Minister: No additional energy price support measures currently agreed on

Riina Sikkut.
Riina Sikkut. Source: Ken Mürk/ERR

Household consumers whose consumption levels are modest will benefit from the compensation for high energy prices as announced in principle yesterday, Thursday, Minister of Economic Affairs and Communications Riina Sikkut (SDE) says.

However, those with "higher" levels of consumption, particularly of natural gas, will face a tough winter, the minister added, though the coalition has no plans for additional measures as things stand, Sikkut told ETV news show "Aktuaalne kaamera" (AK) Thursday, in an interview which follows.

Interviewer Margus Saar: In your estimation, will domestic consumers be able to cope with their heating bills in the coming winter?

Minister Sikkut: People's consumption levels vary so much, ad to which, what [a benefit] is being used for – when an individual uses district heating, natural gas and electricity, they will obtain three types of benefit.

If they are only using electricity from these three, this depends on whether they have a fixed package already, or not.

At present, two-thirds of electricity consumers have fixed their electricity package, and probably this winter they will be getting a cheaper rate than is quoted on the Nord Pool exchange, and possibly even cheaper rates than [planned] universal service.

What should those people do who have to pay €350 per month for their heating, but also need to buy food?

The price has increased for all energy carriers, mostly multiple times. It cannot be assumed that a person can somehow foresee risk, or mitigate it. Nor does anyone consider it normal behavior to start cooking at night or to set an alarm clock to start the washing machine (in order to benefit from cheaper electricity rates, often observed in the small hours of the morning – ed.). The goal should be that people can live in the same way as before.

Compensation should make it possible to offset the risk carried by peak prices. However, it is clear that the prices will be higher than last winter or the year before. We discuss gas, electricity and district heating, but we are actually talking about the conflict, with Europe withdrawing from Russian gas supplies, while this uncertainty is what is driving up the price of gas. 

This is not purely a matter of compensation, but that Europe must be united and Russia cannot use gas as a weapon.

Apparently, the current proposals will be accepted (by cabinet and Riigikogu – ed.), elections are coming in March, and then people will really understand how the winter went. Are additional measures also planned, or will they be left to nearer the elections, when public dissatisfaction has perhaps grown quite large?

For home consumers, the compensation package sets a practical price ceiling for them, whose excess only has to be covered by one fifth, while as the calculations demonstrated, according to current forecasts, the state will aid to the tune of about a fifth for both electricity and district heating, and even more than half of the total bill in respect of natural gas. 

This is the extent of assistance currently agreed. There is a large number of home consumers for whom this is sufficient, whose consumption is relatively small, who live in an apartment, who do not heat a large area with gas. For them, this compensation will probably bring relief. For those with higher consumption, this winter will be difficult, but no additional measures have been agreed upon at the moment.

As far as the government goes, the primary concern is to have gas, electricity and liquid fuels on hand - the issue of security of supply is foremost. In the case of prices, [new] benefits can always be negotiated.

Have I understood it correctly, that the government has set a consumption cap for compensation of gas, but not for electricity. Is this targeted correctly? Figuratively speaking - if it is necessary to heat a second swimming pool with electricity, the state will also compensate for this?

The fact that similar compensation as for gas should be applied in the case of electricity – ie. where there is a price ceiling, and that 80 percent of the part that exceeds the ceiling is compensated for, and there is a consumption volume limit - was discussed during the coalition negotiations (in June and July – ed.).

And the universal service was agreed upon. On the one hand, both this side of the implementation and the fact that there will be a universal service (which just passed its first of three Riigikogu readings – ed.) plus compensation will be cheaper for the consumer, in the end. 

The fact that there is no ceiling with electricity, and people with high consumption levels also receive compensation, this is indeed the case for electricity this year, but economical energy consumption can be recommended to all, and we will not be able to get over this in the next ten years.

From the perspective of entrepreneurs - if €154 million is spent on private consumers, a large part of the energy consumed still goes to entrepreneurs. You won't support entrepreneurs with €600 million, or how realistic would that be?

No commercial support measures have been agreed upon. The main difference is that the home consumer has to pay his or her bill, whereas in the case of business, we can see that a lot of the input prices have already been passed on to the finished product or service they provide. 

This is reflected in the current inflation level. Helping the home consumer in the first place has been a priority for the coalition. In the case of companies, we will discuss the measures, together with the new ERR building (the planned TV house – ed.) and teachers' salaries - these decisions are all made in concert.

This is a very strategic maneuver, but I also wanted to ask about when the hardships of entrepreneurs eventually reach employees - do you foresee a wave of bankruptcies, and do you foresee large layoffs coming?

How the winter turns out depends a lot on whether we see a victory for Ukraine and some stability. 

If the uncertainty persists, the prices of energy carriers will also be high. 

Entrepreneurs could think about alternative heating sources or energy-efficient solutions or about establishing their own energy production. It is needed not only for this winter, but for a longer time.

Riina Sikkut was talking to ERR's Margus Saar.

Minister Sikkut sent the regulation to the Ministry of Finance for approval on Thursday. It sets out the conditions for the energy subsidies that will come into effect in the fall. In total, the subsidies from the state budget set aside to pay for the measures amount to €154.4 million. According to the bill, the state compensates household consumers for the price of energy consumed from October 1 to March 31, traditionally heating season in Estonia, in three ways, pertaining to the three types of domestic energy consumption – electricity, natural gas, and district heating, the latter supplied to many apartment buildings in the form of hot water centrally controlled and piped in, heated, often, by natural gas.


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Editor: Andrew Whyte

Source: Aktuaalne kaamera

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