May 1, 2020

Excise duty on natural gas, electricity lowered from Friday | News

Excise duty on natural gas, electricity lowered from Friday | News


“Due to the economic downturn, both people’s incomes and the revenue of companies are declining, but daily household expenses such as electricity or gas bills still need to be paid. To better cope with them, we are reducing excise duty rates on gas and electricity for two years,” Finance Minister Martin Helme said.

“Electricity serves as an important and high input price for exporting and producing companies, including in agriculture, and reducing it will help us to be more competitive,” Helme added.

As a result of the changes, the excise duty rate on natural gas will fall to the level of 2017 and for households, this will mean a 7.1 percent decrease in the price of natural gas. In Estonia, more than 100,000 households use natural gas to heat their homes, heat water and prepare food, consuming a total of 67 million cubic meters of natural gas in 2018.

District heating companies consumed 184 million cubic meters of natural gas in 2018. It is estimated that 60 percent of the Estonian population uses district heating for heat supply. As the price of district heating is regulated by the Competition Authority, according to the methodology of which excise duty is included in the final price of the consumer, the total savings for the population from lower excise duty through district heating will be approximately €4.2 million per year.

The industrial sector used natural gas as a production input in the extent of 118 million cubic meters in 2018, and the reduction will leave them with an estimated €2.7 million more.

The general reduction in excise duty on gas does not apply to gas-intensive companies, which can, under certain conditions, use a reduced rate of excise duty of €11.30.

In addition, the rate of excise duty on liquefied petroleum gas (LPG) used as heating fuel will fall almost two-fold, from €107.71 to €55 per 1,000 kilograms, which is approximately the excise duty rate of 2017.

The excise duty rate on electricity will decrease from €4.47 to one euro per megawatt-hour from May, that is, to the minimum rate allowed by the European Union. For consumers, this will lead to a 3.1 percent decrease in the price of electricity, as the excise duty on electricity represents only a small part of the final price of electricity.

In addition, there is a discount for major electricity consumers, upon the implementation of which a discount rate of 0.5 euros per megawatt-hour can be used.

 



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