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Eurofound's EU PolicyWatch collates information on the responses of government and social partners to the COVID-19 crisis, the war in Ukraine, rising inflation, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.

Factsheet for measure EE-2022-40/2906 – measures in Estonia

Energy cost compensations for households

Energiahindade kompensatsioonid

Country Estonia , applies nationwide
Time period Temporary, 01 October 2022 – 31 March 2023
Context War in Ukraine
Type Legislations or other statutory regulations
Category Responses to inflation
– Support for energy bills
Author Ingel Kadarik (Praxis Center for Policy Studies) and Eurofound
Measure added 15 September 2022 (updated 21 September 2022)

Background information

Households are experiencing significant increase in energy prices due to several factors. Therefore, the government agreed to establish several temporary compensation schemes for electricity, gas and district heating costs for private households. The Ministry of Economic Affairs and Communication issued a corresponding regulation on 15 September 2022. The compensation schemes will take effect as of 1 October 2022.

Content of measure

Electricity Households are compensated for up to €0.05/kWh from the average monthly price of electricity (excl. VAT) which exceeds €0.08/kWh. The compensation is based on the average monthly electricity cost of the household.

Gas Households are compensated 80% of the part of the average monthly gas price that exceeds €80/MWh / €0.7744/m3 (excl. VAT). The consumption of up to 2.6 MWh / 251.7 m3 is compensated, which is the monthly gas consumption of an average household.

District heating Households are compensated 80% of the part of the average monthly district heating price that exceeds €80/MWh (excl. VAT).

The compensations are automatic, meaning that the seller reduces the prices on the invoice themselves and the consumers will receive invoices with reduced costs. The compensation applies to energy consumed between 1 October 2022 and 31 March 2023.

Use of measure

It is estimated that the target group includes approximately 400,000 household electricity consumers with a consumption volume of approx. 1.1 TWh during the compensation period. There are approx. 40,000 domestic gas consumers in Estonia, whose estimated consumption volume in the period is approx. 0.55 TWh. With a district heating price of over €80/MWh there are approx. 46 network areas with a projected sales volume of approx. 1.9 TWh.

It is expected that:

  • the electricity compensation will reduce the costs of an average consumer by 21%;
  • the gas compensation will reduce the costs of an average consumer by 54% at the gas price of €270/MWh;
  • the district heating compensation will reduce the costs by 14% at the price of €97,15/MWh (current maximum price of the district heating in the capital).

Target groups

Workers Businesses Citizens
Does not apply to workers Does not apply to businesses Applies to all citizens

Actors and funding

Actors Funding
National government
National funds

Social partners

Social partners' role in designing the measure and form of involvement:

Trade unions Employers' organisations
Role No involvement No involvement
Form Not applicable Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

  • No involvement
  • Main level of involvement: N/A

Involvement

Social partners were not involved.

Views and reactions

Business associations (e.g. Estonian Association of SME'S; agricultural producers) have expressed their dissatisfaction with the fact that there will be no measures available for companies. However, their wish is mainly to be able to make use of the universal electricity service. The government stated that the discussions over the support measures for companies will take place in September after receiving the European Commission's views on subsidies for the European Union's economy.

Sources

  • 07 September 2022: Põllumajandustootjad soovivad elektri universaalteenusest osa saada (Farmers want to benefit from universal electricity service) (majandus.postimees.ee)
  • 09 September 2022: Majandus- ja taristuministri määruse „Energia hinna osalise kompenseerimise tingimused ja kord“ eelnõu seletuskiri (Explanatory letter of the draft regulation ) (mkm.ee)
  • 12 September 2022: EVEA seisukohad energeetika dialoogis (EVEA's views on the energy dialogue) (evea.ee)
  • 12 September 2022: Koalitsioon arutab ettevõtete energiahüvitisi neljapäeval (Coalition to discuss corporate energy benefits on Thursday) (www.err.ee)
  • 15 September 2022: Energiakulude leevendamise hüvitised (Energy cost mitigation compensations) (mkm.ee)

Citation

Eurofound (2022), Energy cost compensations for households, measure EE-2022-40/2906 (measures in Estonia), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/EE-2022-40_2906.html

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