“Europe and a considerable part of the world have been hit by soaring energy prices, and it is important for us that the people of Estonia do not have to worry about high energy bills,” said Prime Minister Kaja Kallas. “In the second half of last week, we reached an agreement in principle with the coalition partner on a new additional package of mitigation measures and today, all members of the government voted in favour of this package. Our goal is for the support to reach the people and entrepreneurs of Estonia as soon as possible. The new mitigation measures apply to everyone. The energy bills of people and businesses are automatically lower, i.e. there is no need to apply for support separately. We also approved a loan guarantee support for companies that need a working capital loan to continue operating in the current situation.”
The prime minister emphasised that the government is also working on long-term solutions to bring down the energy prices. “In addition to the current crisis measures, the government is working to develop longer-term solutions for the energy sector to avoid price shocks in the future, ensure the operation of Estonian production capacities, and boost the entry of new production capacities into the market.”
Minister of Economic Affairs and Infrastructure Taavi Aas stated that energy prices are still very high, which is why the state has no choice but to help people even more with their monthly gas and energy bills. “It is now clear that the state aid provided to the people of Estonia must be much more extensive than we planned at the end of last year,” he noted. “The portfolio of energy supports for household consumers will now be supplemented in the form of a price limit for electricity and gas bills. It provides household consumers with a range of different and complementary ways that help them cope with the coldest and darkest months of the year.”
As the new support measure, the government will set a price limit for electricity and gas bills for household consumers until March, from which the state will compensate for energy costs. In the case of electricity consumption, the price limit for household customers is 12 cents per kilowatt-hour. If the price is higher than this limit, the state will compensate the electricity bill up to 650 kilowatt-hours. This means that if the average monthly price of electricity, either on the stock exchange or in a fixed-price package, exceeds 12 cents per kilowatt-hour, the part of the electricity bill that exceeds this price will be paid by the state. For example, if domestic monthly consumption is 650 kilowatt-hours and the bill is 150 euros, the average cost per person is 23.08 cents per kilowatt-hour. Thus, the cost of the consumer, including state aid, is no more than 650 kWh × 12 cents/kWh + km = 93.6 euros, i.e. the state compensates 56.4 euros out of a bill of 150 euros.
In the case of gas consumption, the same scheme applies to state support: the price limit for household consumers is 65 euros per megawatt-hour for consumption up to 2.75 megawatt-hours. “The consumer does not have to do anything to receive compensation – the part of the bills received in February that exceeds the price limit has already been deducted,” emphasised Minister Aas.
The gas and electricity consumption limit is not taken into account when paying compensation to apartment buildings in January. In February, the purposefulness of compensation in the case of apartment buildings will be analysed and, if necessary, the underlying data will be adjusted.
According to Minister Aas, in addition to household consumers, it is important for the state to help companies and authorities that have found themselves in a difficult situation in the energy crisis. Until now, companies were reimbursed for 50% of the network service fee, but from January to March, it will be reimbursed in full.
Andres Sutt, Minister of Entrepreneurship and Information Technology, emphasised that due to the continuing COVID situation and high energy prices, in addition to direct state support for people and companies, it is important to help those companies that have run into liquidity problems due to the high energy prices. “The sharp rise in electricity and gas prices has increased the energy costs of companies many times over,” he said. “Companies with fixed-price contracts are in a better position, but many of these contracts have expired or are about to expire in 2022. Therefore, this year, the Ministry of Economic Affairs and Communications will allocate up to 50 million euros primarily to those companies that temporarily need additional working capital to finance loan guarantees,” said the minister.
The total cost of compensating for the price limit for electricity and gas bills and the gas network charge, which includes the 50 million euros, is estimated at 74.6 million euros. The actual cost depends on the level of energy prices, the change in the shares of electricity and gas contracts with fixed prices and those depending on the stock exchange price, and the price level of fixed contracts. The cost will also depend on electricity and gas consumption volumes in the coming months – these figures may change significantly compared to the forecast.
The government has previously decided on temporary support measures amounting to 240 million euros to alleviate the energy crisis. These include compensation of electricity and gas network charges to both private and business consumers, as well as targeted support measures for families whose income in below the median wage, for whom the state compensates for 80 percent of the increase in gas, central heating, and electricity prices. This support measure must be applied for separately. For more information, see: https://www.rahandusministeerium.ee/et/energiakulude-huvitamine
