Regulations Regarding Electricity Production and Price Determination upon Production of Electricity in Cogeneration

Issued pursuant to
Section 28, Paragraphs two and seven and
Section 28.¹, Paragraphs two and five of
the Electricity Market Law

I. General Provisions

1. This Regulation prescribes:

1.1. the criteria for qualification of cogeneration units for them to acquire the right to sell the produced electricity within the framework of the mandatory procurement or to receive guaranteed payment for the electric capacity installed in a cogeneration unit;

1.2. the procedures for the mandatory procurement of electricity produced in a cogeneration unit and for the supervision thereof;

1.3. the procedures for the settlement of mandatory procurement costs;

1.4. the procedures for determining the price for electricity produced in a cogeneration unit depending on the electric capacity of the cogeneration unit and the fuel used;

1.5. the procedures by which a merchant may refuse the right to sell the produced electricity within the framework of the mandatory procurement;

1.6. the procedures by which a merchant may receive a guarantee of origin that the electricity produced in a cogeneration unit in the ownership thereof complies with the efficiency requirements laid down in this Regulation;

1.7. the procedures by which the payment for the electric capacity installed in a cogeneration unit is determined depending on the production technology, the fuel used and the electric capacity installed in cogeneration units, as well as the procedures by which such payment is made;

1.8. the procedures by which a merchant may refuse the right to receive guaranteed payment for the electric capacity installed in a cogeneration unit.

2. Terms used in this Regulation:

2.1. cogeneration unit - an aggregate of technological equipment, structures and infrastructure, which is intended for simultaneous production of electricity and thermal energy. A cogeneration unit shall consist of one or more cogeneration installations, operation of which is ensured by auxiliary installations and infrastructures for the supply of energy resources used in production, the removal of waste gases, the transfer of the produced electricity and thermal energy and other infrastructures. Installations used only for the production of thermal energy (for example, hot-water boilers, steam boilers) or only for the production of electricity may be installed in a cogeneration unit. Cogeneration installations situated at one address shall be deemed one cogeneration unit;

2.2. cogeneration installation - an installation or an aggregate of installations that is provided for simultaneous production of electricity and thermal energy in a single technological process. A cogeneration installation shall not include installations that are used only for the production of thermal energy or only for the production of electricity;

2.3. useful thermal energy - thermal energy produced in a cogeneration installation, which a merchant sells to a user of thermal energy for a price that conforms to one of the following conditions (if the merchant is vertically integrated and is concurrently involved in the production, transmission and distribution of thermal energy, all the thermal energy produced in the cogeneration installation shall be recognised as the useful thermal energy. Thermal energy that is produced in separate hot-water or steam boilers shall not be included in the amount of the useful thermal energy):

2.3.1. if there is only one producer of thermal energy in the licensing zone of a heating system operator, the sales price of thermal energy has been determined or approved by the Public Utilities Commission (hereinafter - the Regulator);

2.3.2. if there is more than one producer of thermal energy in the licensing zone of a heating system operator, the sales price of thermal energy is not less than the fuel costs for the production of one unit of thermal energy in a heat plant if the same type of fuel is used as in the cogeneration installation and the net efficiency coefficient of the heat plant is not less than 92%, using gas or liquid fuel, and is not less than 80%, using solid fuel;

2.4. guaranteed payment for the electric capacity installed in a cogeneration unit - the annual payment which is paid by a transmission system operator to the cogeneration unit or to a separate cogeneration installation of such unit for each megawatt of the installed electric capacity (EUR/MW);

2.5. small scale cogeneration unit - a cogeneration unit with an installed electric power generation capacity that is not greater than one megawatt;

2.6. installed electric capacity - the total (gross) electric capacity of a cogeneration installation or several cogeneration installations of a cogeneration unit, which is determined in accordance with the technical documentation of the cogeneration unit.

[22 December 2009; 28 August 2012; 5 November 2013]

II. Qualification Criteria for the Sale of Electricity within the Framework of the Mandatory Procurement or for the Receipt of Guaranteed Payment for Installed Electric Capacity upon Production of Electricity in Cogeneration and the Procedures for Waiving the Referred to Rights

3. The following merchants may apply for the qualification for the sale of electricity within the framework of the mandatory procurement or for the receipt of the guaranteed payment for the installed electric capacity (if the units referred to in Sub-paragraphs 3.1, 3.2 and 3.3 of this Regulation have not been introduced or it is not planned to introduce them according to the procedures specified in Section 23 of the Electricity Market Law):

3.1. a merchant who owns or uses a unit that produces electricity in cogeneration and uses renewable energy resources for the production of energy;

3.2. a merchant who plans to build a unit which produces electricity in cogeneration and uses renewable energy resources for the production of energy;

3.3. a merchant who plans to increase the capacity of the unit in the ownership or use thereof, if the referred to unit produces electricity in cogeneration and uses renewable energy resources for the production of energy.

[7 September 2010]

4. Cogeneration units, which consist of a cogeneration installation and individual boilers for production of thermal energy or only of a cogeneration installation and which produce electricity and useful thermal energy concurrently, using one or several of the following production technologies, may qualify in order to obtain the right to sell the produced electricity within the framework of the mandatory procurement or receive the guarantee of origin:

4.1. a combined cycle gas turbine with heat recovery;

4.2. a steam condensing extraction turbine with a steam discharge pipeline for heat supply;

4.3. a steam backpressure turbine;

4.4. a gas turbine with heat recovery;

4.5. an internal combustion engine;

4.6. microturbines;

4.7. Stirling engines;

4.8. fuel cells;

4.9. steam engines;

4.10. organic Rankine cycle;

4.11. other technologies or combinations thereof if by using them it is possible to produce electricity and the useful thermal energy concurrently.

5. In order to determine the efficiency of a cogeneration unit, the primary energy savings (PES), which are obtained when the cogeneration unit produces the energy in cogeneration, shall be calculated. The following formula shall be used for the calculations:

, where

- is the electric efficiency coefficient of cogeneration installations installed in a cogeneration unit within a certain period of time, which is calculated using the formula referred to in Paragraph 7 of this Regulation;

- is the heat efficiency coefficient of cogeneration installations installed in a cogeneration unit within a certain period of time, which is calculated using the formula referred to in Paragraph 8 of this Regulation;

- is the efficiency coefficient for an individual production of thermal energy depending on the type of fuel used (Annex 1);

- is the efficiency coefficient for an individual production of thermal energy depending on the type of fuel used (if firewood or biogas is used in a cogeneration unit, shall be assumed), which is calculated using the following formula:

, where

- is the harmonised efficiency coefficient with a climate correction for an individual production of electricity depending on the fuel used and the year in which the cogeneration unit was put into service (Annex 1);

- is the own consumption coefficient of a cogeneration unit which is calculated by dividing the annual amount of electricity consumed by a cogeneration unit with the annual amount of electricity produced in a cogeneration unit;

- is the correction coefficient for avoided grid losses in relation to electricity that is consumed in a cogeneration unit (Annex 2); and

- is the correction coefficient for avoided grid losses in relation to electricity that is exported to the grid (Annex 2).

