Government reaches agreement on energy compensation measures

Reform Party and Center Party leaders Kaja Kallas and Jüri Ratas.
Reform Party and Center Party leaders Kaja Kallas and Jüri Ratas. Source: Priit Mürk/ERR

The Reform and Center parties finally reached an agreement on energy price inflation compensation measures on Thursday. The government is planning to compensate electricity prices exceeding €0.12 per kilowatt-hour and will also establish a price cap on gas.

"An agreement was reached and we now have a supplemental measure for private consumers. The compensation will be automatically added to the electricity bill, we will fully compensate electricity bills where the price exceeds €0.12 per kilowatt-hour (kWh), up to 650 kWh," Reform Party Riigikogu group chair Mart Võrklaev said.

"Some 80 percent of families consuming less than 650 kWh fit under this framework, but this measure helps everyone, it is valid for everyone up to 650 kWh," he added.

This means that if the price of electricity on fixed-price contracts or exchange price contracts exceeds €0.12 per kWh, the state will pay that part of the bill. The electricity provider will provide the consumer with a bill with the compensation already taken off.

A similar cap is already implemented for gas prices, which is set at €65 per megawatt-hours (Mwh). The state will compensate the consumer 100 percent for any prices exceeding that, up to 2.75 Mwh.

The government also reached an agreement on lowering network fees for companies. "If that is 50 percent for everyone today, then we will take the companies' share to zero. What we are still set to discuss is how to make a measure regarding gas for companies," Võrklaev noted.

Center Party chair Jüri Ratas said the support system will end up costing some €90 million, €45 million of which will be allocated to taking network charges for legal persons to zero.

Ratas did not specify where the funds will be drawn from. "At the moment, we are making an effort to not have to draw up a supplemental budget, if possible," the Center chair said.

An electricity pylon. Source: Siim Lõvi / ERR

The currently existing directed measure, which allows claims to be made for September-December will stay in place.

"Starting January, the supplemental measure, which is immediately reflected on bills, will become valid. Families that go under the directed measure, but could have higher consumption than 650 kWh, could also receive support from the directed measures, but there will be calculators for this purpose," Võrklaev said.

"Most people likely have no reason to apply for support from the directed measure in January, since it is automatically added to the bills, but it could end up being necessary for many," the Reform Riigikogu group chair added.

District heating prices could be affected by the aforementioned gas measure for companies, Võrklaev said. He noted that there is no agreement regarding that measure yet.

Reform and Center have been trying to reach an agreement since the start of the week. Center wanted to immediately introduce measures for the whole population, while Reform believed targeted measures should be introduced after further analysis.

The deadlock led some, including Center Party Chairman Jüri Ratas, to say the government was in crisis.

Energy bills have been rising for several months with December's bills being double or higher for many people. Estonia's January electricity prices in the Nord Pool power area are several times higher than at the same period last year, which can be seen below.


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Editor: Kristjan Kallaste

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