An unprecedented event occurred in Latvia: the Court answered to a claim requesting to declare Latvenergo’s introduction of a new tariff net dated April 1, 2011 illegal. If the energy monopolist loses the case, it is possible that it will be obliged to pay back up to 45 million LVL to its clients – legal persons.

The march against the monopolist

The Public Services Regulatory Commission (PSRC) adopted new pricing of the energy company in February, 2011. From April 1, 2011, tariffs for small and medium companies and around one half of Latvian residents, which consume more than 1200 KW/h per year, increased by an average of 21%. Households received a benefit: the first 1200 KW/h of energy is to be paid according to the «Starter tariff»- 0.0825 LVL per KW/h. After the limit is over, the «Main tariff» is turned on – 0.1074 LVL KW/h.

This increase not only caused a wave of massive discontent, but also ended in a demonstration and multiple pleas to Justice Institutions with requests to cancel the decision of the PSRC. 34 applications were united into one case. And, so it comes to this: the Administrative Regional Court voices its verdict: the decision of the PSRC is cancelled since the moment of its declaration. The Court’s verdict can be challenged in the Senate of the Supreme Court within 30 days. And this is where the interesting bit begins: if the decision is improper, then the question of compensating the people who paid according to the new tariff is ever so important. There are no accurate calculations yet, but, according to one of the members of the Board of Latvenergo – Uldis Bariss, the amount will reach 45 million LVL just for legal persons. The company fully disagrees with the Court’s verdict and is planning to file a cassation complaint in the nearest time.

Senior officials of the country also expressed their concern: Prime Minister Valdis Dombrovskis claims that the case of PSRC tariffs is unprecedented and could lead to a massive barrage of similar claims. President Andris Berzins pointed: consequences could be negative and the question about the company’s balance and its financial indexes will arise sooner or later.

However, a review by the Senate could drag on for months, and even if the verdict remains in force, the issue of compensations is still blurry. In any case, old tariffs are not likely to remain: Latvenergo will only come up with new arguments and go to the PSRC for approval, changing the “Main-increased-tariff”, and this time – for everyone.

«2.x» formula

This week, it became known that the absolute maximum of financing of Baltic States from European funds in 2014-2020 could be increased from the initial 2.5% of GDP to 2.9%. According to current regulations, the absolute maximum of support for EU members could reach 4% of GDP. For Latvia this index is 3.8% for the period of 2007-2013. In 2011, the European Commission (EC) proposed introducing a limit for all EU countries for the next seven-year budget – 2.5% of GDP. Brussels explained it: the maximum limit is necessary because many members cannot keep up with the limited amount of time and use all allocated money.

The new model caused harsh criticism from Baltic States and Hungary, which suffered a strong economic drop during the global economic crisis. According to the calculations of the Latvian Finance Ministry, support for our country in 2014-2020 will decrease by about 1 billion EUR compared with the previous period. Lithuania could lose around 300 million EUR, Hungary – 6 billion EUR.

Negotiations about the next EU budget will be carried out during the whole of 2012. As Lithuanian Deputy Finance Minister Rolandas Kriščiūnas said, a «2.x» formula is being used against the three Baltic States and Hungary: it means that the x is not clearly determined. Right now, it is impossible to say what this «x» will be. It seems that it will be decided on the last night of the negotiations.

The state portal will «speak» English

The information on the official website of Latvia – Latvia.lv –will soon be available in different languages, including Russian and English. A robot-translator, which will cost around 800 thousand LVL, will be responsible for the information. An appropriate decision was made this week by the Cabinet of Ministers. This concept suggests adding a machine translation function on the official website, similar to Google Translate. Currently, most of the information published there is only available in Latvian.

Constant content availability in different languages makes the work of institutions more expensive. Even though machine translation does not offer the highest possible quality, it does allow saving up money on the services of professional translators. This technology is used on the websites of other countries and for a long time. The projects is planned to be realized with the help of the European Regional Development fund, as part of the «Infrastructure and Services» program. The government’s permission is required to begin the project. This decision is expected to be made in August-September 2012.

Traders’ life is made difficult…again

Starting from January 1, 2013, Latvian traders will need to report to the State Revenue Service (SRS) about all cash deals exceeding 1 thousand LVL. The fiscal institution will also need to be informed about the buyers’ personal data. Purchases with “living” money, exceeding 5 thousand LVL, will be prohibited, as the amendments to the Law on Taxes and Fees, which were adopted by the Saeima in the final reading, state. According to the current regulations, traders are still obliged to report about cash deals exceeding 3 thousand LVL; and the maximum limit is 10 thousand LVL.

The stated goal of the amendments – is combating shadow economy by limiting the flow of unrecorded cash. However, according to the Head of Latvian Traders Association Henriks Danusevics, the new regulations will severely limit companies, which operate in selling products to tourists from Russia and CIS countries. «No reasonable man would want want his purchase to be reported to fiscal institutions. We believe that the adoption of this law will decrease the purchasing activity in the segment of expensive goods,»- Henriks Danusevics says.

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