Energy subsidies to be cut

RIGA - Latvia’s Cabinet of Ministers on July 30 passed amendments to the Regulations Regarding Electricity Production and Price Determination Upon Production of Electricity in Cogeneration; the amendments stipulate a significant reduction in subsidies to the large cogeneration plants that run on natural gas and have a capacity of over four megawatts, reports Nozare.lv.

Due to decisions made by previous governments, the amount of subsidies for electricity produced by the large cogeneration plants would increase significantly next year. In order to reduce the risk of higher electricity rates for consumers, support for the large cogeneration plants, including Latvenergo thermal power plants, will be reduced; therefore, at least 20 million lats (28.5 million euros) will be saved annually from 2014 already, which will put a cap on mandatory procurement component increases in the future, notes Economy Minister Daniels Pavluts.
The said large cogeneration plants are Latvenergo thermal power plants One and Two, Rigas siltums cogeneration plant Imanta, and Juglas jauda.

In 2012, these cogeneration plants received 46 percent of the entire amount of subsidies paid to electricity producers, the Economy Ministry says.
The Economy Ministry said previously that, if no measures were taken to reduce the mandatory procurement component, the total amount of subsidies would increase from 1.89 santims per kilowatt hour (kWh) now, to 2.33 santims per kWh in 2014.

The Latvian Renewable Energy Association however, is not happy. It is reproaching the Economy Ministry for not harmonizing support for natural gas cogeneration with the European Commission. The association is ready to file a complaint to the European Commission.
The Latvian Renewable Energy Association has established that the Economy Ministry’s amendments to Cabinet regulations on electricity production and pricing envisage a continuing support for natural gas. According to the association, this support has not been harmonized with the European Commission.

The association has already drawn the attention of several state institutions that support for natural gas cogeneration, within the framework of the mandatory procurement component, has most likely not been harmonized at the EU level.
The Latvian Renewable Energy Association believes that the Economy Ministry does not learn from its mistakes and continues to ignore well-founded arguments and requests to solve the issue, wanting to continue supporting natural gas, which can be considered as openly lobbying Latvenergo and imported natural gas.