6. A cogeneration unit shall comply with the efficiency criteria and is entitled to sell the produced electricity within the framework of the mandatory procurement if the calculated primary energy savings are:

6.1. more than 1% for small scale cogeneration units;

6.2. not less than 10% for other cogeneration units.

7. The electrical efficiency coefficient of cogeneration installations installed in a cogeneration unit within a certain period of time, which is not less than four months, shall be calculated, using the following formula:

, where

- is the amount of electricity produced in cogeneration installations installed in a cogeneration unit within the relevant period of time, which is not less than four months (MWh); and

B - is the total amount of fuel consumed for the production of electricity and useful thermal energy in the cogeneration installations installed in a cogeneration unit within the relevant period of time, which is not less than four months (MWh).

8. The heat efficiency coefficient of cogeneration installations installed in a cogeneration unit within a certain period of time, which is not less than four months, shall be calculated, using the following formula:

, where

- is the amount of the useful thermal energy produced in cogeneration installations installed in a cogeneration unit within the relevant period of time, which is not less than four months (MWh); and

B - is the total amount of fuel consumed for the production of electricity and useful thermal energy in the cogeneration installations installed in a cogeneration unit within the relevant period of time, which is not less than four months (MWh).

9. A cogeneration unit or an individual cogeneration installation thereof with the installed electric capacity of 20 megawatts and more, which produces electricity and useful thermal energy concurrently, using one or several of the following production technologies, may qualify for obtaining the right to receive a payment for the electric capacity installed in a cogeneration unit:

9.1. a combined cycle gas turbine with heat recovery;

9.2. a steam condensing extraction turbine with a steam discharge pipeline for heat supply;

9.3. a steam backpressure turbine;

9.4. a gas turbine with heat recovery;

9.5. other technologies or combinations thereof if by using them it is possible to produce electricity and useful thermal energy concurrently.

10. A cogeneration unit or an individual installation of such unit may qualify for obtaining the right to receive a payment for the electric capacity installed in a cogeneration unit if the following criteria are fulfilled:

10.1. the primary resource savings of the cogeneration unit or individual cogeneration installation of such unit, calculated according to Paragraph 6 of this Regulation, are not less than 10%;

10.2. the number of hours of use of the electric capacity installed in the cogeneration unit or individual cogeneration installation of such unit in a year (T_MAX) exceeds 3000 hours. For cogeneration units, which are located in the licensing zone of a heating system operator, belong to one merchant and are connected to an electricity transmission system and included in the dispatch control schedule, the number of hours of use of the installed electric capacity in a year shall be determined by summing up. The merchant shall inform the Ministry of Economics in writing regarding the conformity with the conditions referred to in this Paragraph.

[28 August 2012]

11. In order to determine the number of hours of use of the electric capacity installed in a cogeneration unit or in an individual cogeneration installation of such unit, the following formula shall be used:

, where

E - is the amount of electricity produced in the cogeneration unit or in the individual cogeneration installation of such unit in a year (MWh);

P - the electric capacity installed in the unit, which complies with the gross amount of capacity specified by the producer of the installations producing electricity installed in a cogeneration unit (MW).

12. A merchant who wishes to obtain the right to sell the electricity produced in a cogeneration unit within the framework of the mandatory procurement or receive a payment for the capacity installed in a cogeneration unit shall submit a submission to the Ministry of Economics (hereinafter - Ministry) according to the requirements referred to in Paragraph 14 of this Regulation.

13. A submission regarding a cogeneration unit in operation, which already has the right to sell the produced electricity within the framework of the mandatory procurement or the right to receive a payment for the electric capacity installed in a cogeneration unit, shall be submitted if the installed capacities are changed in order to assess the conformity of the cogeneration unit with the efficiency criteria referred to in Paragraph 6 or 10 of this Regulation following the changes in the installed capacity.

14. The merchant shall prepare a submission in accordance with Annex 3 to this Regulation in computer typing without corrections. The submission shall be signed by the authorised official of the merchant and submitted to the Ministry in printed form or in the form of an electronic document in accordance with the laws and regulations regarding drawing of electronic documents. All pages of the submission shall be numbered and each page shall be signed by the authorised official of the merchant.

[28 August 2012]

15. The following documents shall be appended to the submission referred to in Paragraph 14 of this Regulation:

15.1. [28 August 2012];

15.2. a certification of the merchant regarding non-existence of tax debts;

15.3. a description in free form of the unit, which produces or in which it is planned to produce electricity in cogeneration, justifying the indicators included in the submission (the most significant information regarding the unit shall be indicated: the type of the available energy resources, the location, the electric capacity installed or planned for installation, the available technologies, the existing or planned modes of operation);

15.4. a certified copy of the contract regarding the sale of useful thermal energy or a letter of intent regarding the sale of useful thermal energy. The amount of the useful thermal energy for sale and the sales price thereof shall be indicated in these documents.

[28 August 2012]

16. A merchant who wishes to obtain the right to sell the electricity produced by a cogeneration unit within his or her ownership or use within the framework of the mandatory procurement or to receive a guaranteed payment for the installed electric capacity, shall append to the submission a document or a certified copy thereof, which confirms that the relevant unit is in the ownership or use of the merchant.

17. The Ministry shall examine the submission within 30 days after receipt thereof. The Ministry is entitled to verify the authenticity of the documents referred to in Paragraph 15 of this Regulation and the identity of the issuers thereof.

18. If a submission does not contain all the information referred to in Annex 3 to this Regulation or all the documents are not appended to the submission according to Paragraphs 15 and 16 of this Regulation, or, during examination, any of the documents appended to the submission is declared to be invalid, the Ministry shall request to submit the missing information or document within 30 days. If the merchant has not submitted the requested information or documents within the specified period of time, the Ministry shall take a decision to reject the submission and shall inform the merchant regarding such decision by sending the submission back.

19. If a submission and the documents appended thereto comply with the requirements of this Regulation, the Ministry shall verify the compliance of the cogeneration unit with the requirements referred to in Paragraphs 3, 4, 5, 6, 9 and 10 of this Regulation on the basis of the information submitted in the submission within 30 days after receipt of all the necessary information.

20. If a merchant and the submission thereof complies with the relevant requirements, the Ministry shall take a decision to grant the merchant the right to sell the electricity produced in cogeneration in a unit within the framework of the mandatory procurement or the rights to receive the guaranteed payment for the capacity installed in a unit and issue it to the merchant according to Paragraph 21 of this Regulation. The Ministry shall issue the specified decision to the merchant in three copies.

