'Rahva teenrid': Resolving record electricity prices brings many challenges

Saturday's 'Rahva teenrid' panelists, from left Urmet Kook, Evelyn Kaldoja and Aivar Hünidmägi.
Saturday's 'Rahva teenrid' panelists, from left Urmet Kook, Evelyn Kaldoja and Aivar Hünidmägi. Source: ERR

Keeping future, sudden rises in electricity prices at bay, alleviating the current crisis and the possible psychological impact of a large proportion of the population suddenly finding itself in financial difficulty and having to apply for support were the topics on the table during Vikerradio's 'Rahva teenrid' politics discussion show broadcast Saturday.

Aivar Hundimägi of business daily Äripäev said finding a way to keep such price shocks to a minimum in the future is key.

He said: "Our problem in Estonia is simply that there may be two or three weeks a year in the winter when it is particularly cold, and when wind energy is not viable and we cannot use solar energy; in such times, then we really need that energy. This may be the take-away from the current crisis."

Also appearing on "Rahva teenrid", Postimees journalist Evelyn Kaldoja called the creation of support measures for low-income people amid record energy prices a good thing.

Kaldoja said: "This is very much needed. I think that many people were shocked this week when, in principle, a situation arose where half of the Estonian populace are now receiving social assistance. The shock is so great, but [the measures are] clearly needed," referring to the proposed near-doubling of the threshold for receiving electricity bill support, from the current €673 to the median wage of €1,200 – definitionally the wage which half the population earns no more than (this figure was quoted by economics affairs minister Taavi Aas (Center) earlier last week - while finance minister Keit Pentus-Rosimannus (Reform) put the figure at €1,052 on Thursday - ed.).

Hundimägi said that at the heart of the high electricity prices was demand outstripping supply, and the green "revolution" curbing electricity production capacities and the fact that generating electricity from oil shale was now economically not viable.

Kaldoja noted that the high prices were a Europe-wide phenomenon, though exacerbated in Estonia's case by its northern locale.

Of possible solutions, Hund said that thinking about energy policy more broadly is needed in the long term, while in the short term the support measures address this winter.

ERR's Urmet Kook, also appearing on Saturday's "Rahva teenrid", said that a little under half the households in Estonia have market-linked packages and while these are directly affected by the price rises, households with fixed packages are also affected, and the prime minister's recommendation to switch to the latter had not been successful as a policy, as some customers fixed terms are soon expiring.

"[The price rises] also apply to people with a 'fixed' package ... who have made an annual package, for example, and whose contract expires at the end of the year," he said.

"If the desire is for them to continue with a fixed package, they will get a much more attractive offer," he went on.

Evelyn Kaldoja noted the problems facing people who had been doing well economically in return for working hard, suddenly finding themselves overwhelmed by electricity bills.

She said: "This is certainly a major blow to self-esteem. A person seems to be doing well and correctly, doing an honest day's work, paying bills and then suddenly they're over their heads. The issue of wage poverty is a tough one," she said.

The payment of support could be resolved in such a way that an individual need not apply for it themselves, Hundimägi said, noting that accurate Tax and Customs Board (MTA) data and automated systems would make this viable.

Urmet Kook noted the social impact of having to apply for relief, and also the political ramifications this may have in the future (the next election is to the Riigikogu, in March 2023 - ed.).

He said: "An interesting situation is emerging. As of now, energy prices are rising and solutions are bein offered by the government, not to cut VAT, but to do so on the median [wage] basis, and we don't know how this will affect people. "

"If we have families who have to apply for social assistance for the first time in their lives, how do they feel psychologically? Do they feel that they are poor in this context? And how do they behave politically after that? I am not at all sure that all these people will be grateful for that later," Kook went on.

Inflation in other areas will rise the impact of wage poverty, Kaldoja added.

This edition of "Rahva teenrid" was broadcast on Saturday, December 11 on ERR's Vikerraadio channel and featured Evelyn Kaldoja, Aivar Hündimägi and Urmet Kook.


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Editor: Andrew Whyte

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