Government approved additional energy price support measures

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“Europe and a considerable part of the world have been hit by soaring energy prices, and it is important to us that the people of Estonia do not have to worry about high energy bills,” said the Prime Minister Kaja Kallas. “In the second half of last week we reached an agreement in principle with the coalition partner on a new supplementary package of mitigation measures and today all members of the government voted in favor of this. package. Our goal is for support to reach citizens and entrepreneurs in Estonia as soon as possible. The new mitigation measures apply to everyone. Energy bills for individuals and businesses are automatically reduced, i.e. say there is no need to apply for assistance separately.We have also approved loan guarantee assistance for businesses that need a working capital loan to continue operating in the current situation. ”

The Prime Minister stressed that the government was also working on long-term solutions to bring down 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, to ensure the functioning of Estonian production and stimulate the entry of new production capacity into the market.

Economic Affairs and Infrastructure Minister Taavi Aas said 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 given to the people of Estonia must be much greater than what we anticipated at the end of last year,” he noted. “The portfolio of energy supports for residential consumers will now be complemented by a price cap for electricity and gas bills. It offers residential consumers a range of different and complementary means that help them cope with the most coldest and darkest of the year. year.”

As a new support measure, the government will set a price limit on electricity and gas bills for residential consumers until March, from which the state will offset energy costs. In the case of electricity consumption, the price limit for residential customers is 12 cents per kilowatt hour. If the price is above this limit, the state will offset the electricity bill up to 650 kilowatt hours. This means that if the average monthly price of electricity, either on the exchange or in a 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 the monthly domestic 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 consumer’s cost, including State aid, is now only 650 kWh × 12 cents/kWh + km = 93.6 euros, i.e. the State compensates 56.4 euros on a bill of 150 euros .

In the case of gas consumption, the same regime applies to state support: the price limit for residential 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 invoices received in February which exceeds the price limit has already been deducted”, underlined Minister Aas.

The gas and electricity consumption limit is not taken into account when paying compensation to apartment buildings in January. In February, the purpose of compensation in the case of apartment buildings will be analyzed and, if necessary, the underlying data will be adjusted.

According to Minister Aas, in addition to domestic consumers, it is important that the state helps companies and authorities that have found themselves in a difficult situation with the energy crisis. Until now, companies were reimbursed 50% of the network service fee, but from January to March, this will be fully reimbursed.

Andres Sutt, Minister of Entrepreneurship and Information Technology, pointed out that due to the ongoing COVID situation and high energy prices, in addition to direct state support to people and companies, it is important to help companies that have encountered liquidity problems due to high energy prices. “The sharp rise in electricity and gas prices has multiplied energy costs for businesses,” 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 Economy and Communications will allocate up to 50 million euros mainly to those companies that temporarily need additional working capital to finance loan guarantees,” the minister said.

The total cost of offsetting the price cap 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 evolution of the shares of electricity and gas contracts at the flat rate and those dependent on the stock market price, and the price level of the flat rate contracts. The cost will also depend on the volumes of electricity and gas consumption in the coming months – these figures may change significantly from forecasts.

The government previously decided on temporary support measures amounting to 240 million euros to alleviate the energy crisis. These include the compensation of electricity and gas network charges to private and professional consumers, as well as targeted support measures for families whose income is below the median wage, for which the State compensates 80% of the increase in gas, central heating and electricity prices. This support measure must be requested separately. For more information, see: https://www.rahandusministeerium.ee/et/energiakulude-huvitamine

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