Isamaa electricity market reform has not been given green light at talks

Power lines.
Power lines. Source: Siim Lõvi /ERR

Isamaa managing committee member Aivar Kokk said that the party wants the electricity market reformed in a way to obligate Eesti Energia to cap the price of electricity at €50 per megawatt-hour for households. The Reform Party and Social Democrats have not greenlit the plan.

How will your planned reform reach the ordinary person who currently has a fixed or market-rate contract with their electricity seller?

We know today that the price has hit €200 per megawatt-hour, while the normal price would be €50 per MWh. A big component therein is the price of CO2 quota. Eesti Energia pays €50 million for CO2 quota every month and our aim is to put a stop to that. If we compensate Eesti Energia for the half of the €50 million that is paid straight into the state budget, we would allow it to cap the price at €50/MWh for home consumers.

What about other electricity sellers?

Because Eesti Energia is a state company, we can agree on a fixed rate. The option exists in Lithuania, as well as France.

In other words, people would need to sign new contracts with Eesti Energia were your plan to come to fruition?

Yes, of course. New fixed-rate contracts would have to be signed. There would have to be a limit to how much power consumers could buy at the fixed rate. It should be around what is feasible for keeping the house warm and the lights on.

What could the limit be for an ordinary family?

In all, around 2 terawatt-hours nationwide. That would take care of household consumption.

What effect would it have on the market if virtually every household were to take you up on it?

If we're being honest, Estonia can generate the power it needs in the summer months, while the deficit is great in the winter. It should not be a major disturbance for the market as renewable energy producers are exempt from the CO2 quota. The cost price of Eesti Energia power generation is €30-35/MWh. If we add profit and taxes, I'm sure it can be sold for €50/MWh. We know that the CO2 quota price is over €100 today.

We share a market with the other Baltic countries and Finland. Would the move not disrupt the system?

It would. The soaring price of electricity today has just one reason – we are talking about CO2 quota on the one hand, but the reason it is more expensive in Finland is that [Estonian grid operator] Elering built a third open link to Latvia last fall. Knowing that Lithuania and Latvia have a constant power deficit that drives up the price, whereas producers sell to where the price is best, which in turn determines prices back home. Hence the overload fee of which Elering takes in around €10 million a month.

Those are the reasons for the peaking prices on the Estonian market. But this cannot be the responsibility of Estonian consumers.

A working group of the incoming coalition was convened on Wednesday evening to discuss your proposal. How far did you get?

Not far. Our proposal has been tabled, while there is no good solution or agreement yet. Isamaa is fighting for a favorable energy price for Estonian consumers heading into winter.

I did not feel strong support for the proposal from either potential coalition partner. The Reform Party is against it, while the Social Democrats remain hesitant.

Is it your goal to include the measure in the coalition agreement?

It is definitely what we have been promising people since last fall when we saw the electricity market situation become critical. The gas market and construction of an LNG terminal were also on the table. Things that affect both entrepreneurs and home consumers, and it is our goal to bring energy and fuel costs under control.

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Editor: Marcus Turovski

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