The Ministry of Economy (ME) will encourage companies to offset 50% of the price of electricity above 160 euros per megawatt hour (MWh), ME representatives inform.
Taking into account the rapid increase in the price of energy resources, which creates a risk for the population’s ability to pay their heating bills, as well as endangering the existence of export companies essential to the Latvian economy, the Ministry of Energy has prepared further measures to reduce the price of energy resources for this heating season.
Among these, the EM offers support measures to all companies, regardless of their size and type of operation, providing for an electricity price threshold of 160 euros per MWh. In this case the State would indemnify 50% of the price that exceeds the fixed threshold. The support should be applied from October 1, 2022.
In order to provide additional support to households, the Ministry of Finance proposes to differentiate support for central heating. The tariff for the centralized supply of heat in some municipalities will exceed 150 euros per MWh, therefore the Ministry of Energy proposes to maintain the already approved support up to 150 euros per MWh, where the State will compensate 50% of the price that exceeds the 68 euros per MWh. Instead, it is proposed to compensate 90% of the part exceeding 150 euros per MWh.
The second support measure for families directed by the Ministry of Finance will be the determination of a single threshold for the price of natural gas. Currently, the regulated rate for natural gas is 107.34 euros per MWh, but the market price exceeds this threshold. EM’s proposal envisages setting a maximum price for natural gas of 107.34 euros per MWh, and the State would compensate traders for the amount that exceeds this threshold.
The third EM-led support measure will offset the increase in electricity prices for households. On average, a household in Latvia consumes 150 kilowatt hours (kWh) per month, but most households spend around 100 kWh. Therefore, the ME will encourage all households to set the first 100 kWh at a flat rate, which does not exceed €180 per MWh, and the State will compensate the remaining difference with the real price.
The Minister of the Economy will submit these proposals for examination at the meeting of the Council of Ministers on Tuesday 27 September.
Economy Minister Ilze Indriksone (NA) on Monday at the extraordinary meeting of the National Economic Council with entrepreneurs and representatives of organizations representing major entrepreneurs, as well as invited representatives of universities and institutes, ice rinks, as well as the Association of Major Latvian hospitals, the Latvian Swimming Federation, the Latvian Heating Enterprises Association, Foreign Investor Councils and others, discussed the additional measures prepared by the Ministry of Energy to mitigate the impact of rising energy resource prices .
Representatives of business organizations stressed that state support will be of paramount importance this autumn and winter, enabling entrepreneurs to think about business and ensuring wage competitiveness. At the same time, representatives of the Association of Heating Companies stressed the need for additional support measures for households in municipalities where currently approved heat tariffs significantly exceed the country’s average level.
Latvian Employers’ Confederation (LDDK) Chairman Andris Bite says LDDK fully supports Energy Ministry’s proposal to determine maximum level of electricity threshold and compensation mechanism to support resource price increase energy. “This will not only allow entrepreneurs to ‘winter more easily’, but will also help save energy resources,” he says.
On the other hand, the president of the Latvian Chamber of Commerce and Industry (LTRK) Aigars Rostovskis notes that horizontal support to all entrepreneurs is also important besides households and energy-intensive companies.
The government has already approved mechanisms to support residents to reduce the extraordinary increase in energy prices this heating season, including the decision to cancel the mandatory electricity purchase component (OMI), from 1 October to April 30, 2023, entities will be fully compensated for the electric system service fee or system operator distribution and transmission tariff costs, including value added tax, except for state and local government agencies and of the legal entities to which the domestic rate applies.
In addition, a support program for energy-intensive processing industry traders for entrepreneurs was approved, compensating for the increase in prices of energy resources in the form of a contribution for the period from February 1, 2022 to December 31, 2022. The amount of support is provided for up to 30% of the chargeable costs of natural gas or electricity, not exceeding two million euros in total for an operator.
The National Economic Council is an advisory body established by the Ministry of Economy, LTRK, Union of Local Governments of Latvia, Union of Free Trade Unions of Latvia, LDDK, which attracts industry associations and independent experts to its work in order to promote professional solutions related to company policy. The purpose of its activity is to promote the creation and implementation of a business-friendly environmental policy in Latvia, as well as to promote the implementation of the principles of sustainable economic development in the country and to promote its processes and public participation in it.
