The Riigikogu concluded the first reading of Bills relating to the electricity market

At the extraordinary session of the Riigikogu, two Bills relating to the electricity market passed the first reading.

If the Bill on Amendments to the Electricity Market Act and the Competition Act (655 SE), initiated by the Government, is passed, it will enable the price of the production of electricity to be delimited and electricity to be sold to household consumers as a universal service.

The Bill will impose an obligation on the national company Eesti Energia to also sell electricity as a universal service to Estonian household consumers and all electricity resellers from this October to 30 April 2026.

The Bill will not provide for a price of the universal service but will set out the price formation principles. The Competition Authority will set the price, taking into account producer input prices, environmental charges and a reasonable profit from generation. Sellers of electricity may factor in selling costs. Household consumers will be able to transfer to the universal service without paying a contractual penalty for the termination of a contract in force. Consumers will be able to step out of the universal service at any moment.

The price of the universal service will also begin to apply automatically to all household consumers who are using the universal service now. This means the people who have not yet entered into a contract for purchase of electricity and are therefore consuming electricity from the power exchange. According to plan, the price of the universal service will become clear in mid-September when the amendments to the Act will have been adopted and the Competition Authority will set the price after a process of coordination with sellers of electricity.

During the debate, Taavi Aas (Centre Party), Rene Kokk (Estonian Conservative People’s Party), Helir-Valdor Seeder (Isamaa), Mart Võrklaev (Reform Party) and Indrek Saar (Social Democratic Party) took the floor.

Aas said that the measures that had been in place the previous winter needed to be implemented at once. All the more so as those measures also included indoor heating, those measures also included gas, because electricity was not the only energy carrier that had become expensive. In his view, the Bill completely excluded businesses, which was one of the greatest problems with it.

Kokk also underlined that household consumers were no doubt very important. Today it is necessary to help people and to bring the price of electrical energy as low as possible. However, if we fail to think of how to support entrepreneurship and businesses, our approach will be totally unbalanced. If we do not have entrepreneurship, soon our people will no longer have jobs, we will have no one to pay taxes to the country and we will have no employers. In his opinion, Estonia should exit the power exchange Nord Pool at once.

Seeder noted that the need to respond quickly was indeed understandable to everyone, and the abnormal electricity prices, abnormally high inflation, the people’s insolvency due to high prices, and the loss of economic competitiveness were unfortunately a reality that was to force all of us to take urgent action. The electricity market reform will more broadly encompass the regulation of other energy carriers as well. It will also concern gas and it will concern district heating. The only difference will be that gas and district heating will be regulated at the level of Government and minister, and there will be no need to amend the Act for that. Indeed, the reimbursement for gas price, as well as the regulations and district heating – all this will come as well, and its price level will be probably even lower than the price of the universal service for electricity regulated as a result of an electricity market reform. In a long-term perspective, we still see that the solution will lie in the functioning of the market and the creation of additional generation capacities, but in the current extraordinary situation an intervention is justified.

Võrklaev recalled that, in previous spring, they had taken a step that had enabled to enter into long-term electricity contracts on more favourable terms. Many have in fact used that opportunity. Those who have entered into a fixed-price contract have understood that it has been the right decision. The Reform Party faction supports the application of electricity as a universal service for home consumers. The Bill will create an option where the Competition Authority sets the price, and it will be based on the most efficient oil shale plants of Eesti Energia. It will be an interim measure for four years in order to offer relief to household consumers in the electricity price crisis until cheaper renewable energy solutions will be available on the market again and the price will possibly have fallen enough. In the heating season from 1 October to 1 April, household customers will receive additional support in the case of electricity price, a discount of 50 euro per MWh, regardless of whether they are using the universal service or have entered into any other contract. Household gas consumers will receive a reimbursement to the extent of 80% for a gas price exceeding 80 euro per MWh in the case of a consumption of up to 2,600 KWh per month. In district heating, we will also support home consumers and we will reimburse 80% of a price exceeding 80 euro per MWh.

Saar said that the current situation was harsh. It is in parliament’s power to mitigate the situation for household consumers. Gas and district heating users need to be given an assurance against a high price level. He pointed out that the Government would also provide help with an additional allowance upon consumption of high-price energy. We are presuming that the future price will be lower than the price in the fixed-price contracts at the present moment, but it will depend on various factors and among other things on what price the Competition Authority will set after this Act will have been adopted. The state has however proactively agreed and earmarked funds for this, so that starting from a certain price the state would come to help in any case.

The deadline for submission of motions to amend the Bill was set as 5 September.

The Bill on Amendments to the Energy Sector Organisation Act (656 SE), initiated by the Government, is intended to change the target for the share of renewable electricity so that, by 2030, renewable electricity would account for at least 100 per cent of total electrical energy consumption instead of the current 40 per cent. Renewable energy will have to account for at least 65 per cent of total energy consumed, instead of the current 42 per cent.

In order to meet the target, additional reverse auctions for renewable electricity in a total amount of at least 1 TWh are planned to be conducted in 2024-2025. In addition, the implementation of a wind turbine charge and faster processing of the authorisations for the establishment of offshore wind farms should contribute to the achievement of the target. Additional funding has also been allocated for the updating of electricity grids, and opportunities to simplify the connection to the network of new generation capacities are being sought.

During the debate, Maria Jufereva-Skuratovski (Centre Party), Martin Helme (Estonian Conservative People’s Party), Annely Akkermann (Reform Party), Aivar Kokk (Isamaa) and Kalvi Kõva (Social Democratic Party) took the floor.

The Estonian Conservative People’s Party Faction moved to reject the Bill at the first reading. The result of voting: 16 votes in favour and 48 against. The motion was not supported. The first reading of the Bill was concluded.

The deadline for submission of motions to amend the Bill was set as 14 September.

The sitting ended at 9.33 p.m.

Source: Parliament of Estonia