At today’s sitting of the Riigikogu, Prime Minister Kaja Kallas made a political statement in connection with the situation on the electricity market. She pointed out the reasons for the crisis, gave an overview of the vulnerabilities the Government had decided to tackle, and described the long-term solutions as well as rapid measures that had already been taken.
First Kallas spoke of the reasons for high energy prices. She pointed out that Estonia does not have enough electricity produced from low-cost or renewable energy sources, and lacked the transmission capacity that would enable low-cost electricity to move into our market area. “The cheapest electricity comes from wind farms, both onshore and offshore wind farms, then from hydropower, and then from nuclear energy, and from combined heat and power plants,” Kallas explained.
The Prime Minister pointed out that the price of natural gas had had the greatest role in the increase of electricity price. “Much of Europe uses natural gas as its energy source. At the same time, Russia has significantly reduced its gas supplies to Europe. Because of that, the wholesale price of natural gas increased by four times, or by 400%, in 2021,” Kallas said. According to Kallas, there are also less production capacities in Europe than necessary. “We have been busy with closing old power plants, but building of new ones is more expensive, slower and more complicated, and as a result, the deficit has deepened.”
Kallas pointed out the shortcomings the Government had started to solve. She noted that environmental protection set several restrictions to developing of production capacities, and it was also necessary to deal with the “not-in-my-backyard” problem where people had a positive attitude towards renewable energy, but did not wish to see wind turbines near their homes. The local benefit element has been developed to solve that problem.
The Prime Minister also noted the need for the spatial plan for the maritime area necessary for the establishing of offshore wind farms, the importance of energy storage, analysing the reasonableness of the construction of a nuclear power station, making of grid connection simpler, increasing the transmission capacity between Estonia and Finland, and bringing hydrogen technology projects to Estonia.
Speaking of the different contracts of household customers, Kallas said that the contracts with stock exchange price may involve very low prices as well as the risk of very high prices. “That risk can be grounded by fixed-price contracts. But in order to achieve that people would conclude more fixed-price contracts, we have to create better conditions to electricity sellers, so that they could offer lower fixed price to household customers,” Kallas said.
According to her, today the household customers can leave fixed-price contracts at any time, which does not motivate the electricity sellers to offer better prices. The Prime Minister added that the Electricity Market Bill, which was being deliberated in the Riigikogu, would specify the terms and conditions for withdrawal from the contract that would give the electricity sellers confidence and enable to lower the prices of fixed-price packages.
Kallas said that the European carbon pricing mechanism was also directly connected with the functioning of electricity market. In her opinion, the mechanism has to be reviewed because the price changes in the Emissions Trading Scheme should be more planned. The Prime Minister also spoke about making the buildings more energy efficient and the measures that could be used for it as long-term solutions.
Speaking of rapid measures, the Prime Minister pointed out that in order to alleviate the price increase, the Government had decided to cancel rises in the excise duty, lower the power network charge by 50 per cent to all consumers, lower the gas network charge by 100 per cent to all consumers and to compensate 80 per cent of the increase of the electricity, district heating and gas price increases for households with up to median income. According to her, the cost of these measures is 245 million euro.
Kallas underlined that the price rise would be compensated to 380,000 households, and retroactively as of September 2021 to March this year. The Prime Minister encouraged everybody to whom the support was meant to apply for it, and the local governments to act rapidly and help their people. More information about the compensations can be found on the home page of the Ministry of Finance at rk.ee/energia.
“The sudden increase of energy prices has also hit entrepreneurs and other legal persons, therefore we have to avoid the snowball effect caused by lack of liquidity. We are looking for solutions also from the KredEx measures, like the loan surety measure or additional measures for surety contracts. Supporting the energy sellers’ additional need for liquidity, and the plan to reopen extraordinary working capital loan are also considered for supplementing the existing system,” Kallas added. Kallas said that, as possible solutions, the coalition parties also planned to discuss imposing a ceiling to stock exchange price and reducing the network charge to zero for companies.
