations. The
major objective of the amendments to the District Heating Act was to ensure more
comprehensive and intensive supervision of the district heating sector, as compared to local
governments the Competition Authority has significantly greater experience in the
regulation and supervision of the district heating sector, thus contributing to a more
homogeneous regulation and equal treatment of undertakings in the entire sector of district
heating.
In addition to the above, the approval principles of the maximum price of sold heat were
changed so that the heating undertakings had more obligations to ensure the sale of heat to
consumers for fair and reasoned prices. For this reason, a principle has been provided in the
District Heating Act that a heat undertaking is required to monitor such circumstances,
independent of its activities, that affect the price of heat to consumers, and submit a new
limit price approval application to the Competition Authority within 30 days from the
emergence of such circumstance that can affect the price of heat to consumers by more than
5 per cent. Hence, a heat undertaking is required to harmonise a new limit price of heat with
the Competition Authority, for example in case of a decrease of the purchasing price of fuel.
Among the most significant amendments, the Competition Authority was given the right to
invalidate a current approval of the maximum price of heat and establish a temporary sales
price of heat to a heat undertaking if the heat undertaking sells heat for a price that does not
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