Electricity undertaking licence

An undertaking must hold relevant licence to engage in the following activities:

  • generation of electricity, except where the producer uses generating installations whose total net capacity falls below 100 kW, and where the transmission network operator generates electricity in an emergency reserve power station;
  • provision of network services through a distribution network;
  • provision of network services through the transmission network;
  • selling of electricity;
  • conveying electricity via a direct current line crossing the national border;
  • conveying electricity via a direct line.

The licence to provide network services through the transmission network is granted to one undertaking only, to whom special rights and obligations are set out in sections 18¹, 261 and 39¹of the Electricity Market Act.

Distribution undertakings shall observe the special requirements set out in section 18 of the Electricity Market Act.

The Estonian Competition Authority grants previously mentioned licences for an unspecified term.

The licence obligation does not apply in the following cases:

  • generation of electricity, except for generation by a producer who uses generating installations which have a total net capacity of less than 100 kW;
  • provision of network services through a distribution network, provided that generation takes place in accordance with point 1 or 2 of subsection 6 of section 15 of the Electricity Market Act;
  • selling of electricity, provided that electricity is sold in accordance with point 1 or 2 of subsection 6 of section 15 of the Electricity Market Act;
  • the selling of electricity by the producer of that electricity, provided the electricity has been produced using generating installations whose total net capacity is less than 100 kW;
  • selling of electricity by a producer to another electricity undertaking or an undertaking belonging to the group to which the producer belongs, or at a power exchange.

Activities of an electricity undertaking are regulated by:

Requirements for applicants

In order to obtain the operating licence, an undertaking must correspond to the following requirements:

  • the electricity undertaking is entered into the Commercial Register or a public or private limited company under establishment (except a line possessor using a direct line);
  • the share capital of the network operator or the line possessor using a direct current line is at least 127,800 euros;
  • share capital of the manufacturer and the seller is at least 31,950 euros;
  • the undertaking has submitted all the necessary documents (see “Filling in and submitting the application form”);
  • special requirements for an undertaking providing network service through the transmission network and a distribution network operator are stipulated in section 18 and 181 of the Electricity Market Act.

An undertaking applying for an operating licence for the provision of network service through a distribution network must also correspond to the following additional requirements:

  • the organisation of the undertaking corresponds to the extent and type of the pursued activity;
  • the undertaking has a sufficient number of employees with the necessary qualification; among the employees of the undertaking, there is a person who has obtained a certificate of competency for managing electrical works stated in the Electrical Safety Act and a person in control of an electrical installation;
  • the undertaking has economic prerequisites for acting in this field;
  • the undertaking has other prerequisites for acting in this field in accordance with the present act and the legal acts imposed based on this act;
  • the activity of the undertaking does not threaten the security of supply;
  • the operating licence is issued, if it is not in conflict with section 60 of the Electricity Market Act and if the region stated in the application is suitable for the distribution of electrical energy.

A permit for transmitting electrical energy via a direct current line which crosses the state border and a direct line is issued to an undertaking, if the undertaking corresponds to the above stated requirements and the issuing of the operating licence is not in conflict with the provisions of section 60 and 61 of the Electricity Market Act.

Cross-border operation

As licence for an unspecified term to provide network services through the transmission network is granted to one undertaking only, it is impossible to apply for the provision of cross border network services through the transmission network, once such licence has been already issued to a network operator providing this service.

If an undertaking holds licence for the production of electricity, provision of network services through a distribution network, sale or transmission of electricity in another State which is a Contracting Party to the European Economic Area (hereinafter EEA) Agreement, which by its subject of review predominantly corresponds to the licence of Estonia and which validity has not been confined to a territory or place of business situated outside Estonia, then such undertaking does not need a separate licence activity in Estonia.

In such case, the foreign undertaking shall submit an application to the Competition Authority for exemption from the licence obligation, setting out the following information:

  • in the case of a sole proprietor, the name, personal identification code, in the absence thereof the date of birth, and business name upon the existence thereof, in the case of an undertaking which is a legal person, the business name and registry code;
  • address of the seat of the undertaking;
  • contact details of the undertaking (phone number, postal address and e-mail address);
  • name of the authority that has granted the licence and the date of issue of the latter.

In the adjudication of an application for exemption from the licence obligation, the Competition Authority is guided by the provisions of section 22 of the General Part of the Economic Activities Code Act.

If a foreign company wants to offer goods or services in Estonia in one’s own name continuously, it shall register a branch in the Commercial Register.

If an undertaking holds licence for the production of electricity, provision of network services through a distribution network, sale or transmission, wishes to provide these services in another EEA state, it is recommended to contact relevant economic authority in that state with an inquiry prior to commencement of activity or applying for exemption from the licence obligation, as the procedure rules may differ from country to country.

Information for operating in other countries of the European Economic Area can be found from the EUGO point of single contact of the respective country.

