Last week, Minister of Economics Viktors Valainis (ZZS) called for an extraordinary meeting of the National Energy Crisis Centre due to rising heating bills, while this week Prime Minister Evika Siliņa (JV) stated that there is no energy crisis in the country and that she expects concrete solutions from the Minister of Economics on how to deal with the increasing costs. BNN posed a similar question to political scientist Filips Rajevskis, co-founder of the consultancy Mediju tilts.
“We do not have an energy crisis, because such a crisis would exist if we had nothing to heat with and homes were cold due to a lack of gas or electricity, or, God forbid, if something like what is happening in Ukraine were taking place, where energy infrastructure is being bombed. Everything is functioning here and is in order,” says Rajevskis, stressing that the core problem is the relatively high cost of energy resources.
“Why, for example, is heating in Riga the most expensive in the Baltics? The second problem is the prolonged cold and how much it increases heating costs. January has been very cold, February is also expected to be far from warm, and it is already clear that bills will be astronomical. So this is not an energy crisis, but a payment crisis,” the political scientist explains.
“This is a serious issue on the political agenda, and politicians feel the urge to help, meaning to provide financial support,” Rajevskis says, noting that since this is an election year, politicians also hope in this way to attract more voters.
According to Rajevskis, such fairly blatant populism is itself part of the problem.
“It’s not as if temperatures have reached something unprecedented. Latvia has always had winters when the thermometer drops to around minus fifteen degrees, and we are used to that. We were lucky in 2022 that, although energy resources were even more expensive, the winter was not cold. At that time, however, the state subsidised and helped all residents with their bills. The question is whether the state should always help everyone, or whether the state and municipalities should take a more selective approach and help only those people who genuinely accumulate debts due to these high payments. And even then, the question remains whether this should be direct support or an opportunity to pay these debts over a longer period of time.”
It is currently known that district heating companies, together with building management firms, are discussing the non-application of penalty interest in cases of late payment of bills, while sufficiently long-term instalment payment options are not being considered, as the law does not provide for them.
“Then change the law!” says Rajevskis, adding that
the worst thing in Latvia is to respond to problems by saying, “No, the law does not allow it,”
“the regulations do not allow it,” or simply “no,” instead of saying, for example, in this case: “We will change it so people can pay.” This is the minimum the state can do to allow people to spread their payments over time without penalty interest. Bills are high, and for many people this can be a serious blow to their finances.
Responding to BNN’s remark that there may also be cases where people could lose their homes due to debt collection over unpaid utility bills, Rajevskis stresses that protective mechanisms must be put in place for residents who, for objective reasons, may end up in such a situation. “This is also necessary to prevent them from falling into the traps of fraudsters, scammers or payday lenders, which would only worsen their situation and ultimately lead to bankruptcy and the loss of their home.”
Read also: BNN IN FOCUS | Austerity on paper, bonuses in reality – political scientist on Latvia’s State double standards