Authority: Selling electricity at fixed prices in line with EU directives

Competition Authority.
Competition Authority. Source: Siim Lõvi /ERR

Director General of the Competition Authority Märt Ots said that European Union directives allow regulated energy prices for home and small consumers. This would make it possible to sell electricity at cost price in Estonia.

"It is definitely possible in Estonia, provided there is political will," Ots said at a sitting of the Riigikogu State Budget Control Select Committee on Monday.

He said that the Narva Power Plants are very effective and Estonia could implement a policy of returning CO2 money to least fortunate consumers.

"Discounting the CO2 price, I believe the regulated price could be €50 per megawatt-hour or less," Ots explained.

Chairman of the committee Urmas Reinsalu said that the EU energy directive fully supports returning the CO2 component to less fortunate consumers.

"The only reason the government is not doing that is that it brings in a pretty penny to be used for the green turn, so less energy would be consumed," Reinsalu said.

Reinsalu added that Eesti Energia could be obligated to offer electricity at a universal price to those who want it instead of depending on the market price that is not determined in Estonia, as is being done in Lithuania and France.

"We go to Helsinki, while out electricity stays in Estonia, stamp it with a Helsinki exchange stamp – €1,000 – and then tell the Estonian consumer that it is a sensible price. Why are we not offering an alternative?" Reinsalu asked, adding that people should be able to opt for a package that is not dependent on market price.

Minister of Economic Affairs and Infrastructure Taavi Aas (Center) found that the proposal would equal offering prices independently from the exchange, which Estonia could consider. "I do not want to rule it out, while we have had fixed-price electricity packages in its place so far."

The minister said he does not support the opposition's proposal of pulling out of the exchange system, while the CO2 quota trading could be reformed.

"As concerns going back to the drawing board with the CO2 measures package, we have allies. There are states that believe it would be sensible, while others find it should remain intact," Aas said.

Compensating power bills a la Norway not discussed in the government

Aas also said that the government has not discussed the state paying for a part of people's electricity bills as is being done in Norway. The country has decided to compensate home consumers for half of their electricity bills in December-March if the market price is above €70 per megawatt-hour. Families that consume up to 5 MW/h a month are eligible for the measure.

"The government has not discussed the feasibility of the Norwegian approach in Estonia," Aas said, adding that the Center Party still supports lowering the VAT rate on electricity.

The minister said that because there are two coalition partners, the other party needs to agree to measures.

Center Party leader Jüri Ratas also said that there is no consensus currently between Center and Reform for how to move forward in the electricity price matter.

"It is clear than no one measure can solve the problem and that they need to work in tandem. We must also not forget companies – energy price hikes affect all goods and services," Aas added.

The minister recalled that Estonia has slashed power transmission fees for all consumers, canceled next year's energy excise duty hikes and will be helping less fortunate families pay their bills.


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Editor: Marcus Turovski

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