Filling in and submitting the application form

Together with the filled-in application for the operating licence and in addition to the data stipulated in section 19 of the General Part of the Economic Activities Code Act, the applicant must also present the following documents to the Competition Authority:

  • in case of providing network service through a distribution network, a definition and plan of the service area in the meaning of section 62 of the Electricity Market Act;
  • in case of transmitting energy via a cross-border DC line or a direct line, the maximum allowed operating voltage of the line, length of the line, line location plan and geographic coordinates of the line;
  • in case of transmitting electrical energy via a direct line, a document verifying compliance with the conditions stipulated in section 61 of the Electricity Market Act;
  • description of the activity, which is related to the application.

The applicant must consider that the following ancillary conditions will be added to the operating licence. In case of the operating licence for the production of electrical energy:

  • maximum allowed net capacity of the manufacturing equipment;
  • data of the location of the manufacturing equipment;
  • data of the energy source used for operating the manufacturing equipment:
  • data regarding the fact whether the electrical energy manufactured based on the operating licence can be sold by using the support stated in section 59 of the Electricity Market Act;
  • list of requirements applied to the production of electrical energy from a renewable energy source and to equipment used for such production, if the electrical energy produced based on the operating licence can be sold by using the support stated in section 59 of the Electricity Market Act;
  • description of the equipment which can be used for the production and sale of electrical energy when using the support stated in section 59 of the Electricity Market Act.

The following ancillary conditions will be added to the operating licence for the provision of network service through distribution or transmission network:

  • maximum allowed operating voltage of the network;
  • technical, economic and organisational requirements the network operator must meet;
  • if providing network service through a distribution network, data about the service area determined pursuant to section 62 of the present act.

The following ancillary conditions will be added to the operating licence for the transmission of electrical energy through a cross-border DC line and a direct line:

  • maximum allowed operating voltage of the line;
  • geographic coordinates of the line and length of the line. The following ancillary conditions may be added to the operating licence:
  • the requirement for granting a collateral security approved by the Competition Authority for covering the costs related to the relocation of the network and the related electrical installations or implementing the measures required for the restoration of the network and the related electrical installations;
  • a development obligation in accordance with section 66 of the Electricity Market Act.

NB! Before the submission of the application, the undertaking must pay a state fee in the extent stipulated in the State Fees Act.

Application can be submitted:

Payment of the state fee

Depending on the type of the operating licence, a state fee is paid for the review of the operating licence application:

  • For terminating the operation for manufacturing equipment the net capacity of which exceeds 1 MW — 640 euros;
  • For production of electrical energy — 160 euros for every year of validity;
  • For provision of network service through a distribution network with the annual service volume of up to 5 GWh — 960 euros for every year of validity;
  • For provision of network service through a distribution network with the annual service volume over 5 GWh up to 20 GWh — 1920 euros for every year of validity;
  • For provision of network service through a distribution network with the annual service volume over 20 GWh up to 50 GWh — 4480 euros for every year of validity;
  • For provision of network service through a distribution network with the annual service volume over 50 GWh up to 100 GWh — 6400 euros for every year of validity;
  • For provision of network service through a distribution network with the annual service volume over 100 GWh up to 500 GWh — 12,790 euros for every year of validity;
  • For provision of network service through a distribution network with the annual service volume over 500 GWh — 19,180 euros for every year of validity;
  • For provision of network service through a transmission network — 2560 euros for every year of validity;
  • For transmission of electrical energy through a cross-border DC line — 2560 euros for every year of validity;
  • For transmission of electrical energy through a direct line — 1280 euros for every year of validity;
  • For sale of electrical energy — 640 euros for every year of validity.

A state fee in the amount 50 percent of the above stated state fee rates will be paid for the review of an application for amending the terms and conditions of the operating licence. State fees must be paid to the bank account of the Ministry of Finance by using the reference number 2900080076:

  • Swedbank – EE932200221023778606
  • SEB – EE891010220034796011
  • Luminor Bank – EE701700017001577198
  • Danske Bank –EE40330033416110002

Processing the application

The bases and terms for the procedure of assessment of compliance with established requirements of the transmission network operator are laid down in section 261 of the Electricity Market Act.

For the generation of electricity, provision of network service through the distribution network, sale and transmission of electricity the Competition Authority submits a preliminary reply to the applicant within three days, which among others contains information on the validity term of the licence and the requirements for economic activities included in the subject of scrutiny of the licence.

The Competition Authority adjudicates the applications for licence within 60 days, except for applications for the licence to provide network services through the transmission network, which are to be decided on within 10 months. If an undertaking fails to submit all the required information in its application, the Competition Authority notifies the undertaking thereof no later than on the working day following the day of detecting such failure, determining a reasonable time limit for remedy of the deficiency.

