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Tuesday 23.07.2019 | Name days: Magda, Magone, Mērija
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Final decision on MPC cancellation after 2022 will fall on Latvia’s next government

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThe final decision regarding the cancellation of the mandatory procurement component system in 2022 will fall on the shoulders of the next government, said Latvian Prime Minister Māris Kučinskis on Monday, 7 January.

The Cabinet of Ministers Committee decided on Monday to propose for review Economy Ministry’s conceptual report ‘On complex measures for the cancellation of MPC system and further improvement of electricity market’s development’. The report details measures to ensure the cancellation of MPC system as of 2022 and basing state support for green energy production on market principles.

At the same time, Kučinskis said the old Cabinet of Ministers has only reviewed the proposed solution, whereas the final decision will fall on the new government. This is why the government did not listen to the industry’s critical opinion about the ministry’s offer during the review of this matter. Kučinskis added that the discussion will take place once the next Cabinet of Ministers tackles this matter.

The ministry proposes several measures to cancel the established system within the next three years. The proposed solutions for the liquidation of the MPC system have been considered from the economic and legal aspects.

«If proposed measures are implemented fully, they will help balance social and national economic interests in a medium-term perspective and ensure energy security for the country and allow us to accomplish long-term goals for Latvia’s energy policy,» the ministry stresses.

In 2019 it is planned to prevent over-subsidization of MPC power plants and reduce support for non-commissioned power plants. In 2022 it is planned to implement stricter requirements for raw materials used by biogas power plants, as well as cease end users’ payments to gas CHP plants, except for the country’s strategically important power plant – TEC 2.

Economy Ministry plans to submit proposals to the Electricity Market Law that provide for replacing the MPC system with a market efficient model or bonus pay over electricity market price on 1 January 2022. The solution included in the report provides complex measures to ensure state support for electricity production as of 1 January 2022 is based on market principles and the total support volume does not exceed 0.3% of GDP.

Unlike the previous offer, Economy Ministry proposed reducing MPC by not implementing a subsidized energy tax.

«Currently it is not planned to provide support to new power plants. The market model will apply to honestly-working power plants to help achieve renewable energy goal,» the ministry says.

Economy Minister Arvils Ašeradens previously said producers of subsidized energy will have to prove they are able to work in market and fair competition conditions.

«We do expect objections against the reform, as well as there being a long coordination process with interested sides. We also cannot exclude the possibility of litigations, considering not everyone is prepared to refuse privileges. It is also necessary to coordinate planned changes with the European Commission. At the same time, I am certain our plan is the best possible solution for the liquidation of the outdated MPC system,» said Ašeradens.

The minister also added that a great amount of work has been completed to liquidate this system.


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