Changes to the law related to the universal service of companies came into force

On October 23, amendments to the Electricity Market Act entered into force, according to which micro and small companies have the opportunity to purchase electricity as a universal service until the end of 2023. In the Chamber's opinion, there are still a number of unclear points regarding the universal service for companies, for which we are waiting for explanations from the ministry.

Which companies have the right to use the universal service?
According to the Electricity Market Act (§ 3 clause 15² and 34¹), micro and small enterprises are allowed to use the universal service. According to the law, a microenterprise is a company that employs fewer than ten people and whose annual turnover or annual balance sheet total does not exceed two million euros. A small enterprise is a company that employs fewer than 50 people and whose annual turnover or annual balance sheet total does not exceed 10 million euros.

How are the micro and small enterprise criteria checked?
If the initial version of the bill did not specify exactly how the above-mentioned criteria are checked, separate rules have been added to the law at the proposal of the Chamber of Commerce. According to the Electricity Market Act (§ 12 (6)), when verifying the right to provide universal service to a micro and small enterprise, the seller must be based on the volume of turnover and balance sheet and the number of employees reduced to full-time in the annual financial report of the year preceding the consumer's inspection. If the number of employees of the business consumer has changed compared to the previous financial year's report, the number of employees reduced to full-time in the employment register must be used as the basis for determining the number of employees.

It is still unclear to the Chamber of Commerce how the seller can obtain reliable data on the number of full-time equivalent employees. The Tax and Customs Board publishes the number of persons performing work quarterly, but this number does not indicate the number of full-time employees. The number published by the Tax and Customs Board also includes, for example, people working under a contract of law of obligations, for whom the workload is not known. We turned to the Ministry of Economic Affairs and Communications with this question, but we have not yet received an answer.

In addition, the unanswered question is whether and how it is possible to automatically obtain data from the business register on micro and small enterprises that belong to a consolidation group.

Can corporate tenants also benefit from universal service?
At the proposal of the Chamber of Commerce, the principle was added to the law that the universal service can also be used by a person who buys electricity for its transmission and sale to micro and small enterprises to the extent of the electricity required for this purpose (§ 12 (5) of the Electricity Market Act). This means that landlords who rent property to micro and small enterprises can offer a universal service to micro and small enterprises.

At the moment, we do not know whether and how it is possible for tenants who are micro and small enterprises to use the universal service in a situation where each rental space does not have a separate electricity meter. For example, if the building has ten rental premises and ten different tenants, but only one electricity meter. We are also waiting for further clarifications on this issue from the Ministry of Economic Affairs and Communications.

How will the transition to universal service take place?
In case of provision of universal service, the electricity seller has the right to propose to the business consumer to enter into a contract for the provision of universal service, if the electricity seller has a valid electricity contract with the business consumer and the price of electricity sold to the business consumer is higher than the price of the universal service (§765 (21) of the Electricity Market Act). The electricity seller must notify the business consumer of this at least seven days before the potential universal service contract enters into force. The business consumer must express his consent to join the universal service by notifying the electricity seller who made the proposal at least two days before the contract enters into force.

Will the entrepreneur be relieved of a contractual penalty if it switches to universal service?
If a business consumer terminates the concluded electricity contract prematurely, then unlike a household consumer, the seller of electricity has the right to demand a contractual penalty if such possibility arises from the contract.

How long can entrepreneurs use the universal service?
Micro and small businesses can use the universal service until the end of 2023.

Why can't medium-sized enterprises and large enterprises use the universal service?
During the development of the Law on Amendments to the Electricity Market Act, we proposed to allow medium-sized enterprises and large enterprises to use the universal service as well. The ministry informed us that this proposal cannot be considered because it is against the government's decision. At the same time, the ministry emphasized that the government has decided to implement various support measures for entrepreneurs to help them get through the crisis. These measures include loan guarantees, the support measure for investments in the security of supply for industrial enterprises and the increase in the budget for the resource efficiency measure.

As the Chamber of Commerce is not aware of the content of the aforementioned support measures, we asked the ministry for an overview of these support measures.

Amendments to the Electricity Market Act can be found HERE.

If you have any questions regarding the universal service for companies, please contact our lawyers at juristid@koda.ee.