A case initiated on the fixed tariffs of natural gas within the framework of mandatory procurement of electric power
On 27 November 2014 the 2nd Panel of the Constitutional Court initiated case “On Compliance of Para 541 of the Cabinet Regulation of 10 March 2009 No. 221 “Regulations Regarding Electricity Production and Price Determination upon Production of Electricity in Cogeneration” with Article 1 and Article 105 of the Satversme of the Republic of Latvia and Section 28(1) of Electricity Market Law.”
The Contested Norm
The contested norm provides: “The final trade tariff for trading natural gas approved by the regulator, indicated in Sub-Para 53.1, 53.2 and 54.2, and Note 4 in Annex 7, without the value added tax, according to the actual heat capacity of natural gas (EUR/thousand. n.m3) shall not exceed the sum, which is calculated if the trading price of natural gas is 277.46 EUR/thousand. n.m3.”
The norm is in force since 1 May of the current year.
The Norm of Higher Legal Force
Article 1 of the Satversme: “Latvia is an independent democratic republic.”
Article 105 of the Satversme: “Everyone has the right to own property. Property shall not be used contrary to the interests of the public. Property rights may be restricted only in accordance with law. Expropriation of property for public purposes shall be allowed only in exceptional cases on the basis of a specific law and in return for fair compensation.”
Section 28 (1) of Electricity Market Law: “The Cabinet shall prescribe the criteria for the qualification of co-generation plants for acquiring the right specified in Paragraph one of this Section, the procedures for the mandatory procurement and the supervision thereof, the procedures for the determination of electricity price depending on the electric capacity of a co-generation plant and the fuel used, the procedures for covering the mandatory procurement expenses and the procedures for refusing the right to sell the produced electricity within the framework of the mandatory procurement.”
The Facts
The case has been initiated with regard to the application submitted by the Limited liability company “Windau”, which is engaged in producing electricity and heating in co-generation power station, using natural gas. The applicant notes that the contested norm changes the formula that existed thus far for calculating the price of electric power, which is paid to co-generation power stations for the electric power produced in the framework of mandatory procurement. Previously the change of the price of the mandatory procurement of electric power was directly proportional to the price of natural gas. Allegedly, the contested norm causes a situation, in which the applicant would be forced to cover the increase of the costs of natural gas from its own resources. This situation allegedly is incompatible with principle of legal certainty and violates the applicant’s right to own property.
Legal Proceedings
The Constitutional Court has asked the institution, which adopted the contested act, – the Cabinet of Ministers, to submit a written reply on the facts of the case and legal substantiation by 27 January 2015.
The term for preparing the case of 27 April 2015. The Court shall decide upon the procedure and the date for hearing the case after the case has been prepared.
Linked case: 2014-35-01