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Sunday 20.08.2017 | Name days: Bernhards, Boriss
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Minister: opening the electric energy market now would be irresponsible

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Daniels Pavluts

“The question of a full opening of the electric energy market will be submitted to the Cabinet of Ministers once again only after real progress is made in the reduction of the compulsory procurement component (CPC),” – Economy Minister Daniels Pavluts said.

“After once again going through all the factors and CPC increase risks, I am not ready to keep on pushing the question of the market’s opening in the government until we have created and agreed on effective solutions to the reduction of CPC obligations,” – the minister emphasises.

Even though, according to Pavluts, Latvia should, in fact, progress toward opening its market in a medium-term perspective, it is possible to protect households from unexpected increases in electricity expenses this year already thanks to regulated tariffs. “Households that want and are prepared to purchase electricity in the open market are able to do so already. However, making the purchase of electricity in the open market compulsory for all households could create unpredictable socially-economic consequences. This would be irresponsible,” – he says.

According to him, the government first needs to decide on the reduction of CPC and only then continue opening the market for households. An open electrical energy market would mean that prices for households are set by the competition in the market. The decision to completely open the electrical energy market, including making it compulsory for households starting from September 1, 2013, was made prior to the review of the historic amount of subsidies by the Cabinet of Ministers. This creates serious risks for the increase of prices, as the Economy Ministry reports.

If the market ever fully opens, companies will not be the only ones that will be forced to pay a larger CPC in the open market, but households as well. Currently the tariff for households is being regulated, and the CPC increase is paid by Latvenergo. This will continue until a new tariff has been compiled.

Even though a number of electrical energy traders were preparing for households to enter the market, the minister believes the delay in the process would provide some time for suppliers and consumers to prepare for it. The minister believes it would be irresponsible for the government to rush to open the market and make it compulsory for all households than reviewing the previous initiative and planned terms for the reduction of CPC expenses.

Pavluts expects that the Social Services Regulation Commission will review these questions with more attention and react responsibly to proposals submitted by entrepreneurs.

It should be added that the proposals for CPC reduction are to be developed by the joint ministry commission (Economy, Justice, Welfare, Finance) before April 1, 2013. After that, proposals are to be submitted to the Cabinet of Ministers for review.

Ref: 102.109.109.6793


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