Government mulling lower electricity price for industry at ordinary consumers' expense
The government will begin discussions next year on differentiating energy prices, introducing a fixed and lower energy price for large industries, which would result in a price increase for regular consumers.
Climate Minister Yoko Alender (Reform) said at a government press conference that in many countries, differentiated and lower energy prices are offered to large industries. "Naturally, this means that these costs must somehow be compensated by other consumers, but many countries do this to stimulate the economy," said Alender.
Minister of Economic Affairs and Industry Erkki Keldo (Reform) stated that such measures could encourage the development of advanced and sustainable industrial enterprises.
"If we want new capacities here that, in the long term, lower energy prices for all consumers, and to prevent network costs from skyrocketing, we need to attract large consumers to the grid. This is because the final energy price consists of several components: the energy price itself, network fees, renewable energy charges, excise duties etc. So, we need to consider the overall impact. We will certainly look at the big picture, but to take a step back, we first need to create high-value-added jobs across Estonia that allow us to pay higher wages," Keldo said.
"I believe that in cooperation with the Ministry of Climate, we aim to bring this discussion on energy price differentiation to the economic cabinet early next year, within the first few months, to explore how we can become more competitive," he added.
Prime Minister Kristen Michal (Reform) emphasized that the goal should be to move toward lower prices.
"This is an important input for both households and industries. Part of the solution, as described by the climate and economic ministers, is the creation of new capacities capable of offering competitive prices with other countries. This means, for example, that the development of clean production capacities is important for both exports and price reduction. These capacities will bring down the average price," said Michal.
"This also means the unfortunate reality that fossil fuels will not always find a place in the market anymore. Fossil fuels will serve as reserve capacities in the future, while storage will be added to help stabilize prices, and possibly even nuclear energy in the future. These are all part of the package," added the prime minister.
Michal acknowledged that offering lower prices to industries would result in higher prices for regular consumers. "In the end, the energy price pool is still one pool. If you want industry prices to be lower, it means that consumers will pay a few cents more. That is how it works in other countries. Every decision has two sides, and these must be debated openly in society. That is the discussion we will begin," Michal said.
"We must examine the limits of what society can bear and what kind of agreement the coalition can reach," Alender added.
"If we want to find a solution, the discussion will first take place within the government cabinet to determine how this could work, what balance can be struck, how it would look across Estonia and how it would affect people and the economy. At this point, we are ready for a general discussion, but there is no concrete draft yet," Michal said.
Chairman of the Social Democratic Party, Lauri Läänemets, told ERR that lower energy prices should primarily benefit the food industry.
"There is a certain logic, based on examples from around the world, to providing cheaper electricity for energy-intensive industries, especially when there is a sufficient ecosystem and business activity around them. This doesn't just benefit one company but a larger chain, creating jobs and having a positive impact on the economy. In this discussion, the focus should be on the economic sector that truly benefits every Estonian citizen – namely, the food industry," said Läänemets.
"We know that energy prices are high. We know the difficulties faced by Estonia's food producers, from those manufacturing end products to those at the very start of the food production chain. The Social Democrats believe we must think about how to keep food prices lower or even reduce them," he added.
"This would have a tangible impact on ordinary people through economic growth, the development of the food industry sector and more affordable food prices," Läänemets emphasized.
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Editor: Aleksander Krjukov, Marcus Turovski