If the undertaking still fails to submit sufficient information, the Authority may not adjudicate the application. In case of necessity, the Authority may suspend the adjudication time limit for 30 days or prolong it for up to 30 days.

The licence is granted for an unspecified term.

The Competition Authority issues licence in an electronic format.

Amending the terms and conditions of the operating licence

An undertaking holding an authorisation notifies the Competition Authority on changes in the circumstances of economic activity pursuant to the procedure prescribed in section 30 (1-3) of the General Part of the Economic Activities Code Act:

  • of an intention to change the circumstances related to the subject of review of the authorisation or the circumstances related to the ancillary conditions no less than 30 days before the intended change by an undertaking and no less than three months before the intended change by a provider of services of general interest (hereinafter notice on intention to change economic activities). A notice on intention to change economic activities shall also be submitted if an undertaking founds a subsidiary, which commences economic activities within the framework of the subject of regulation of the authorisation.
  • an undertaking notifies the Competition Authority promptly, but no later than within five working days, of changes in the circumstances related to the subject of review of the authorisation and circumstances related to the ancillary conditions that have occurred independently of the undertaking (hereinafter notice on change in economic activities).

If it appears from the notice that the changes bring along non-compliance with the economic activity requirements in the subject of review of the authorisation or the ancillary conditions of the authorisation, a need to review the economic activity requirements, amend the authorisation or apply for a new authorisation, the Competition Authority notifies the undertaking thereof immediately.

If a need for amendment of the authorisation or application for a new authorisation appears, the notices are regarded as applications for amendment of the authorisation unless the undertaking has specified in the notice that it has no such wish.

An application submitted by an undertaking for changing the terms and conditions of the operating licence will be resolved by the Competition Authority within 60 days.

The application for changing the terms and conditions of the operating licence together with justifications can be submitted to the Competition Authority:

Suspension of the operating licence and termination of economic activity

A network operator who is deemed provider of a service of general interest, as stated in section 213 of the Electricity Market Act, notifies the Competition Authority on partial or temporary renouncement of the service of general interest no less than three months in advance. In the adjudication of an application, the Competition Authority is guided by the bases laid down in section 35 of the General Part of the Economic Activities Code Act.

Undertakings, who hold licences but are not deemed providers of a service of general interest, notify the Competition Authority on the circumstances of economic activity (incl. temporary renouncement of economic activities or termination economic activity) no less than 30 days in advance. In the adjudication of applications, the Authority is guided by the bases laid down in section 30 of the General Part of the Economic Activities Code Act.

NB! The right to renounce economic activities does not preclude the obligation of an undertaking under law, administrative act or contract to continue to pursue economic activities; and if such obligation to continue to pursue economic activities exists, the undertaking is deemed not to have renounced economic activities.

The notice on temporary renouncement of economic activities and the application on termination of the validity of the authorisation together with the grounds can be submitted to the Competition Authority by one of the following means:

Revocation of the activity licence

A licence is revoked on the following bases:

  • intentional submission of incorrect information by an undertaking upon application for a licence, which affected the grant of a licence, provided that if such information had not been submitted, the grant of an licence would have been denied;
  • renouncement of economic activities by an undertaking;
  • validity of a relevant prohibition on economic activities imposed by a court judgment or arising from law in a relevant area of activity in respect of an undertaking, except for validity of a prohibition on economic activities imposed pursuant to the General Part of the Economic Activities Code Act.

The licence may be revoked on the following bases:

  • failure to commence economic activities within two years after issue of the licence or failure to pursue economic activities within two years, and in the case of provision of services of general interest, failure to commence economic activities within 12 months after issue of the licence or failure to pursue economic activities within 12 months or failure to commence economic activities within the term prescribed by an ancillary condition of the licence;
  • material violation of an economic activity requirement in the subject of review of the licence or ancillary condition of the licence;
  • a significant damage or danger caused to public order by the activity permitted by the licence, which did not exist or was not known at the time of grant of the licence and which overrides the interest of the undertaking in continuing the activity and which cannot be eliminated by amendment of the licence;
  • amendment of the ancillary conditions of the licence;
  • the notice on renouncement of provision of services of general interest. A licence is revoked as of communication or delivery of the revocation decision to the undertaking.

Supervision

The procedures related to the operating licences issued based on the Electricity Market Act are within the competence of the Competition Authority.

Contact details

Substantive information

Tiina Maldre

Competition Authority, tel: +372 667 2573, e-mail: tiina.maldre@konkurentsiamet.ee

Anu Vainik

Competition Authority, tel: +372 667 2572, e-mail: anu.vainik@konkurentsiamet.ee

Information about the Register of Economic Activities

Register of Economic Activities, tel: +372 668 7080, e-mail: register@mkm.ee

Last amended: 05-05-2016 14:23 | Compiled by: Konkurentsiamet