21. The following shall be indicated in the decision referred to in Paragraph 20 of this Regulation:

21.1. the trade name, registration number and legal address of the merchant;

21.2. the registration number in the register of electricity producers;

21.3. the location of the cogeneration unit;

21.4. the electric capacity installed in a cogeneration unit;

21.5. if the right to receive a payment for the capacity installed in a cogeneration unit is granted to a cogeneration installation - the operational designation of such installation;

21.6. that a merchant has obtained the right to sell the electricity produced in cogeneration in the relevant unit within the framework of the mandatory procurement or the right to receive the guaranteed payment for the capacity installed in a unit;

21.7. if a merchant has obtained the right to sell the electricity produced in cogeneration in the relevant unit within the framework of the mandatory procurement - the amount of electricity procured in a calendar year within the framework of the mandatory procurement;

21.8. if a merchant has obtained the right to receive the guaranteed payment for the capacity installed in a unit, - the capacity installed by the unit, for which such rights have been obtained, and the number of hours of use of the installed electric capacity in a year, which is calculated according to Paragraph 11 of this Regulation;

21.9. the primary energy savings calculated pursuant to Paragraphs 5, 7 and 8 of this Regulation;

21.10. the deadline by which a merchant shall commence the production of electricity in cogeneration.

[28 August 2012]

21.¹ The time period for commencing production of electricity in cogeneration, laid down in accordance with this Regulation, may not be extended.

[30 July 2013]

22. The Ministry shall take a decision not to grant a merchant the right to sell the electricity produced in the relevant cogeneration unit within the framework of the mandatory procurement or receive a payment for the electric capacity installed in a cogeneration unit in the following cases:

22.1. the cogeneration unit or the cogeneration installation of such unit does not comply with the efficiency criteria referred to in Paragraph 6 or 10 of this Regulation;

22.2. the data provided in the submission or the documents appended thereto are contradictory or are not sufficiently substantiated or arithmetical errors have been made in determining the compliance of the cogeneration unit or the cogeneration installation of such unit with the efficiency criteria referred to in Paragraph 6 or 10 of this Regulation;

22.3. the submission of the merchant is in contradiction with the provisions of the Electricity Market Law.

23. The decision of the Ministry not to grant a merchant the right to sell the electricity produced in the relevant cogeneration unit within the framework of the mandatory procurement or to receive a payment for the capacity installed in a cogeneration unit may be appealed by the merchant in accordance with the procedures laid down in the Administrative Procedure Law.

III. Implementation and Supervision of Mandatory Procurement and Guaranteed Payment for the Electric Capacity Installed in a Cogeneration Unit

24. The mandatory procurement shall be implemented on the basis of a contract by and between a public trader (hereinafter - trader) and a merchant or an authorised person thereof.

25. Before entering into a contract a merchant shall submit to a trader a copy of one of the decisions of the Ministry referred to in Paragraph 20 of this Regulation. The day when the unit is put into service and an act of the system operator regarding recognition of the unit as valid for parallel work with the system shall be deemed the date of the coming into effect of the contract for the planned unit of the merchant.

[28 August 2012]

26. In order to sell electricity within the framework of the mandatory procurement, a cogeneration unit shall be equipped with:

26.1. electricity meters for accounting of the electricity produced in the cogeneration unit and the cogeneration installations installed therein, exported to the electricity grid and received from the grid, which comply with the technical requirements specified and published by the operator of the relevant electricity system (hereinafter - system operator). A deed regarding installation and sealing of the accounting meters shall be drawn up by the system operator and signed by the representatives of the cogeneration unit and of the system operator;

26.2. meters or a system of meters for accounting of thermal energy, which ensures a separate accounting of the thermal energy produced in a cogeneration installation, individual boilers for production of thermal energy or the thermal energy produced in another way and the useful thermal energy sold to a user;

26.3. a system of meters or measurement equipment, which ensures separate accounting of the fuel consumed in cogeneration installations and other installations for the production of thermal energy.

[28 August 2012]

27. The period of time for the settlement of accounts regarding the sale and purchase of electricity within the framework of the mandatory procurement shall be one calendar month.

28. A trader shall purchase from a cogeneration unit, which has received the right to sell the produced electricity within the framework of the mandatory procurement, only the surplus of electricity produced in cogeneration, which is left after the utilisation of electricity for the needs of the cogeneration unit. The remaining amount of electricity shall be calculated in accordance with the procedures referred to in Paragraph 29 of this Regulation.

29. The amount of electricity produced in cogeneration during the time period for the settlement of accounts, which is left after the utilisation of electricity for the needs of the cogeneration unit, shall be determined as follows:

29.1. the actual total efficiency coefficient of the energy production of the cogeneration installation shall be calculated, using the following formula:

, where

- is the amount of electricity produced in a cogeneration installation installed in a cogeneration unit during the period of time for the settlement of accounts, which is determined in accordance with the readings of the meters at the generator output (MWh);

Q_np - is the amount of the useful thermal energy produced in cogeneration installations installed in a cogeneration unit during the period of time for the settlement of accounts (MWh);

B_np - is the amount of fuel consumed in cogeneration installations installed in a cogeneration unit during the period of time for the settlement of accounts (MWh);

29.2. it shall be assumed that the amount of electricity produced in cogeneration remaining after the utilisation of electricity for the needs of the cogeneration unit is equal to the amount of electricity exported to the electricity grid during the period of time for the settlement of accounts, if one of the following conditions is observed:

29.2.1. the total actual efficiency coefficient of energy production for the cogeneration unit, in which the technology referred to in Sub-paragraph 4.1 or 4.2 of this Regulation is used, is 80% or more;

29.2.2. the total actual efficiency coefficient of energy production for the cogeneration installation, in which any of the technologies referred to in Sub-paragraph 4.3, 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10 or 4.11 of this Regulation is used, is 75% or more;

29.3. if the calculated total actual efficiency coefficient of the cogeneration unit is less than the values referred to in Sub-paragraph 29.2.1 or 29.2.2 of this Regulation, the amount of electricity produced in cogeneration remaining after the utilisation for the needs of the cogeneration unit shall be calculated, using the following formula:

, where

- the proportion between the electric capacity installed by cogeneration installations installed in a cogeneration unit and the heat capacity in accordance with the data of the technical passport. If such data are not available, the referred to value shall be determined depending on the cogeneration technology used (Annex 4).

[28 August 2012]

30. A merchant shall sell the amount of electricity, which in accordance with Paragraph 29 of this Regulation is not recognised as being produced in cogeneration, to a trader for the agreement price.

[22 December 2009]

31. Merchants who have obtained the right to sell the produced electricity within the framework of the mandatory procurement shall sell the produced electricity to the trader:

31.1. according to fixed schedules of trade intervals for the following period for the settlement of accounts if the electric capacity installed in a cogeneration unit is 15 megawatts or more;

31.2. according to the actual generation if the electric capacity installed in a cogeneration unit is less than 15 megawatts.

[22 December 2009]

32. At a time when a cogeneration unit produces less electricity than it consumes for its own needs or does not produce at all, it shall purchase electricity from a trader according to laws and regulations governing the sale of electricity.

33. The procedures for the co-ordination of fixed schedules of trade intervals shall be stipulated by the electricity producer and the trader in the contract, taking into account the requirements of the Network Code. The electricity producer shall co-ordinate the final daily schedule of trade intervals with the trader at least one working day prior to the commencement of trade. The electricity producer may change the previously co-ordinated fixed schedules of trade intervals, co-ordinating it with the trader at least two hours before the start of the trade interval. When procuring electricity in conformity with the fixed schedules of trade intervals, the trader shall procure electricity from the electricity producer, which has been transferred to the grid and exceeds the amount specified in the schedule, for the price specified in this Regulation, multiplied by a coefficient of 0.8, as well as shall sell the missing electricity to the electricity producer for the price specified in this Regulation, multiplied by a coefficient of 1.2.

