Elering CEO: Choice between volatile or evenly high electricity prices

Taavi Veskimägi.
Taavi Veskimägi. Source: ERR

While fluctuations in the price of electricity are alarming, it is the future and Estonia needs to decide if it prefers volatile or evenly high electricity prices, Taavi Veskimägi, chairman of the management board of Estonian gas and electricity system operator Elering has said.

Speaking on ETV's "Esimene stuudio" program on Tuesday evening, Veskimägi said high electricity prices raise concerns; however, the readiness to start reviewing the basics of the free electricity market after a couple of days of record-high prices is equally as alarming.

"One should always inquire about the reasons behind it. It is caused by an increase in input prices -- we know the price of gas: it was six times smaller a year ago; we also know the price of carbon dioxide, and many variable costs have become more expensive for power plants," he said.

While the present volatility in electricity prices is alarming, it is the future, according to Veskimägi.

"Our choice is not between an evenly low or volatile price, it is between an evenly high or volatile price," Veskimägi said, adding that if Estonia wants to get rid of volatility, investments in supplementary production devices are needed, which will have to be paid for by the consumer.

The head of Elering said that in Europe, electricity is a free market product and if there is a wish to redefine electricity as a public good, the corresponding discussion will be held in Europe now during high prices.

Veskimägi said that low prices have rather been the prevailing concern in European electricity exchanges instead, having caused power plant closures and temporarily also excluded Estonia's own Narva power plants from the competition.

He added that the solution for the future is rather more cooperation with the neighboring states' electricity systems and not less.


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Editor: Helen Wright

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