Latvia’s Ministry of Economics has prepared rules that govern provision of compensation to households intended to reduce the impact from the rapid energy price rise, as confirmed by the ministry.
Additionally, the ministry has prepared rules to provide support to households that use firewood and wood chips for heating. The support mechanism for users of natural gas is also improved.
It is planned for the Cabinet of Ministers to view proposed regulations on 9 August and for the Saeima – on 11 August.
On 21 June Latvia’s Cabinet of Minister decided to develop measures to compensate the rising costs of energy resources (electricity, natural gas, heating energy and wood pellets) for households. Due to the rapid price rise for firewood and wood briquettes, the Ministry of Economics included in the new regulations support for households that use these fuels for heating.
It is planned to set the support period between 1 May 2022 and 30 April 2023.
It is also planned to set the price ceiling for firewood at EUR 40 per loose cubic metre or approximately 35 EUR/MWh.
Similarly to wood pellets the Ministry of Economics proposed to the government to decide on state compensation increase by 50% if costs exceed EUR 40 per loose cubic metre, but no higher than EUR 15 per loose cubic metre.
Maximum size of support per household is estimated at 35 loose cubic metres. The maximum necessary financing to afford providing this aid is estimated at EUR 37.5 million.
As for wood briquettes, similarly to wood granules, the price ceiling may be set at EUR 300/tonne or approximately 65 EUR/MWh.
Similarly to other forms of support, the cost growth may be compensated at 50%. This means if costs exceed 300 EUR/tonne, but no more than 100 EUR/tonne.
The maximum support volume available to a single household is 10 tonnes. Provision of this amount of support may cost the state budget approximately EUR 3.6 million.
It is planned for households that use wood granules, wood briquettes or firewood for heating will have to submit documents to their local municipal administration, which will then decide on provision of aid. The state will then pay back to the municipality the cost of this support.
At the same time, the Ministry of Economics also plans to proposes extending the previously set support period for households that use gas for heating, putting it between 1 July 2022 and 30 April 2023.
This support may cost the state budget approximately EUR 36 million. Support is planned to be applied automatically in residents’ bills.
Support is planned to be provided to households that use electricity for heating. Support will be provided to electricity users whose consumption is higher than 500 kWh a month, if electricity is used for heating based on heat pump self-declaration principle.
The state will compensate 50% of electricity price that exceeds EUR 0.16 per kWh, but no more than EUR 100 EUR per MWh.
All households will have to pay for the first 500 kWh in accordance to the price set by the trader. Electricity volumes that exceed this figure are the ones that will be compensated. Support is planned to be provided between 1 October 2022 and 30 April 2023. Households will have to request it from their local government.
Representatives of the Ministry of Economics stress that when it comes to natural gas and electricity users that pay for their gas and electricity using fixed payment principle, it is planned to outline in regulations a duty for gas and electricity providers to re-calculate fixed payments and take into account households’ actual consumption and add corrections based on previous months.
Between 1 October 2022 and 30 April 2023 it is planned to provide support to help compensate the costs of central heating energy services.
In this case as well it is planned to set the compensation amount at 50% from the difference between the nearest heating season’s heating energy tariff and the tariff median on 68 EUR/MWh. This support is planned to be added to households’ bills automatically.