[22 December 2009]

34. The costs of the mandatory procurement of electricity produced in accordance with the procedures of mandatory procurement shall be covered by all end users of electricity in proportion to the amount of electricity consumption. The referred to costs shall be covered as follows:

34.1. the Regulator shall determine the procedures, by which the components of the mandatory procurement from cogeneration units are calculated and the components that compensate the trader for the additional expenses caused by the mandatory procurement are approved, in comparison with the procurement of the same amount of electricity in the electricity market;

34.2. the associated user in proportion to the amount of electricity consumed thereby shall pay the component of the mandatory procurement to the trader or to the relevant system operator together with the final tariff of electricity trade;

34.3. end users - electricity market participants - in proportion to the amount of electricity consumption shall pay the component of the mandatory procurement to the relevant electricity transmission or distribution system operator together with the payment for the service of transmission or distribution;

34.4. system operators shall account a component of the mandatory procurement corresponding to the electricity consumption of the end users connected to the systems thereof in each period for the settlement of accounts, provide the necessary information to the trader for the performance of the settlement of accounts and settle the accounts with the trader for a component corresponding to the electricity consumption of the end users connected to the systems thereof.

[22 December 2009]

35. A merchant who has obtained the right to receive the guaranteed payment for the electric capacity installed in a cogeneration unit shall ensure that the capacity installed in a cogeneration unit be put into service and be operational not later than within five years from the coming into effect of the decision referred to in Paragraph 20 of this Regulation.

[22 December 2009]

35.¹ If a merchant does not fulfil the duties referred to in Paragraph 35, 72 or 73 of this Regulation or does not commence producing electricity in cogeneration within the time period laid down in a decision by which the right to sell the produced electricity within the framework of the mandatory procurement is granted, the Ministry shall take a decision to revoke the decision referred to in Paragraph 20 of this Regulation within a month. The decision shall be notified to the merchant, public trader and system operator.

[30 July 2013]

36. Payment for the electric capacity installed in a cogeneration unit shall be performed on the basis of a contract by and between a transmission service operator and a merchant, which has been entered into for a period of time not exceeding 15 years from the putting into operation of the cogeneration unit or a cogeneration installation of such unit, in accordance with a permit issued by the system operator to connect the cogeneration unit to the system. Before entering into the contract, the merchant shall submit to the transmission system operator a copy of one of the decisions of the Ministry referred to in Paragraph 20 of this Regulation.

[22 December 2009; 28 August 2012]

37. The date of the coming into effect of a contract for a cogeneration unit planned by a merchant or a cogeneration installation of such unit shall be deemed the date when the cogeneration unit or the cogeneration installation of such unit is put into service.

38. A transmission system operator shall pay a merchant the payment for the electric capacity installed in a cogeneration unit once a month.

39. A transmission system operator shall discontinue paying for the electric capacity installed in a cogeneration unit if the cogeneration unit or the cogeneration installation of such unit is not operational for more than six months running. The transmission system operator shall resume payment for the electric capacity installed in the cogeneration unit from the moment when the merchant proves that the cogeneration unit or the cogeneration installation of such unit is operational.

40. By 1 March of each year, a merchant shall submit an account to the Ministry on operation of each cogeneration unit in the ownership thereof (Annex 5). The data provided in the account shall be attested by the responsible official of the system operator, to the electricity grid of which the cogeneration unit is connected. The data provided in the account regarding useful thermal energy sold shall be approved by an independent accredited auditor. The account shall be submitted in printed form or in the form of an electronic document in accordance with the laws and regulations regarding drawing up of electronic documents.

[28 August 2012; 30 July 2013]

40.¹ The auditor referred to in Paragraph 40 of this Regulation shall be a legal person, which has been accredited at the Latvian National Accreditation Bureau and conforms to the accreditation requirements, taking into account the standard LVS EN ISO/IEC 17020:2012 "Conformity assessment - Requirements for the operation of various types of bodies performing inspection". The Latvian National Accreditation Bureau shall publish the list of accredited auditors on the website thereof.

[28 August 2012]

40.² If a merchant has not submitted the annual account referred to in Paragraph 40 of this Regulation, the Ministry shall warn the merchant sending a corresponding notification thereto by 1 April.

[30 July 2013]

40.³ If a merchant does not submit the annual account referred to in Paragraph 40 of this Regulation within a month after receiving a warning of the Ministry, the Ministry shall take a decision to revoke the right of the merchant to sell the electricity produced in cogeneration within the framework of the mandatory procurement or to receive a payment for the electric capacity installed in the cogeneration unit within 20 days after expiry of the time period referred to in the warning. The decision shall be notified to the merchant and the system operator.

[30 July 2013]

41. If the right to receive a payment for the electric capacity installed in a cogeneration unit is received by an individual installation of such unit, an account shall be submitted only regarding the operation of such installation according to Paragraph 40 of this Regulation.

42. A copy of the sales contract of useful thermal energy, as well as a copy of the decision of the Regulator on thermal energy tariff shall be appended to an account.

42.¹ The Ministry shall register and record all decisions, according to which a merchant has been granted the right to sell the electricity produced in the unit in cogeneration within the framework of the mandatory procurement or the right to receive a guaranteed payment for the electric capacity installed in the unit. The Ministry shall publish the following information on the website thereof:

42.¹ 1. a list of all decisions and the date of taking thereof;

42.¹ 2. the firm name of the merchant;

42.¹ 3. the type of the heating fuel to be used;

42.¹ 4. the installed capacity and the annual amount of electricity, which the merchant is entitled to sell within the framework of the mandatory procurement;

42.¹ 5. until 1 March of each year - the sum, which has been disbursed to the merchant in the previous year within the framework of the mandatory procurement or guaranteed payment.

[28 August 2012]

43. The Public Utilities Commission shall control the compliance of the operation of a cogeneration unit with the requirements of laws and regulations governing the energy sector, but the system operator - the condition of the electricity and thermal energy meters.

[30 November 2009; 28 August 2012]

44. On the basis of the data of the account referred to in Paragraph 40 of this Regulation the Ministry shall, within three months after receipt of an account, evaluate the compliance of the cogeneration unit with the efficiency criteria specified in Paragraph 6 or 10 of this Regulation. In evaluating the annual account submitted by the merchant, the Ministry has the right to request that the merchant submits detailed information in order to evaluate the conformity with the criteria referred to in Paragraph 44.¹ of this Regulation. The merchant has a duty to submit the requested information to the Ministry within 20 days upon request of the Ministry. The Ministry is entitled to request that the State Revenue Service and the State Social Insurance Agency prepares a statement regarding non-existence of debts of taxes, fees or other mandatory payments by the merchant into the State budget, if the referred to information cannot be obtained in the public data base, for the period of time, for which the last annual account has been submitted.

