Heating undertaking licence

An undertaking must have an operating licence for the following fields of activities:

  • production of heat;
  • distribution of heat;
  • sale of heat.

The above operating licences are valid for an indefinite period and are issued by the Republic of Estonia Competition Authority.

There is no licence obligation in the following cases:

  • The production of heat if the estimated annual production volume does not exceed 50,000 MWh per undertaking or if the undertaking does not produce heat in the process of combined generation of heat and power.
  • The distribution of heat if the estimated annual distribution volume does not exceed 50,000 MWh per undertaking.
  • The sale of heat if the estimated annual distribution volume of sales does not exceed 50,000 MWh per undertaking.
  • The sale of heat if the heating undertaking is part of a group and the combined annual heat sales of the group in Estonia to persons who are not part of the group does not exceed 50,000 MWh; The sale of heat if the heating undertaking does not produce heat in the process of combined generation of heat and power.
  • Where a person sells heat solely to its members, commercial lessees or tenants provided that the sale of heat is not the principal activity of the person and provided that heat is sold within a single immovable, or within a construction work that is a movable, together with the land necessary for servicing that construction work.

The activities of heating undertakings are regulated by the following acts:

Requirements for applicants

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

  • It is a public or private limited company that is entered in the commercial register or that is in process of being founded and possesses the technical capability and employs personnel with the requisite skills for engaging in the area of activity stated in the application.
  • The share capital of a heating undertaking that sells annually over 50,000 MWh of heat amounts at least to 31,950 euros.

Cross-border operation

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

In such case, the foreign undertaking shall submit an application to the Competition Authority for exemption from the licence obligation, which contains 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 adheres to 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 Estonian undertaking holds licence for the production of heat, distribution or sales 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 and submission of an application

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:

  • licenced territory applied for;
  • the layout plans and description of the networks located within the licensed territory;
  • description of the activity that is applied for.

The applicant must consider that the following ancillary conditions will be added to the operating licence:

  • The development obligation in accordance with section 14 (3) of the District Heating Act;
  • Other ancillary conditions, provided they are necessary in order to ensure security of supply or the performance of obligations arising from, or the achievement of the objectives of, the District Heating Act or the legislation enacted under it or in order to take into consideration the particular character of a specific activity.

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:

  • Production of more than 50,000 MWh of heat per year — 260 euros for every year of validity per one undertaking.
  • For the distribution of more than 50,000 MWh of heat per year — 260 euros for every year of validity per one undertaking.
  • For the sale of more than 50,000 MWh of heat per year — 260 euros for every year of validity per one undertaking or per an undertaking belonging to a group if the undertakings in the group sell a combined total of more than 50,000 MWh of heat per year.

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 changing 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:

  • SEB — EE891010220034796011
  • Swedbank — EE932200221023778606
  • Estonian branch of Danske Bank A/S — EE40330033416110002
  • Estonian branch of Nordea Bank Finland PLC — EE701700017001577198

Processing the application

The Competition Authority submits a preliminary reply to the applicant within three days as of receipt of application from the undertaking, which, amongst other, 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 by issuance or refusal to issue the licence within 30 days as of submission of all required data. 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 operating licence is issued for an unspecified term.

The Competition Authority issues the operating licence for the undertaking in an electronic form.

Amending the terms and conditions of the operating licence

An undertaking holding a licence 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 licence 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 licence.
  • 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 licence 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 licence or the ancillary conditions of the licence, a need to review the economic activity requirements, amend the licence or apply for a new licence, the Competition Authority notifies the undertaking thereof immediately.

If a need for amendment of the licence or application for a new licence appears, the notices are regarded as applications for amendment of the licence unless the undertaking has specified in the notice that it has no such wish. The Competition Authority adjudicates applications for the modification (amendment) of an licence within 60 days.

Both the notice on intention to change economic activities and the notice on change in economic activities can be submitted to the Competition Authority by one of the following means:

Suspension of the operating licence and renouncement of economic activity

A network operator may terminate its activities only if it transfers to another network operator the obligations incumbent upon itself by virtue of section 14 of the District Heating Act.

A network operator shall give the Competition Authority at least a twelve months’ written notice regarding termination of its activities, specifying the date and schedule for termination, and provide a sufficiently detailed overview of the circumstances which guarantee that the requirements provided in section 14 of the District Heating Act are met.

Undertakings, who hold licence but are not deemed providers of a service of general interest, notify the Competition Authority on the circumstances of economic activity (incl. temporary renouncement 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 the economic activity does not exclude the obligation of the undertaking arising from law, administrative act or agreement to continue its economic activity, also, in case of the existing obligation, the undertaking is not regarded as renounced from economic activity.

The note about the temporary suspension of economic activity and the application about the termination of the operating licence together with justifications can be submitted to the Competition Authority:

Revocation of the activity licence

An activity 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 a 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 adjudication related to the licences issued on the basis of the District Heating Act is authorised by law to the Estonian 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

Registry information and technical questions

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

Last amended: 04-04-2017 10:39 | Compiled by: Ministry of Economic Affairs and Communications