Energy, Financial Services, Latvia, Legislation

The government also supported the Finance Ministry's proposal that in case this decision leaves a negative impact on the fiscal space in 2019 and/or 2020, the negative fiscal space will be compensated by increasing dividend payments from Latvenergo power utility. If this cannot be done, then the Economics Ministry will have to offer other compensating measures.

In order to reduce the MPC average value, the government supported the Economics Ministry's proposal that Latvenergo's dividends from 2017 profit, worth EUR 62.2 million, should be paid into the state budget in 2018. Of this sum, EUR 10.5 million are allocated for reducing the average value of MPC and capacity component in the second half of 2018.

The remaining EUR 51.7 million would then be a compensation to Latvenergo for the advance tax payment, proportionally reducing the company's advance tax payment for the time period between January 1, 2019, until September 23, 2028.

As of July 1, the share of the mandatory purchase component (MPC) in electricity bills will contract by 13%, Economics Minister Arvils Aseradens (Unity) told journalists.

Aseradens said that this decision was the first step taken towards the plan to allocate EUR 78.9 million of Latvenergo power utility’s 2017 profit for cutting MPC. As a result, the share of MPC in electricity bills is expected to decrease by 13% when the measure takes effect on July 1.

“We passed the first decision, but the final decision will be taken at the beginning of May to reduce MPC by 13. For large energy consumers, the fixed part of MPC will decrease by a third,” the minister said.

Asked about the reasons behind the decision to use Latvenergo profit for cutting MPC, Aseradens said that the decision was a result of political negotiations.