[28 August 2012]

44.¹ The Ministry shall evaluate the account referred to in Paragraph 44 of this Regulation, including ascertain that in the relevant year of annual account:

44.¹ 1. the merchant complies with the requirements of the laws and regulations governing construction and operation of structures;

44.¹ 2. the merchant has not had tax debts, including debts of mandatory State social insurance payments;

44.¹ 3. the type of the heating fuel indicated in the annual account has been used for the production of electricity in the cogeneration unit.

[28 August 2012]

45. If a cogeneration unit does not comply with the efficiency criteria specified in Paragraph 6 or 10 of this Regulation or the criteria referred to in Paragraph 44.¹ of this Regulation, the Ministry shall send the merchant a warning regarding non-compliance of the cogeneration unit and the possibility to lose the right to sell the electricity produced in cogeneration within the framework of the mandatory procurement or to receive a payment for the electric capacity installed in a cogeneration unit.

[28 August 2012]

45.¹ The Ministry is entitled to create a control group which, when necessary, verifies the conformity of a cogeneration unit with the criteria referred to in Paragraphs 6, 10 and 44.¹ of this Regulation and the veracity of information and data provided in the annual account of the merchant or the submission referred to in Paragraph 14 of this Regulation. The control group shall survey the cogeneration unit throughout the settlement period. The merchant has a duty to lay down a date of survey, which is no later than 20 days from the day when a request of the Ministry is received, within 10 days after receiving the request of the Ministry. Within the framework of the survey the control group shall request the information from the merchant, necessary for implementation of supervision, as well as written and oral explanations.

[30 July 2013]

45.² If after a survey by the control group the Ministry establishes that a cogeneration unit does not conform to the criteria referred to in Paragraph 6, 10 or 44.¹ of this Regulation or the merchant has provided false information in the submission referred to in Paragraph 14 of this Regulation, on the basis of which the Ministry has taken a favourable decision, the Ministry shall warn the merchant within 20 days after the survey by the control group, sending a notification thereto regarding non-conformity of the cogeneration unit and the possibility of losing the right to sell the electricity produced in cogeneration within the framework of the mandatory procurement or to receive a payment for the electric capacity installed in the cogeneration unit. The Ministry shall send the referred-to warning also to the trader and the system operator.

[30 July 2013]

46. Within nine months after receiving a warning, a merchant who has obtained the right to sell the electricity produced in cogeneration within the framework of the mandatory procurement or who has obtained the right to receive a payment for the electric capacity installed in a cogeneration unit, shall renew the compliance of the cogeneration unit according to the efficiency criteria referred to in Paragraph 6 or 10 of this Regulation and shall submit an account to the Ministry regarding the referred to period of time according to the form specified in Annex 5 to this Regulation.

46.¹ Within six months after sending of a warning a merchant who has obtained the right to sell the electricity produced in cogeneration within the framework of the mandatory procurement or who has obtained the right to receive a payment for the electric capacity installed in a cogeneration unit, shall ensure the conformity of the cogeneration unit and the merchant with the criteria referred to in Sub-paragraphs 44.¹ 1 and 44.¹ 3 of this Regulation and submit a relevant certification to the Ministry. The merchant shall ensure the conformity with the criterion referred to in Sub-paragraph 44.¹ 2 of this Regulation within nine months after sending of the warning.

[28 August 2012]

46.² If the Ministry has established that a merchant has provided false information in the annual account or the submission referred to in Paragraph 14 of this Regulation, the merchant shall submit an account on the relevant time period according to the form referred to in Annex 5 to this Regulation within six months after receiving the warning referred to in Paragraph 45.² of this Regulation.

[30 July 2013]

47. If data of the account referred to in Paragraph 46 of this Regulation prove that the cogeneration unit still does not comply with the efficiency criteria, or a non-conformity with the criteria referred to in Paragraph 44.¹ or Paragraph 46.² of this Regulation is established after submitting the certification of the merchant and the non-conformity has not been rectified within six months after receiving a warning, the Ministry shall take a decision to deprive the merchant of the right to sell the electricity produced in cogeneration within the framework of the mandatory procurement or to receive a payment for the electric capacity installed in the cogeneration unit within a month. The decision shall be notified to the merchant, trader and system operator.

[30 July 2013]

48. A trader or a transmission system operator shall discontinue the operation of the contract referred to in Paragraph 24 or 36 of this Regulation on the basis of the decision referred to in Paragraph 40.³, 45.¹ or 47 of this Regulation. The cogeneration unit may continue operation and sell the produced electricity to any market member after discontinuation of the contract, reaching a mutual agreement regarding the conditions of sale.

[30 July 2013]

49. If a merchant wishes to waive the right to sell electricity produced in cogeneration within the framework of the mandatory procurement or the right to receive the guaranteed payment for the capacity installed in a cogeneration unit, it shall submit a relevant submission to the trader, the Ministry and the system operator. Within 30 days after receiving the submission, the Ministry shall examine the submission and take a decision to deprive the right to sell electricity produced in cogeneration within the framework of the mandatory procurement or the decision to deprive the right to receive the guaranteed payment for the capacity installed in a cogeneration unit. The operation of the contract referred to in Paragraph 24 of this Regulation shall be discontinued not earlier than three months after the coming into effect of the decision of the Ministry to deprive the right to sell electricity produced in cogeneration within the framework of the mandatory procurement if the merchant waives the right to sell electricity produced in cogeneration within the framework of the mandatory procurement. The operation of the contract referred to in Paragraph 36 of this Regulation shall be discontinued not earlier than six months after the coming into effect of the decision of the Ministry to deprive the right to receive the guaranteed payment for the capacity installed in a cogeneration unit if the merchant waives the right to receive the guaranteed payment for the capacity installed in the cogeneration unit after the announcement of the merchant regarding the relevant decision.

50. A merchant still has a duty to submit the account referred to in Paragraph 40 of this Regulation after discontinuation of the operation of the contract referred to in Paragraph 24 or 36 of this Regulation.

51. The transmission system operator shall control the accessibility of capacity of a cogeneration unit (or individual installations thereof) for merchants who have obtained the right to receive a payment for the electric capacity installed in a cogeneration unit, in accordance with the following procedures:

51.1. the transmission system operator controls and calculates availability - the readiness of each cogeneration unit (or individual installations thereof) for launching at a specific time co-ordinated with the merchant and for accepting the capacity requested by the transmission system operator;

51.2. the transmission system operator carries out the supervision of availability of a cogeneration unit (or individual installations thereof), including requesting launching and load of the cogeneration unit (or individual installations thereof). If the transmission system operator has requested launching and load of a cogeneration unit (or individual installations thereof), the operator shall compensate the additionally caused expenditure to the merchant, reaching an agreement with the merchant on the amount thereof. If a cogeneration unit (or an individual installation thereof) is unable to execute a command of the controller of the transmission system operator or executes it partially, the expenditure related thereto shall be compensated by the merchant, reimbursing in triple amount the expenditure caused to the transmission system operator;

51.3. the transmission system operator suspends payment for the capacity component to a cogeneration unit, which is connected to the electricity transmission system and in accordance with the requirements of the Network Code conforms to the definition of a generating unit of a dispatch control schedule, if the capacity installed in the cogeneration unit in the previous years had not been available in the amount specified in this Regulation. The transmission system operator shall renew payment of the capacity component, if the cogeneration unit proves the accessibility of capacity (availability).

