Mandatory procurement components compensate the additional expenses that a public trader incurs by purchasing electricity under mandatory procurement. The mandatory electricity procurement costs are covered by all end-users in Latvia in proportion to their electricity consumption levels regardless of the trader they have selected.
The bill states that by abolishing the OIK payment, households would have to pay on average 15 per cent less than before for electricity consumed, business profits could increase by around 0.44 per cent, while producer prices for goods and services would fall by about 0.2 per cent.
The draft law also provides that the price of electricity for which the public trader purchases electricity from a producer in cogeneration under compulsory procurement is equal to the price on the stock exchange.
"Mandatory procurement of electricity is planned to continue to be maintained, but electricity is to be purchased from producers at an exchange price. This would be fair for all market participants and society as a whole," said Ralph Nemiro, Chairman of the Economic Commission responsible for the passage of the bill.
Ivars Zariņš (Harmony) criticized the draft law, saying that the proposed changes could not lead to the abolition of OIK. Nemiro, meanwhile, pointed out that this is a first reading and various proposals are yet to be made before the final decision.
The abolition of OIK was already initiated in 2019.