At the meeting of the Cabinet of Ministers on December 20, amendments to the Electricity Market Law developed by the Ministry of Economics were approved, stipulating that electricity consumers will no longer have to cover the costs of mandatory procurement, i.e. the line “mandatory procurement component” will no longer appear in electricity bills. The amendments to the Law still have to be approved by the Saeima.
As it is known, at its meeting of August 30 the Cabinet of Ministers examined the Conceptual report “Package measures to address the problem of the mandatory procurement component and the development of the electricity market” and conceptually supported the proposal of the Ministry of Economics that from 1 September 2022 to 31 December 2025 the average rate of the mandatory electricity procurement component (hereinafter referred to as MPC) will be 0 euro/MWh, and the costs of the mandatory procurement support will be covered from the state budget. At the same time, the government instructed the Ministry of Economics to develop amendments to the Electricity Market Law by proposing a solution within which the costs of mandatory procurement will not be covered by Latvian electricity end-users also after 2025.
The MPC has not been in the bills of end users since September this year and is now cancelled once and for all. In view of the significant reduction in the number of beneficiaries of mandatory procurement among electricity producers, we have improved the existing support system so that in future mandatory procurement support is covered by the state without imposing additional burdens on end consumers. Bills of electricity users will show zero in the mandatory procurement component line,” the Minister of Economics Ilze Indriksone emphasises.
“At the same time, forecasting that the average wholesale electricity prices will remain high in the coming months, we have extended support for protected users for four months,” the Minister indicates.
Expenses caused by electricity procurement and capacity component payments generated within the scope of mandatory procurement are covered by SIA “Elektroenerģijas publiskais tirgotājs” (hereinafter referred to as EPT) from the company’s revenue generated from activity in electricity markets that exceeds its respective expenditures, as well as state grants for limiting the increase in mandatory procurement and capacity component. In the event that during the entire operation period EPT’s expenditures related to the mandatory procurement system exceed its revenues resulting from the operation within the mandatory procurement system for electricity, the excess of the relevant costs, including value added tax, will be covered by the state budget.
This year, the number of recipients of mandatory procurement state aid decreased significantly. According to data from the State Construction Control Bureau on the validity periods of mandatory procurement permits, the number of cogeneration plants receiving MP aid will gradually continue to decrease further, thus reducing the total costs of mandatory procurement.