[30 July 2013]

III.¹ Conditions for the Performer of Annual Account Accreditation

[30 July 2013]

51.¹ The Latvian National Accreditation Bureau shall certify the conformity of an institution with the requirements stipulated in the standard LVS EN ISO/IEC 17020:2012 "Conformity assessment - Requirements for the operation of various types of institutions performing inspection" when accrediting an institution that approves the data provided regarding efficient thermal energy sold (Annex 5).

51.² The Latvian National Accreditation Bureau shall carry out annual supervision of the accredited auditor.

51.³ If the Ministry establishes substantial non-conformities of information or data with the information or data in the annual account approved by the auditor and the auditor has not established such non-conformities or has not taken them into account, the Ministry shall notify the Latvian National Accreditation Bureau thereof. The account shall include the following information:

51.³ 1. the name of the relevant accredited institution and information regarding the auditor;

51.³ 2. the non-conformities established;

51.³ 3. the consequences of non-conformity of information or data.

51.⁴ The Ministry is entitled to submit a complaint to the Latvian National Accreditation Bureau regarding the accredited institution. The Latvian National Accreditation Bureau shall examine it in accordance with the requirements stipulated in the standard LVS EN ISO/IEC 17020:2012 "Conformity assessment - Requirements for the operation of various types of institutions performing inspection".

51.⁵ The Latvian National Accreditation Bureau shall take a decision to revoke, suspend accreditation or to reduce the field of accreditation of an institution in accordance with the laws and regulations regarding assessment, accreditation and supervision of assessment institutions, if:

51.⁵ 1. in approving the annual account referred to in Paragraph 40 of this Regulation, the auditor of the accredited institution has not conformed to the requirements stipulated in the standard LVS EN ISO/IEC 17020:2012 "Conformity assessment - Requirements for the operation of various types of institutions performing inspection";

51.⁵ 2. in assessing the account of the Ministry referred to in Paragraph 51.³ of this Regulation, a substantial infringement in activities of the accredited institution is established.

51.⁶ The Latvian National Accreditation Bureau shall notify the decision referred to in Paragraph 51.⁵ of this Regulation to revoke, suspend the granted accreditation or to reduce the field of accreditation to the addressee and publish it on the website thereof.

51.⁷ The Latvian National Accreditation Bureau shall renew accreditation of an institution, which has been suspended in accordance with the decision referred to in Paragraph 51.⁵ of this Regulation, if:

51.⁷ 1. the accredited institution has rectified non-conformities and carried out the necessary activities in order to prevent repeating thereof;

51.⁷ 2. the Latvian National Accreditation Bureau has ascertained that the accredited institution conforms to the requirements stipulated in the standard LVS EN ISO/IEC 17020:2012 "Conformity assessment - Requirements for the operation of various types of institutions performing inspection" for an accredited auditor.

IV. Determination of the Price or Guaranteed Payment for the Capacity Installed in a Cogeneration Unit

52. A trader shall procure the electricity produced in cogeneration from cogeneration units, which have obtained the right to sell the produced electricity within the framework of the mandatory procurement and the installed electric capacity of which is greater than four megawatts, for a price to be determined in accordance with the following procedures:

52.1. energy component is equivalent to the electricity stock exchange price of the relevant hour (EUR/MWh). The trader of electricity pays for the electricity component on the basis of hourly data on the electricity produced in the cogeneration unit and transferred into the network;

52.2. capacity component:

52.2.1. for cogeneration units, the installed electric capacity of which is greater than four megawatts, but is less than 20 MW, the capacity component is 153 527 euros per installed electric megawatt a year (EUR/MW a year);

52.2.2. for cogeneration units, the installed electric capacity of which is greater than 20 MW, but is less than 100 MW, the capacity component is 119 237 euros per installed electric megawatt a year (EUR/MW a year);

52.2.3. for cogeneration units, the installed electric capacity of which is greater than 100 MW, the capacity component is 102 304 euros per installed electric megawatt a year (EUR/MW a year);

52.3. for cogeneration units which are connected to a transmission system and have received the right to sell the produced electricity within the framework of the mandatory procurement and the installed electric capacity of which is greater than four megawatts, the number of utilisation of the installed electric capacity of the cogeneration unit or an individual installation thereof is at least 1200 hours per year;

52.4. the trader pays the capacity component for the installed electric capacity (regardless of electricity output) once a month, dividing the annual payment in 12 parts;

52.5. the trader suspends payment of the capacity component for a cogeneration unit, which is connected to an electricity transmission system and in accordance with the requirements of the Network Code conforms to the definition of a generating unit of a dispatch control schedule, if the capacity installed in the cogeneration unit in the previous year had not been available for at least 4500 hours. The transmission system operator shall control and calculate the availability in accordance with the procedures referred to in Paragraph 51 of this Regulation;

52.6. for the electricity produced in a cogeneration unit and sold to a trader, exceeding the amount referred to in Annex 7 to this Regulation, the merchant shall carry out the adjustment of the capacity component referred to in Sub-paragraph 52.2 of this Regulation. Each month until tenth date the merchant shall submit the calculation of the adjustment of the capacity component (in electronic form) for the previous calendar month in accordance with Annex 7 to this Regulation. The trader shall take into account adjustment of the capacity component in the settlement of accounts, reducing the amount to be disbursed accordingly.

[30 July 2013; 5 November 2013]

52.¹ A trader shall procure electricity produced in cogeneration process from a merchant, which has received the right to sell the produced electricity within the framework of the mandatory procurement and the installed electrical capacity of the cogeneration unit of which or of individual cogeneration installation of such unit is greater than four megawatts, 15 years from the day when one of the following conditions has been complied with:

52.¹ 1. the capacity of the cogeneration unit or individual cogeneration installation of such unit has been put into service according to an authorisation issued by the system operator for connecting the cogeneration unit or individual cogeneration installation of such unit to the system, but if such authorisation has not been issued - from the day when the unit was accepted into service;

52.¹ 2. the capacity indicated in a decision to grant the right of mandatory procurement of electricity produced in cogeneration after increasing the capacity has been put into service according to an authorisation issued by the system operator for connecting the cogeneration unit with the increased capacity or individual installation of such unit to the system.

[28 August 2012]

53. The price for electricity produced in cogeneration for cogeneration units, the installed electric capacity of which is not greater than 4 megawatts, shall be determined, using the following formula:

53.1. for cogeneration units, which use renewable energy resources or peat as fuel:

C - the price without value added tax, for which a trader purchases electricity produced in cogeneration (EUR/MWh);

T_g - the final trade tariff for natural gas approved by the Regulator without value added tax, according to the actual calorific value of the natural gas (EUR/thousand n.m³);

k - the price differentiation coefficient which depends on the electric capacity installed in a cogeneration unit;

53.2. for other cogeneration units:

53.3. if a renewable energy resource or peat and a mixture of other fuels is used in a cogeneration installation, the price for electricity shall be calculated as the average weighted value in proportion to the consumption of different types of fuel. In such case the cogeneration unit shall be equipped with a system of meters allowing for the separate accounting of the consumption of each type of fuel. If renewable energy resources make up at least 90% of the fuel consumed in a cogeneration installation, it shall be assumed that all the electricity produced in the cogeneration installation is produced from renewable energy resources.

