Electricity system service fee and the mandatory procurement component (MPC) costs will be covered by the state until April 2022, as provided by the Law on Measures to Reduce the Extraordinary Electricity Price Climb passed by the government on Tuesday, 25 January.
Support will be provided in response to the rapid electricity price climb.
Compensation of electricity system fee for a four-month period was calculated in accordance with information from 11 licenced system operators about their income in 2020. This means the compensation of service costs requires EUR 63.5 million (VAT included).
Provisional estimates from LLC Enerģijas publiskais tirgotājs suggest that to support the reduction of MPC fees, EUR 17 520 984 without VAT and EUR 21 200 391 with VAT may be required in four months of 2022. In January alone MPC compensation may cost the state budget EUR 4 438 196. In February it may cost EUR 4 375 061, in March – EUR 4 413 202 and in April – EUR 4 294 525.
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Ministry of Economy reports that the planned support mechanisms – MPC and system operator cost compensation – will help reduce energy cost by another 10%-15% in the current situation. Additionally, these measures will help subsidize the system service fee by 50% for all end users from 1 December 2021.
The decrease will apply to all end users – private persons and entrepreneurs.
The legislative draft will need to be approved by the Saeima.
Latvian state to cover MPC costs until April 2022
