Cabinet approves halving electricity distribution tariff in Latvia

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On December 21 the Cabinet approved amendments to the law On Pollution, which provide for 50% of the costs of the electricity system service to be compensated for electricity end-users from December 1, 2021 to April 30, 2022.

Prime Minister Krišjānis Kariņš explained that the changes will lead to a reduction in electricity distribution rates. The Saeima still needs to decide on this.

Short-term compensation is expected to mitigate the immediate negative effects of the increase in electricity prices for both individuals and legal entities.

In a statement, the Ministry of Environmental Protection and Regional Development explained that EUR 77,894,000 of the income from auctioning of emission allowances is earmarked for the compensation of electricity costs. In line with the amendments to the law, all system operators should be compensated monthly for the costs of the system service (including VAT) for all their customers. System operators will, on the other hand, be required to invoice the system costs applicable during the previous settlement period, including VAT, which will be paid by the State by the end of the month.

The instrument for auctioning emission allowances is the Latvian State budget program, which aims to mitigate climate change and ensure adaptation to climate change.

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