Keldo proposes energy bill support for households this winter

Estonia’s energy and environment minister Erkki Keldo has proposed measures to help households if energy prices rise sharply this winter, ERR reported. The proposals would reduce the cost of electricity, gas or district heating by up to 20 percent, but the announcement did not specify the price levels that would trigger support.

The state would cover half of electricity network fees for monthly consumption of up to 1,000 kilowatt-hours. The measure would cut the total bill by up to 15 percent for households using about 100 kWh a month and by about 7 percent for those using more than 1,000 kWh.

For gas, the state would cover all network fees on monthly consumption of up to 2,500 kWh. Households using gas only for a stove and oven could see their total bill fall by up to 14 percent, while those using gas to heat their homes could see a reduction of about 8 percent.

For district heating, the state would reimburse 80 percent of the price above 110 euros per megawatt-hour, excluding VAT. The proposal would apply in about 40 district heating network areas, where the price cap is roughly a quarter above Estonia’s weighted average. In the areas with the highest prices, heating bills in poorly renovated buildings could fall by 15 to 20 percent.

If the measures were in force throughout the winter months from December to March, they would cost the state budget about 45 million euros. About three quarters of the total would go towards electricity network fees, while gas network fee compensation would account for one tenth. The need for district heating support would vary, mainly depending on the competitiveness of heat and power cogeneration at the Narva power plants in the electricity market.

Keldo said the government needed to prepare practical measures before winter because the severity of the cold and the scale of any price rises were not yet known. He said covering network fees would be a straightforward option that would not require consumers to take action.

He also pointed to tension in international energy markets, saying developments in the Middle East and disruptions in the Strait of Hormuz could affect gas supplies and prices. The Environmental Board has granted temporary exemptions to heat producers in Narva and Tallinn to use shale oil in district heating if gas supplies deteriorate, Keldo said.

No decision has been made on whether to introduce the proposed measures. The government is preparing different scenarios and says any response will depend on energy market developments, the scale of a possible crisis, the final terms and the state budget. In the longer term, the ministry aims to increase affordable electricity production and develop energy storage and dispatchable generation capacity.