Government hears Economics Ministry's plan for phasing out MPC without discussions

RIGA - The Cabinet of Ministers on Tuesday heard without discussions the Economics Ministry’s report on phasing out the mandatory procurement component (MPC) in electricity tariffs.

Until March 1, the ministry intends to survey opinions about the MPC system’s abolition, according to the report. There is also a plan to find a legal solution for recovering the subsidies paid to the energy producers under the MPC system.

The Economics Ministry has asked the parties concerned to provide their opinion about the proposal to scrap the MPC as of March 2019. The Public Utilities Commission has been asked to give its opinion about the plan’s impact on heating tariffs in Latvia’s municipalities. Augstsprieguma Tikls power transmission operator has been asked about the plan’s impact on the electric power system’s stability and electricity prices, and the Latvian Renewable Energy Federation has been asked about its impact on the generation of renewable energy in Latvia.

The other authorities asked to provide their opinion about the planned abolition of the MPC system include farmers’ organizations, the Agriculture Ministry, the Environmental Protection and Regional Development Ministry, the Finance Latvia Association, the Finance Ministry, Latvenergo power utility and the European Commission.

The Economics Ministry will use these opinions to draft regulations for phasing out the MPC system and a provisional impact assessment.

Economics Minister Ralfs Nemiro (KPV LV) told journalists following the Cabinet meeting that the Economics Ministry is working on the situation’s legal analysis to take a decision that would be based on EU law and Latvia’s national legislation. The ministry therefore plans to consult the European Commission on this matter.

Nemiro also said that there is a plan to step up control of the so-called green energy producers.

The declaration of the Krisjanis Karins-led government includes a commitment to phasing out the MPC system in a legally acceptable and financially feasible way. The government has also committed to assessing the lawfulness of the system’s creation.

At the beginning of January, Saeima passed a resolution calling on the Economics Ministry to provide the legislation necessary to abolish the MPC already by March 31, 2019.