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Wednesday 16.01.2019 | Name days: Lida, Lidija
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Saeima committee conceptually supports proposals for limiting MPC

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUEconomic, Agricultural, Environmental and Regional Policy Committee has conceptually supported proposals on limiting mandatory procurement component system.

Vilnis Rantiņš, head of Latvian Association of Mechanical Engineering and Metalworking Companies, mentioned during the meeting that the way Latvia employs the subsidized energy support system, without proper supervision and with excessive funding only served to increase electricity costs for Latvian producers. This has severely impacted Latvian industry’s competitiveness.

According to him, energy prices for industrial consumers are significantly higher than the average in Europe. The difference is especially large when compared to Latvia’s neighbours and countries in northern and central Europe.

He also adds that Latvia has the largest MPC and transmission service proportion price, and that for most small and medium-sized the costs for electricity continued growing in 2017 and 2018. Meanwhile, in spite of what Economy Minister Arvils Ašeradens has said – that subsidized energy support system was a mistake – there have been no signs from Economy Ministry to suggest there is any political will or readiness to fix this mistake.

The association’s proposals, which the committee plans to propose forwarding to the parliament for review, provide for a clear definition of what a CHP plant should be. This is intended to help prevent situations when producers try realizing different schemes on paper, such as dividing one CHP plant into several.

It is planned to make it a duty for Economy Ministry to perform in-depth analysis of MPC support recipient’s submitted documents and information to make sure everything is in order. Producers that do not meet or ones that violate requirements of MPC support mechanism should have their support revoked.

It is also planned to establish that the norm for total internal capital profits is to be applied to producers with rights to sell electricity as part of MPC system across the power station’s entire life cycle. It is calculated based on all of the producer’s costs in accordance with Cabinet of Ministers requirements on permitted cost levels. It is thereby planned to prevent the possibility of producers re-calculating internal profits norm by including costs not related to production of electrical energy. Support should be reasonable, not excessive.

The committee plans to submit this legislative draft to the Saeima on Thursday, 27 September. Nevertheless, the committee does plan to discuss this matter before the meeting at 08:30.

As previously reported, Economy Ministry has commenced work on measures to abolish the MPC system to help the energy market to develop.

Nevertheless, in a letter addressed to Ašeradens, Prime Minister Māris Kučinskis detailed a resolution that stated how Economy Ministry has failed to provide proposals for regulations that would govern abolishment of the MPC system within the allotted time period.

The ministry was asked to research the possibility of enhancing control activities, price formation procedures, extension of the moratorium until the abolishment of the MPC system, power output and subsidies for CHP plants, the length of continued function of the Subsidized Energy Tax and other matters associated with financial influence MPC has for different consumer groups and the state budget.


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