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Saturday 20.04.2019 | Name days: Mirta, Ziedīte

Latvian minister: reducing residents’ electricity bills is more important than MPC abolishment

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUIf Latvia were to abolish mandatory procurement component system for electricity, the country would have to procure electricity from foreign countries, said Latvia’s Economy Minister Ralfs Nemiro in an interview to LTV programme Rīta Panorama.

Power stations that receive MPC support produce 30% of Latvia’s electricity, said the minister.

He stresses that reduction of residents’ electricity bills is more important than abolishment of MPC system.

As previously reported, Saeima has ordered Economy Ministry to abolish MPC system before the end of March 2019. However, the ministry believes rapid abolishment of the system could have severe economic consequences. Because of that, Latvia’s government has decided not to submit to the parliament the proposal on abolishing MPC within a specific period of time. The government will inform Saeima’s Economy Committee about this decision. Economy Ministry’s report will be submitted to this committee soon.

Nemiro stresses that a rapid abolishment of MPC system would not only result in legal consequences and force several power plants to close down, increase electricity and heating energy prices but also fail to help the state reach the goal of increasing the use of renewable energy resources. On top of that, if Latvia fails to achieve its green goal, European Commission could commence a violation procedure, applying a continuous fine the country would have to pay until it accomplishes the green goal.

Latvia’s Prime Minister Krišjānis Kariņš ordered Economy Ministry to prepare a vision for support of green energy by the end of 31 March. Once it has been reviewed by the Saeima, the ministry will prepare amendments to regulations for proposed changes to come to force. Nemiro did not say when this could happen. He did say that he hopes residents feel changes in their electricity bills around 2020.

«Within two months Economy Ministry will prepare proposals for the reduction of electricity bills and prevention of growth of heating energy tariffs. MPC system’s abolishment is not as important as the reduction of electricity bills,» said the economy minister.

Nemiro admits MPC has a small presence in electricity bills. Because of that, the ministry intends to evaluate the largest components of electricity bills – transmission and distribution service prices. «To reduce electricity bills, I can see an opportunity to work in this direction. However, I have not studied this topic yet – it is still in consideration,» said the minister.

When asked if with his today’s decision Nemiro’s KPV LV party has not disappointed its voters, who were told that MPC is illegal and should be quickly abolished, the minister said KPV LV had presented society with this position and turned their attention towards the problematic portions of this system during the election.

«This system was not studied in the past, but now we have an option to touch upon this topic. We did not as for years [to abolish MPC] from the prime minister – we asked for two months. This topic will be sorted out quickly,» said Nemiro.

As it is known, Latvia’s Economy Ministry has offered the government to decide on amendment to the Electricity Market Law, providing for the exclusion the term «MPC public trader», as well as crossing out regulations that detail the state’s support as part of MPC mechanism. This is intended to make sure end users no longer have to cover costs for support provided by aforementioned regulations.

On Tuesday, Economy Ministry informed the government that one risk for law amendments is the possibility of litigations. «There is a risk of litigations in regards to investment protection. This includes cases being viewed by the Constitutional Court. These risks can be reduced by creating compensation mechanisms, a longer transition period or find alternative solutions to conflicting situations,» said the minister.

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