Impact of Universal Service to Electricity Consumption in Households
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University of Tartu, Analyst
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University of Tartu, lecturer
Introduction of the universal service into the Estonian electricity market in autumn 2022 led to a dramatic reduction in the price of electricity for many households which had previously kept an eye on stock market prices.
We determined that the weekly energy consumption increased by nearly three percent upon transition to the universal service. On weekdays and weekend evenings, consumption increased by more than one tenth, while it decreased during the nights, particularly over the weekend.
This implies that the universal service led to a short-lived increase in consumption, particularly during peak hours. This in turn means a higher burden on the power grid, which demands additional investments to ensure power supply during peak loads.
Our analysis used Eesti Energia’s data on household consumers from March 2021 until the end of October 2022. If the household’s electricity package exceeded the price of the universal service, Eesti Energia transferred the consumers automatically to the universal service as of 1 October 2022. The price of the universal service was 19.24 cents per kWh for the consumer.
The analysis showed that after the introduction of the universal service, those household consumers who replaced the stock exchange package with the universal service increased their consumption the most in October 2022 compared to 2021, particularly during peak periods. Those household consumers who kept their fixed package or moved from the fixed package to the universal service, adjusted their consumption behaviour less in 2022 compared to 2021.