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Lintilä calls for VAT cut to lower electricity prices

Economic Affairs Minister Mika Lintilä (Cen) says the government must decide on measures to limit the sharp rise in energy bills within the next couple of weeks.

Minister of Economic Affairs Mika Lintilä (Cen) says any price measures must take effect by November. Image: Roni Rekomaa / Lehtikuva

According to Minister of Economic Affairs Mika Lintilä (Cen), a reduction in value added tax would be the simplest, most effective way to ease the projected rise in electricity prices next winter.

"Electricity VAT is now 24 percent. Let's drop it to 14 or 10. That would have the fastest impact, and it would affect consumers' bills directly," Lintilä said on Yle's morning talk show on Tuesday.

Lintilä said that a cap on electricity prices has also been discussed, but would be difficult to implement. He suggested that setting a price ceiling might endanger that the security of supply.

"We always import electricity from abroad, [mostly] from Sweden and Norway. If we raise the price ceiling, no one will transfer electricity here if their price is above that level," he said.

The minister said a solution to the rise in electricity prices must be found quickly in order to be approved during cabinet budget talks beginning in late August.

"Some customers have already received letters informing them of increases in electricity rates. Our solutions should come into effect around November," said Lintilä.

Rolling blackouts an "extreme" measure

Lintilä criticised the media for exaggerating the possibility of planned power outages during the coming winter.

"We're just working to ensure that every home is warm and has lights on. It would be an extreme emergency if we have to limit electricity. At the moment, we don't see that situation yet, but yes, this is certainly challenging," he said.

Lintilä is hoping that the new Olkiluoto 3 nuclear reactor will finally reach full output in December. Now the situation looks good, and the unit is constantly producing electricity during trial operations, he notes.

"If Olkiluoto [3] doesn't start [full production] before the winter, we'll face really big challenges and the price [of electricity] will rise even more," said Lintilä. "Olkiluoto 3 will produce about 14 percent of our electricity, so it's very significant."

Lintilä recalled that he was already an MP when the plant's owner, Finnish nuclear power utility Teollisuuden Voima (TVO), first applied for a permit in 2000. Initially scheduled for commercial operations in 2009, Lintilä said the reactor was now set to come online "just in the nick of time".

The 1600 MW EPR reactor in Eurajoki, southwest Finland, is the country's fifth commercial reactor. In February, Lintilä shelved plans for a sixth plant in Pyhäjoki, which was to be built by the Russian parastatal Rosatom.