Minister: CO2 component near half of universal service price

Kristjan Järvan.
Kristjan Järvan. Source: ERR

Data presented by Minister of Foreign Trade and IT Kristjan Järvan (Isamaa) suggests that the CO2 quota fee makes up 47 percent of the Competition Authority's universal electricity service price.

Järvan said at a press conference given on social media that he asked his advisers to determine the components that make up the universal service price of €154.1 per megawatt-hour.

The minister said that fuel, including oil shale, semi-coke gas and biomass, account for €36.4. The electricity producer's operational expenditure is €15.7, wear and tear €14, operating profit €14 and environmental fees €2. The sum of these components is €82.1.

The rest is the European Union's Emissions Trading System (ETS) and its current price of €72 per ton of CO2 emitted. It makes up 46.7 percent of the universal service price.

Estonia offers a further benefit of €50 for the duration of the heating season to offset the effect, Järvan emphasized.

The minister also suggested that at September's average market price of €230/MWh, considering the cost price of production, Eesti Energia would have sported a profit margin of 60 percent. The competition watchdog's universal price bought it down to 7.4 percent.

Järvan also explained the origin and goal of ETS, adding that while the instrument was acceptable when times were stable, the system should be changed today.

"So far, the system worked to a satisfactory degree. Talking about the price of electricity a few years ago, let us be honest, the CO2 quota system was not the most burning issue in society. While it has become it now. "It is entirely justified to ask, in a situation where we have Ukrainian refugees, Covid, energy crisis, whether exceeding those climate targets threefold is sensible," Järvan suggested.

He said that it is Estonia's position that it is not currently sensible, which position the government has communicated to the EU, while "there were not too many likeminded states."

"I believe the CO2 quota trading system will change in the future, but it needs a little more time. Estonia will keep working on it in a sustainable manner," he promised.

The minister also said that the rules of the electricity exchange should be revised. "They worked relatively well in peacetime. We can see shortcomings today and would like to render the system more open, change pricing rules, make it more transparent in terms of the highest bidder," he suggested.

Järvan criticized Eesti Energia CEO Hando Sutter who, on the one hand, says the universal price is too high, while his company struggles to up its profit margin.

"It is not the sole task of Eesti Energia to turn a profit. It has many strategic tasks, and I'm sad to say that the company has failed to really live up to many of them. I believe that the fact we will soon have a new Eesti Energia management board is a sign of how the government feels about the company's work," Järvan offered.


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Editor: Marcus Turovski

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