In conclusion, the Prime Minister said that the current situation was unique because we were facing both an energy crisis and a security crisis, culminating during the two-year exhausting health crisis. However, in the 30 years since the restoration of its independence, Estonia has emerged from even more difficult situations. She said she was convinced that we would overcome this crisis by working together towards a common goal, and emerge from it stronger, more independent, and more sustainable.
During the debate, Jaanus Karilaid took the floor on behalf of the Centre Party Faction, Helir-Valdor Seeder on behalf of the Faction Isamaa, Mart Helme on behalf of the Estonian Conservative People’s Party, Mart Võrklaev on behalf of the Reform Party Faction and Indrek Saar on behalf of the Social Democratic Party Faction.
The Riigikogu adopted a Statement
At its today’s sitting, the Riigikogu adopted a statement in support of the territorial integrity of Ukraine, initiated by 28 members of the Riigikogu. The Statement of the Riigikogu calls on all nations to unconditionally support the sovereignty and territorial integrity of Ukraine.
Text of the statement:
“In 2014, Ukraine fell victim to an unprovoked aggression, the consequences of which have still not been eliminated, and the security threats in Europe are rapidly escalating.
The Riigikogu resolutely condemns the aggression of the Russian Federation targeted against Ukraine. The Riigikogu reiterates its position of 2014 and 2018, condemning the aggressive activities of the Russian Federation against Ukraine and the annexation of Crimea.
The Riigikogu calls on all nations to unconditionally support the sovereignty and territorial integrity of Ukraine.
The Riigikogu underlines that no country outside the European Union or the North Atlantic Treaty Organization (NATO) has the right to veto regarding the enlargement of these alliances. Ukraine’s membership in international organisations is a decision of Ukraine and these organisations, and third parties have no say in this issue.
The Riigikogu is of the opinion that no decision concerning Ukraine’s sovereignty can be made behind Ukraine’s back. The policy of spheres of influence is over in Europe, and the Riigikogu condemns all attempts to restore spheres of influence in Europe.
The Riigikogu firmly believes that one of the conditions for ensuring lasting peace in Europe is ending the aggression of Russian Federation against Ukraine.”
During the debate, Henn Põlluaas took the floor on behalf of the Estonian Conservative People’s Party Faction, Mati Raidma on behalf of the Reform Party faction, Raivo Tamm on behalf of the Faction Isamaa and Indrek Saar on behalf of the Social Democratic Party Faction.
67 members of the Riigikogu voted for the adoption of the Statement of the Riigikogu “In Support of the Territorial Integrity of Ukraine” (501 AE), submitted by members of the Riigikogu Helir-Valdor Seeder, Heiki Hepner, Priit Sibul, Mihhail Lotman, Urmas Reinsalu, Paul Puustusmaa, Ruuben Kaalep, Leo Kunnas, Urmas Reitelmann, Henn Põlluaas, Rene Kokk, Siim Pohlak, Anti Poolamets, Jaak Valge, Martin Helme, Alar Laneman, Merry Aart, Sven Sester, Tarmo Kruusimäe, Raivo Tamm, Riina Sikkut, Heljo Pikhof, Andres Metsoja, Üllar Saaremäe, Riho Breivel, Indrek Saar, Uno Kaskpeit and Jaak Juske.
The second reading of a Bill was adjourned
Due to the end of the working hours of the sitting, the second reading of the Bill on Amendments to the European Union Common Agricultural Policy Implementation Act (439 SE), initiated by the Government, was adjourned and will continue at tomorrow’s sitting.
The first reading of two Bills was postponed
Due to the end of the working hours of the sitting, the deliberation of the Bill on Amendments to the Aviation Act and the State Fees Act (477 SE), initiated by the Government, and the Bill on Amendments to the Population Register Act and Amendments to Other Associated Acts (494 SE), initiated by the Government, were transferred to the agenda for tomorrow’s sitting.
Photos of the sitting (Erik Peinar, Chancellery of the Riigikogu)
Verbatim record of the sitting (in Estonian)
The video recording of the sitting will be available on the Riigikogu YouTube channel.
(Please note that the recording will be uploaded with a delay.)
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