Minister: Lowering energy VAT to be tabled in government again

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

Minister of Economic Affairs and Communications Taavi Aas (Center) said that electricity prices still have time to climb even more during the winter and he promises to table the discussion of lowering VAT on energy.

Taavi Aas does not support making changes to the electricity stock exchange pricing, because it may cause a situation, in which more expensive providers will not have access to the market, which creates a different kind of deficit, still ending up in prices going up.

"Therefore, Estonia has held a position of not rushing to change the stock exchange pricing system. Short-term support measures for consumers and additional production capacities are preferred, especially green production capacities. These are the solutions for Estonia," Aas said.

He added that exiting the exchange would not be simple, because it requires the entire market to act in the same manner. "We are dealing with one specific network for heating. Networks are connected for electricity. All countries in the network would have to act similarly," Aas said.

The minister noted that Center Party chairman Jüri Ratas' idea of lowering the VAT on energy for consumers deserves to be discussed further. EU regulations would allow for VAT to be lowered up to 9 percent.

"Center Party will certainly make such a proposal to our partners so that we would return to the topic of discussing lowering VAT," Aas noted.

He added that Jüri Ratas has already asked for an extraordinary meeting of the government coalition council to discuss the issue. Aas expressed hope that the council would meet this week.

In an interview with "Aktuaalne kaamera" on Monday evening, Aas said lowering VAT is a measure, which can be implemented quickly. "We do not have many of these quick solutions," the minister said.

He added that another measure has already been offered up and it consists of providing additional benefits through local municipality governments. "I hope this gets going quickly. I know there are local municipality governments that have already taken the first steps to be able to start accepting applications."

The economic affairs minister said another option is for third country electricity providers to enter the market. "There is one Baltic electricity market and cooperation is key here. I know system managers have consulted with each other and Lithuania is ready to increase their part of the electricity trade, but it affects us all. I sincerely hope that is how it goes, which means we would give third country electricity the option to enter our market," Aas said.

He also supports amendments to the CO2 quota price system. "I always raise that topic in all EU meetings and I emphasize that forming a price on the quota and implementing compensatory measures does not work today. We are certainly not alone. We discussed this with the Polish energy minister last Thursday, he had the same position. I think things in the EU do not change quickly, but I still have faith that we can break this opposition at some point," Aas said.

He noted that Estonia can cover its energy demand, but new price records cannot be ruled out this winter.

"True, we are in a network with our closest neighbors, who have an even larger deficit. The decision to keep reserves in power stations in 2019 was the right decision. There could be more price records with the cold winter, but the International Energy Agency (IEA) presented its forecast at a European ministers meeting and said that energy prices would be falling in the second quarter," Aas said. "We cannot rule out price records this winter."

On Tuesday, the average price of electricity in the Estonian region of the Nord Pool energy market will reach a record €469, just a day after setting a record at €290.


Follow ERR News on Facebook and Twitter and never miss an update!

Editor: Kristjan Kallaste

Hea lugeja, näeme et kasutate vanemat brauseri versiooni või vähelevinud brauserit.

Parema ja terviklikuma kasutajakogemuse tagamiseks soovitame alla laadida uusim versioon mõnest meie toetatud brauserist: