State to compensate energy price inflation for low-income families

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An electricity pylon.
An electricity pylon. Source: Siim Lõvi /ERR

On Thursday, the government decided to allocate some of the revenue from European Union CO2 emissions trading toward compensating the increase in the prices of energy for households with lower incomes. Up to 70,000 families can claim the compensation, according to estimates.

The measure will cost some €37 million and will reimburse less well-off households 70-80 percent of the increases of electricity and gas prices, applied retroactively from September this year to March next year.

The costs of the measure will be covered with surplus income from the EU's greenhouse gas emissions trading scheme.

Environment minister Tõnis Mölder (Center) said the surplus trading scheme amount, according to the summer 2021 forecast, will be up to €37 million, which, he said, should be enough to cover the cost of the increase in energy bills over winter and as noted the cost of the measure to date.

Minister of Public Administration Jaak Aab (Center) said that: "We considered different ways to mitigate the increase in energy prices, and support for less well-off households as the most vulnerable target group remained on the table."

"We will support families in paying bills exceeding the longer-term average price level so that the burden on these families does not increase during the already difficult period of the spread of the coronavirus," Aab went on, via a press release.

The application for the subsidy will be processed by the local municipality government.

Aab added that local government will therefore be key in implementing the support.

He said: "We are asking municipalities to help with the subsidies, because they know their people and families best. Understandably, the workload of municipalities will thereby increase, and we will compensate cities and rural municipalities for the costs related to the provision of the support."

The threshold for the compensation is €60 per MWh for electricity, €30 per MWh for gas and €65 per MWh for district heating.

Adults living alone with a net income of up to €673, households with two adults with a net income of up to €1,009 and families with two children with a net income of up to €1,413 are eligible for the subsidy.

Since most consumers' energy bills do not show prices by component, all applicants will be compensated on the basis of the total cost shown in their energy bills, including VAT, renewable energy charges, excise duties and network charges.

Depending on energy tariffs, the number of applications and the amount of subsidies allocated, it will be decided in February 2022, on the basis of the data available by that time, whether compensation can continue in April and May of that year, BNS reports.

This article was updated to include quotes from Jaak Aab.


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Editor: Kristjan Kallaste

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