Economics Ministry drafts regulation to compensate households for increased energy prices

  • 2022-08-03
  • LETA/TBT Staff

RIGA - The Economics Ministry has drafted a regulation detailing conditions on which households will be able to receive support to compensate for the steeply rising energy prices, LETA was told at the ministry. 

The regulation also provides for supporting households that heat their homes with firewood and wooden briquettes, as well as contain an improved support mechanism for consumers of natural gas. 

The government is expected to decide on the proposed regulation at a meeting on August 9. The Saeima is due to vote on the draft document on August 11. 

On June 21 this year, the government decided to develop support instruments to compensate households for the increased prices of electricity, gas, heating and woodchip pellets. Since prices of firewood and wood briquettes have been rising rapidly as well, the Economics Ministry included support to households that heat their homes with firewood and wooden briquettes. 

The proposed support period would last from May 1, 2022 to April 30, 2023. 

The price cap on firewood is proposed at EUR 40 per loose cubic meter, or around EUR 35 per megawatt hour (MWh). Like in the case of woodchip pellets, the Economics Ministry proposes compensating 50 percent of the price increase above EUR 40 per loose cubic meter, but no more than EUR 15 per loose cubic meter. The maximum support per household would be 35 loose cubic meters of firewood. The necessary financing for this support measure would be an estimated EUR 37.5 million. 

For woodchip pellets, the price cap might be set at EUR 300 per ton, or roughly EUR 65 per MWh.

Like in other types of support, the state would pay 50 percent of the surcharge of the price  of pellets rises above EUR 300 per ton, but no more than EUR 100 per ton. The maximum support per household would be 10 tons of pellets. This support measure is expected to cost EUR 3.6 million.

To receive state support, the households using wood pellets, briquettes or firewood will have to file applications to local authorities who will then decide on granting the compensations. The central government will then reimburse the local governments for these expenses. 

The Economics Ministry will also propose extending the support period for households that heat their homes with natural gas from July 1, 2022 to April 30, 2022.

The state compensation has been proposed at EUR 30 per MWh of gas, or EUR 0.03 per kilowatt hour (KWh) to households consuming more than 221 kWh per month, or 21 cubic meters per month. This support measure, which is expected to cost up to EUR 36 million, would be automatically included in the households' gas bills.

State support is also planned for households that heat their homes with electricity. Support would be provided to households that consume over 500 kWh of electricity per month to heat their homes. The state will compensate 50 percent of the part of the electricity price that exceeds EUR 0.16 per kWh, but no more than EUR 100 per MWh.

Households will have to pay a full price for the first 500 kWh of electricity, but will be compensated for the volume above that threshold. The support is planned from October 1, 2022 until April 30, 2023. Households will have to apply to local authorities to receive that support.