[5 November 2013]

53.¹ A trader shall procure electricity produced in cogeneration process from a merchant, which has received the right to sell the produced electricity within the framework of the mandatory procurement and the installed electrical capacity of the cogeneration unit of which or of individual cogeneration installation of such unit exceeds four megawatts, 10 years from the day when one of the following conditions has been complied with:

53.¹ 1. the capacity of the cogeneration unit or individual cogeneration installation of such unit has been put into service according to an authorisation issued by the system operator for connecting the cogeneration unit or individual cogeneration installation of such unit to the system, but if such authorisation has not been issued - from the day when the unit was accepted into service;

53.¹ 2. the capacity indicated in a decision to grant the right of mandatory procurement of electricity produced in cogeneration after increasing the capacity has been put into service according to an authorisation issued by the system operator for connecting the cogeneration unit with the increased capacity or individual installation of such unit to the system.

[28 August 2012]

54. In order to calculate the price, for which a trader purchases the amount of electricity produced in cogeneration specified in Paragraph 29 of this Regulation, using the formulas referred to in Paragraphs 52 and 53 of this Regulation:

54.1. the coefficient k values referred to in Annex 6 to this Regulation shall be used depending on the electric capacity installed in a cogeneration unit;

54.2. the T_g final trade tariffs for natural gas approved by the Regulator shall be used for the amounts of natural gas consumed (Annex 6) depending on the electric capacity installed in a cogeneration unit.

[22 December 2009]

54.¹ The final tariff for the trade of natural gas approved by the Regulator indicated in Sub-paragraphs 53.1, 53.2 and 54.2 and Annex 7, Note 4 of this Regulation, without value added tax, according to the actual calorific value of the natural gas (EUR/thousand n.m³) shall not exceed the sum that has been calculated if the trade price of natural gas is 277.46 EUR/thousand n.m³.

[22 April 2014]

54.² If the trade price of natural gas is lower than 277.46 EUR/thousand n.m³, the final tariff for the trade of natural gas approved by the Regulator indicated in Sub-paragraphs 53.1, 53.2 and 54.2 and Annex 7, Note 4 of this Regulation, without value added tax, according to the actual calorific value of the natural gas (EUR/thousand n.m³) is determined according to the relevant trade price of natural gas.

[22 April 2014]

55. Monthly payment for the electric capacity installed in a cogeneration unit shall be calculated for cogeneration units or cogeneration installations of such units, using the following formulas:

55.1. for a cogeneration unit or a cogeneration installation of such unit, in which solid fuel is utilised, monthly payment for the electric capacity installed in the cogeneration unit shall be calculated multiplying the payment for the electric capacity unit installed in the cogeneration unit (EUR 224 459) by the electric capacity installed and dividing by 12 months:

55.2. for a cogeneration unit or a cogeneration installation of such unit, in which natural gas or liquid fuel is used as fuel, monthly payment for the electric capacity installed in the cogeneration unit shall be calculated multiplying the payment for the electric capacity unit installed in the cogeneration unit (EUR 136 186) by the electric capacity installed and dividing by 12 months:

M - the guaranteed payment for the electric capacity installed in a cogeneration unit or a cogeneration installation of such unit (EUR/month);

P - the electric capacity installed in a cogeneration unit or a cogeneration installation of such unit, which complies with the sum of the gross capacities (MW) stipulated by the equipment manufacturer.

[5 November 2013]

55.¹ The transmission system operator shall pay the merchant a guaranteed payment for 15 years from then day when one of the following conditions has been complied with:

55.¹ 1. the capacity indicated in the decision to grant the right to guaranteed payment has been put into service in accordance with an authorisation issued by the system operator to connect the cogeneration unit to the system;

55.¹ 2. the capacity indicated in the decision to grant the right to guaranteed payment after increasing of capacity has been put into service in accordance with an authorisation issued by the system operator to connect the cogeneration unit with the increased capacity to the system.

[28 August 2012; 30 July 2013]

56. Merchants who receive the guaranteed payment for the electric capacity installed in a cogeneration unit shall sell the electricity produced in a cogeneration unit in the electricity market for such price as has been agreed by the merchant and the purchaser of electricity.

V. Issuance of a Guarantee of Origin of the Electricity Produced in Cogeneration to a Merchant

57. A merchant may receive a guarantee of origin that the electricity produced in a cogeneration unit or in a cogeneration installation of such unit in his or her ownership complies with the efficiency requirements specified in this Regulation.

58. The guarantee of origin referred to in Paragraph 57 of this Regulation shall be issued by the Ministry.

59. A guarantee of origin shall be issued for the amount of electricity, which is produced in a cogeneration unit or in a cogeneration installation of such unit corresponding to the efficiency criteria referred to in Paragraph 6 of this Regulation and is determined in accordance with Paragraph 29 of this Regulation.

60. If a merchant wishes to receive a guarantee of origin for electricity, which is produced within one year, it shall indicate that it wishes to receive a guarantee of origin when submitting the account referred to in Paragraph 40 of this Regulation.

61. If a merchant wishes to receive a guarantee of origin regarding the amount of electricity produced in cogeneration within a shorter period of time (but not less than 3 months), it shall submit a submission to the Ministry. Information regarding the operation of a cogeneration unit or a cogeneration installation of such unit in the relevant period of time shall be appended to the submission (Annex 5).

62. The Ministry shall issue a guarantee of origin or provide a justified refusal within 30 days after receipt of the account referred to in Paragraph 40 of this Regulation or of the submission and information referred to in Paragraph 61 of this Regulation.

VI. Closing Provisions

63. Cabinet Regulation No. 921 of 6 November 2006, Regulations Regarding Electricity Production in Cogeneration (Latvijas Vēstnesis, 2006, No. 181), is repealed.

64. A trader shall continue to purchase electricity from merchants who have been granted the right to sell electricity produced in a cogeneration unit within the framework of the mandatory procurement by decisions that have been issued by the Ministry in accordance with Cabinet Regulation No. 921 of 6 November 2006, Regulations Regarding Electricity Production in Cogeneration, observing the conditions included in the referred to decisions.

[22 December 2009]

65. Submissions regarding granting of the right to sell electricity that has been produced in a cogeneration unit within the framework of the mandatory procurement, which have been submitted by the date of the coming into force of this Regulation, shall be examined in accordance with the procedures prescribed by Cabinet Regulation No. 921 of 6 November 2006, Regulations Regarding Electricity Production in Cogeneration.

66. A cogeneration unit which has obtained the right to sell the produced electricity within the framework of the mandatory procurement and the installed capacity of which exceeds 4 megawatts, and which has been put into service until the day of coming into force of this Regulation or, in accordance with Section 22, Paragraph one of the Electricity Market Law, has received an authorisation from the Ministry of Economics to increase the production capacity or to introduce new production equipment, shall sell the electricity produced in cogeneration to a trader for the price determined by the Regulator according to the methodology approved by the Regulator.

