Estonian Electricity Prices to Rise 6% From August, Utility Says

Estonian electricity prices will rise an average 6 percent for consumers from August after state- owned utility Eesti Energia AS won approval to raise grid fees to fund investments.

Prices will rise because the company needs to invest 300 million euros ($438 million) through 2014 to upgrade the aging power grid and make it less vulnerable to bad weather, the Tallinn-based company said in an e-mailed statement today. The number of electricity outages per household will decline an average 20 percent during the period, it added.

Electricity prices will increase an additional 0.4 percent from June due to the annual indexation of tariffs approved by Estonia’s Competition Board in 2008, Eesti Energia said.

Increases in administratively regulated prices have led annual price growth in Estonia since last March, even as a period of deflation from May 2009 allowed the Baltic nation meet the euro entry terms. Consumer prices grew an annual 5.2 percent in March, with administratively regulated prices rising 6.3 percent and non-regulated prices growing 4.8 percent.

Average inflation will probably accelerate to 4.5 percent this year from 2.7 percent in 2010, the Finance Ministry forecast earlier this month.

To contact the reporter on this story: Ott Ummelas in Tallinn at oummelas@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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