Estonia's Energy Ministry to draft plan for possible compensation of high electricity prices

Estonia's government is weighing ways to soften an expected rise in electricity bills this winter, should cold weather combine with high prices on the energy market. The economy minister said the cabinet could again offer consumers compensation, with covering part of the network fee seen as the simplest option, though the terms of such support still need to be worked out.

Energy and Environment Minister Erkki Keldo said the ministry is already developing possible support measures that could, if needed, ease the growth in costs, particularly for the most vulnerable groups. He noted no decision has been made yet on whether or how much to compensate, but it is important that possible mechanisms are ready in advance. One option under consideration is compensating the network fee.

Similar support was given in 2022

A similar measure was applied in 2022, when the state compensated consumers for 50% of the network fee through electricity suppliers. Network operator Elektrilevi says it received between 3.5 and 5 million euros per month from the state for this purpose at the time, and costs could now be even higher.

The minister noted that funding is a separate issue, since the state budget is always short of money. One option would be to draw funds from the network companies themselves, for instance through Elering's grid congestion fee, though ultimately that money still comes from consumers or taxpayers. Elektrilevi board member Rudolf Penu added that offering a discount on the network service would require compensation from the state or another source, or alternatively support could be paid directly to consumers, for example through local governments.

On average, electricity itself makes up only 49% of a bill, with the network fee accounting for 39% and the rest made up of excise duty, renewable energy charges and other fees. Sergei Mordovin, head of an apartment association in Haabersti, believes the network fee is unjustifiably high and should be reduced — in his case it makes up a third of the bill, and halving it would cut the total bill by roughly a sixth.

The Ministry of Energy and Environment will prepare a compensation plan in the coming months and present it to the government.