Estonia to alleviate energy price shock by picking up transmission fee

Minister of Finance Keit Pentus-Rosimannus.
Minister of Finance Keit Pentus-Rosimannus. Photo: Mihkel Maripuu

Minister of Finance Keit Pentus-Rosimannus said that confirmation from the Competition Authority means it is virtually certain Estonia will pay part of the electricity transmission fee for all consumers and offer less fortunate households additional benefits in the total volume of €100 million to offset record electricity prices.

The Competition Authority said on Thursday that the government’s plan to slash the power transmission fee by half until March is feasible if the state compensates the network operator. A spokesperson for the authority added that it is too soon to comment in more detail.

The first part of the support package is aimed at people who need help the most, Pentus-Rosimannus wrote on social media. Up to €20 million will be allocated as benefits for least fortunate households. This concerns both the electricity price shock and soaring natural gas prices. The mechanism will be put together by the Ministry of Economic Affairs and Communications and will be implemented if the price exceeds 60 euros per megawatt-hour during the heating season. The Ministry of Social Affairs estimates the scheme will benefit 72,000 households. Benefits will be paid out by local governments using sale of CO2 quota proceeds allocated by the government.

The finance minister said that the second part of the package concerns slashing the power transmission fee by 50 percent for the heating season for €75 million. This also concerns companies for which the price hike is a serious problem. The government decided in favor of lowering the transmission fee as other levers with which to alleviate the price hike would have taken too long to implement. The power transmission fee currently makes up 37 percent of total electricity cost for private consumers and 20 percent for industrial consumers.