The Social Democrats propose a price ceiling for electricity, which surprises other parties

The Social Democrats propose a price ceiling for electricity, which surprises other parties

SDP estimates that the costs of the ceiling limit could be covered with the proceeds of the windfall tax imposed on the excess income of energy companies. The tax, which is being prepared by the Ministry of Finance, is expected to generate approximately EUR 0.5–1.3 billion in revenue starting in 2024.

The proposal raised eyebrows among other parties due to the state budget implications and the fact that legislators had only just begun discussing next year’s budget proposal.

Jouni Ovaska (Centre) also questioned the decision to make the proposal without consulting other members of the ruling five-party alliance.

“This is very confusing and dirty, this is a complete circus,” he hit According to YLE. “Citizens who think about this at home don’t want to see this kind of debate.”

the Treasury minister Annika Saarikko (The Center) estimated that the price ceiling would cost around one billion euros and demanded that all parliamentary parties be invited to a meeting to discuss the issue. He also stressed that since the windfall tax would not generate revenue until 2024, the cap would have a “massive impact” on the budget deficit.

Antti LindtmanThe chairman of the SDP group saw the costs as hundreds of millions at most.

“There are several options for the price ceiling system, and we are open about how the ceiling should be implemented. It is good to look at examples from other European countries; in others the price ceiling has been implemented by limiting wholesale prices, in others by setting it for households. In any case, we are not talking about billions of euros, but hundreds of millions at most,” he emphasized.

prime minister Sanna Marin (SDP) claimed that immediate measures are needed to limit the price of electricity because of the latest delays in the start-up of Olkiluoto 3, the long-awaited third reactor unit of the Olkiluoto nuclear power plant, on the Eurajoki in Satakunta.

“Our assessment is such [the cap will cost] more than hundreds of millions of euros and that is why we prepare a windfall tax. These profits can be used to support consumers by offsetting high electricity prices,” he told reporters in Brussels on Wednesday.

In his opinion, the current measures have proven to be insufficient to support households, as electricity prices have risen by up to 60 cents per kilowatt hour.

“Citizens are struggling in the here and now, and we have to react to it in the here and now. We cannot wait until 2024 because people need help and support this winter,” he said quoted saying Helsingin sanomat newspaper. “Profits [from the windfall tax] can be used to cover costs, even if they are retroactive. I don’t want to think that budget techniques could become a problem in how we help people in this acute situation.

Marin also revealed that a meeting of all parliamentary parties is planned for Monday.

Economists reminded on Thursday that the concept of an electricity price ceiling is not without problems, especially because it would not encourage consumers to save electricity and could increase the risk of power outages.

“The price is trying to tell customers that they should spend less.” Marita Laukkanensenior researcher at VATT’s Economic Research Institute, compressed For Helsingin Sanomat.

SDP has not yet announced the details of its proposal, but Laukkanen expressed his dissatisfaction with the fact that the price ceiling refers to a mechanism where the government effectively covers the difference between the electricity ceiling and the spot price.

“How many different support systems for consumers do we need?” he asked. “We already have a VAT reduction, an income tax electricity reduction or, if you are on a low income, an electricity subsidy.”

In his opinion, the government should better target the current systems to consumers who are in financial difficulties due to increased electricity costs: the tax reduction could have included a maximum income limit, while making the subsidy dependent on consumption could have encouraged electricity conservation.

“It feels like the tab is just open here. You’re targeting absolutely everyone with these support systems without thinking about who’s in a really tough spot.

Essi EerolaThe head of the domestic economic policy process of the Bank of Finland also saw that the government should rather consider measures that “do not increase the probability of power outages”, such as systems that encourage households to sign up for a low-cost electricity contract to reduce consumption.

A price cap, he added, could be useful as a mechanism that activates when the price of electricity rises momentarily due to cold or calm weather.

Also Christine LagardeThe president of the European Central Bank has called on the decision-makers of the euro area to target support systems carefully and to abandon measures that weaken incentives to reduce energy consumption.

Aleksi Teivainen – HT

Source: The Nordic Page

Related Posts: