Latvia plans electricity distribution rate compensation

From September until the end of the year, Latvia plans to cover 60% of the fixed capacity fee set by the electricity distribution network (Sadales tīkls, ST) from state funds. This is provided for by the amendments supported by the government on Tuesday, September 19 to the Law on measures to reduce extreme increases in energy prices.

In order for State aid to come into force, the amendments to the law have yet to be approved by the Saeima.

The total amount required for State aid for a four-month period has been calculated at more than EUR 30 million.

On July 1, the new electricity system service tariffs of the ST and transmission system operator “Augstsprieguma tīkls (AST)” came into force, which unpleasantly surprised the public. The impact of new tariffs on households varies according to the characteristics and consumption of the connection.

In order to limit the risk of energy poverty, the changes pushed by the Ministry of Climate and Energy (KEM) provide for a 60% reduction in fixed component charges for system service.

The amendments foresee that initially the fee reduction will be applied in the period from September 1 (the fee reduction would be applied in the October electricity bill) until December 31 (the last reduction in charges would be reflected in the January electricity bill).

At the same time, KEM said work will be underway on a medium-term solution system to curb the increase in service tariffs, which would apply from 2024.

The draft law is being moved as a matter of urgency and it is planned to be adopted by the Saeima by the end of September.

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