Electricity to cost more in Estonia

TALLINN - The cost of electricity will rise by 2 percent over the next two years to help the state energy company, Eesti Energia, cover the cost of a new tax on carbon dioxide emissions.

For each kilowatt hour of electricity used to keep the lights on and computers running, consumers currently pay 0.75 kroons ($0.06.)

But beginning January 2000, the price will rise by 0.01 kroons per kilowatt hour. And in 2001 the price will jump again.

"We have not decided yet what the increase will be in 2001, but it probably will be half a cent more than the current price," said Einari Kisel, an advisor to Eesti Energia's production director.

Eesti Energia announced the rate increase after Parliament approved a new charge on carbon dioxide emissions from power companies.

Beginning next year the power company will have to pay 5 kroons for each ton of carbon dioxide released into the air. The charge will rise to 7.5 kroons per ton in 2001.

The company already pays approximately 40 million kroons each year in emission taxes for other pollutants.

But with the new charge on carbon dioxide, Eesti Energia's emissions tax bill will nearly triple, to 120 million kroons in 2000. By 2001 the bill will total 170 million kroons.

Estonia's energy production process produces a heavy amount of air pollution.

The country produces virtually all of its power, 98 percent, by burning oil shale.

Burning the lightweight black rock releases large amounts of carbon dioxide into the air.

The northern town of Narva, where Eesti Energia's main power plant is located, produces more air pollution than all of the rest of Estonia combined.

The town and its surrounding areas is on a list of environmental hot spots put out by the HELCOM commission, the Helsinki based organization in charge of protecting the environment of the Baltic Sea region.

Many nations extract the oil found in oil shale but Estonia is the only country in the world that burns this rock in its solid form to generate electricity.

The government hopes the new charge will create an incentive for Eesti Energia to clean up its production process.

"Pollution charges are an effective tool for environmental protection," said Eva Kraav, Ministry of Environment secretary general.

The new carbon dioxide emissions charge is only one-tenth of what is recommended by the European Union.

The Environment Ministry plans to increase the charge each year. Parliament has not yet decided what the increase will be after 2001.

"If a company knows that from year to year it will have to pay more it will begin to think of taking measures to reduce emissions," Kraav said.

Eesti Energy is installing two new boilers for burning oil shale which release 20 percent less carbon dioxide into the air.

But it will take some time before any savings on the company's emissions tax bill are felt. The boilers will only be ready in 2002. And the company has 14 other boilers to replace at its three power plants.

"They are very expensive and they take time to install," said Kisel.

The rise in electricity costs has not raised concerns in the business community.

"One cent more (per kilowatt hour) is not significant. Last time the raise was much bigger," said Siim Raie of the Estonian Chamber of Commerce.

Electricity costs are currently 10 percent lower in Estonia than in Latvia.