Minister: Electricity support net likely to be considerably widened

Participants on Wednesday's edition of 'Otse uudistemajast', from left ERR's Anvar Samost, economics affairs minister Taavi Aas and businessman Indrek Neivelt.
Participants on Wednesday's edition of 'Otse uudistemajast', from left ERR's Anvar Samost, economics affairs minister Taavi Aas and businessman Indrek Neivelt. Source: Siim Lõvi /ERR

Various measures both long- and short-term are viable in solving the issue of the current, sky-rocketing price of electricity in Estonia, economics affairs minister Taavi Aas (Center) says. Most concretely, Aas says the threshold below which households can receive help with paying their bills can be nearly doubled.

Appearing on ERR webcast "Otse uudistemajast" Wednesday, Aas said reducing taxation on energy and widening the circle of those who would benefit from support packages would be the best way of dealing with the current, soaring energy prices.

He said: "We will definitely go to the cabinet with a proposal to raise the threshold," Aas said, adding that this threshold would be set at €1,200 per household, below which support could be granted. Currently the figure stands at not much more than half this, €673 per household.

Reducing VAT on electricity, a policy proposed not only by his party – though opposed by its government partner Reform – but also the opposition Isamaa party, would bring about €25 per month more to the average household, he said and, while this may not sound like much, when twinned with the other support package, the 50 percent compensation of network fees, it provides some help.

In the long run, Aas told "Otse uudistemajast", compensating for the high stock market price and, inter alia, considering at least a nuclear power plant construction, are also solutions.

Also appearing on the show, businessman Indrek Neivelt said he found a situation where up to half the populace – since €1,200 is the reported median monthly take-home wage - may need compensation as the result of poor energy policy to be a bizarre state of affairs.

"The problem today is that we don't have enough electricity for our own people," Neivelt said, a problem which is only exacerbated by the fact that Latvia, Lithuania, Poland and Finland are all in the same boat.

The pair did agree on one thing, that the CO2 quota system should be abandoned altogether, due to the upward pressure it exerts on prices.

Neivelt said the CO2 quota has led to Estonia becoming an energy-exporting country, and thus having to buy electricity (in the past around 90 percent of Estonia's electricity needs were provided by the shale oil power stations in Ida-Viru County – ed.).

Neivelt said the so-called green revolution and the lack of coordination between it, energy policy and experts therein, was a major issue, while Aas said of the CO2 quota system that: "As we see it, it just doesn't work. There are countries like Poland that say [scrapping the system] is a strong proposal," even as other countries, such as Denmark, oppose it

Neivelt said a problem arises whereby increasing the capacity of wind energy in the summer is done without thought of -20C, windless conditions coming in winter, meaning the self-created boosted capacity in summer does not translate through to winter – the most energy-critical period of the year.

This, in turn, means that increasing the electricity capacity created by Estonia itself will not benefit from it for a certain - in the most critical - period of the year.

Of other potential solutions to the soaring prices, Aas agreed with a proposal to leave the NordPool exchange, as a consideration, adding it would require mapping both positive and negative effects of doing so.

Setting a limit on the price of electricity – say in the region of €300-€400, to be covered by the state to the tune of €10 million according to initial calculations, would also be viable, Aas said.

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Editor: Andrew Whyte

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