[22 December 2009]

67. The cogeneration unit referred to in Paragraph 66 of this Regulation is entitled to choose to sell the electricity produced in cogeneration for a price determined in accordance with Sub-paragraphs 52.2.1, 52.2.2 and 52.2.3 of this Regulation. In such case it shall lose the right to sell the electricity produced in cogeneration to a trader for the price determined by the Regulator according to the methodology approved by the Regulator. The trader shall inform the Regulator of the procedures for determining the price chosen by the merchant within 30 days after taking of the relevant decision.

[22 December 2009; 30 July 2013]

68. A merchant who until 31 October 2010 has obtained the right to sell the electricity produced in a cogeneration unit within the framework of the mandatory procurement or to receive a payment for the installed capacity of the cogeneration unit in accordance with this Regulation or Cabinet Regulation No. 921 of 31 October 2006, Regulations Regarding Electricity Production in Cogeneration, shall preserve the right to sell electricity to the public trader within the framework of the mandatory procurement.

[7 September 2010]

69. A merchant who until 31 October 2010 has obtained the right to sell the electricity produced in a cogeneration unit within the framework of the mandatory procurement in accordance with this Regulation or Cabinet Regulation No. 921 of 31 October 2006, Regulations Regarding Electricity Production in Cogeneration, may apply for the qualification to the receipt of guaranteed payment for the installed electric capacity according the conditions effective on 31 October 2010 on the qualification criteria for the receipt of guaranteed payment for the installed electric capacity.

[7 September 2010]

70. From 10 September 2012 to 1 January 2016 the merchant is not entitled to qualify for the acquisition of the right to sell the electricity produced within the framework of the mandatory procurement and for the acquisition of the right to receive a guaranteed payment for the installed electric capacity of the cogeneration unit.

[28 August 2012]

71. If submissions regarding acquisition of the right to sell electricity, which has been produced in a cogeneration unit, within the framework of the mandatory procurement and regarding acquisition of the right to receive a guaranteed payment for the installed electric capacity of the cogeneration unit have been submitted until 9 September 2012, the Ministry shall examine them in accordance with the procedures provided for in this Regulation, which were in force on the day when the submission was submitted.

[28 August 2012]

72. If the time period for the commencement of production of electricity has not been indicated in a decision issued by the Ministry to grant the right to sell the electricity produced in cogeneration within the framework of the mandatory procurement and the merchant has not commenced the production of electricity in cogeneration, the production of electricity in cogeneration shall be commenced within the following time periods, applying 10 September 2012 as the reference point for the time periods:

72.1. not later than within 24 months, if the planned electric capacity of a cogeneration unit to be installed is not greater than 1 MW;

72.2. not later than within 36 months, if the planned electric capacity of a cogeneration unit to be installed is not greater than 4 MW;

72.3. not later than within 48 months, if the planned electric capacity of a cogeneration unit to be installed is not greater than 20 MW;

72.4. not later than within 60 months, if the planned electric capacity of a cogeneration unit to be installed is not greater than 20 MW.

[28 August 2012]

73. If the time period for the commencement of production of electricity after increasing of the capacity of the unit has not been indicated in a decision issued by the Ministry to grant the right to sell the electricity produced in cogeneration within the framework of the mandatory procurement after increasing of the capacity of the unit, the production of electricity in cogeneration after increasing of the capacity of the unit shall be commenced within the following time periods, applying 10 September 2012 as the reference point for the time periods:

73.1. not later than within 24 months, if the additional electric capacity of a cogeneration unit to be installed is not greater than 1 MW;

73.2. not later than within 36 months, if the additional electric capacity of a cogeneration unit to be installed is not greater than 4 MW;

73.3. not later than within 48 months, if the additional electric capacity of a cogeneration unit to be installed is not greater than 20 MW;

73.4. not later than within 60 months, if the additional electric capacity of a cogeneration unit to be installed is not greater than 20 MW.

[28 August 2012]

74. The time periods referred to in Paragraphs 72 and 73 of this Regulation shall also be applicable to the decisions issued by the Ministry in accordance with Cabinet Regulation No. 921 of 6 November 2006, Regulations Regarding Electricity Production in Cogeneration.

[28 August 2012]

75. The requirements referred to in Paragraph 40 of this Regulation regarding approval of the data provided by an accredited auditor in an account in relation to the useful thermal energy sold shall be applied from 1 January 2013.

[28 August 2012]

76. Paragraphs 52.¹, 53.¹ and 55.¹ of this Regulation shall be applied from 1 July 2017.

[28 August 2012]

77. The Ministry of Economics may propose reviewing of the justification and conformity of the formulas included in this Regulation with the situation in the electricity market.

[28 August 2012]

78. A merchant which has obtained the right to sell the electricity produced in cogeneration within the framework of the mandatory procurement or the right to receive a guaranteed payment for the installed electric capacity and which has not put the unit into service yet, and the planned electric capacity of the cogeneration unit of which does not exceed four megawatts, shall submit the following to the Ministry until 31 December 2013:

78.1. a statement of a credit institution regarding the decision taken thereby to grant the funding for the implementation of the project, if the merchant needs a credit for implementation of the project;

78.2. a copy of the building permit drawn up in accordance with the procedures specified in the laws and regulations.

[30 July 2013]

79. If a merchant has submitted the documents referred to in Sub-paragraphs 78.1 and 78.2 of this Regulation together with the submission referred to in Paragraph 14 of this Regulation, the merchant need not re-submit the relevant documents. The Ministry has the right to verify the authenticity of the documents referred to in Sub-paragraphs 78.1 and 78.2 of this Regulation, as well as whether construction of the relevant cogeneration unit or increasing of the capacity thereof is put into service in accordance with an authorisation issued by the system operator to connect the cogeneration unit (or an individual installation thereof) to the system, or if such authorisation has not been issued from the day of putting into service the unit.

[30 July 2013]

80. If a merchant plans to invest private funds in implementation of the project, it shall submit a certification until 31 December 2013 that the merchant has sufficient means for implementation of the whole project in full amount, submitting concurrently documents in which the total costs of the project are indicated and a statement of a credit institution regarding availability of the means indicated in the certification of the merchant.

[30 July 2013]

81. If a merchant plans to invest financial means of another person in implementation of the project, it shall submit a certification until 31 December 2013 that the investor will ensure the means for implementation of the whole project, submitting concurrently documents in which the total costs of the project are indicated and a statement of a credit institution addressed to the investor regarding availability of the means indicated in the certification of the merchant.

[30 July 2013]

82. If a merchant does not fulfil the duties referred to in Sub-paragraphs 78.1 and 78.2 and Paragraph 80 or 81 of this Regulation, the Ministry shall take a decision to revoke the decision referred to in Paragraph 20 of this Regulation until 1 February 2014, except the case when the merchant has lodged a submission to the Ministry with a request to extend the time period for submitting the documents for a time period not exceeding two months, indicating the time period for fulfilling the duties referred to in Sub-paragraphs 78.1 and 78.2 and Paragraph 80 or 81 of this Regulation.

[30 July 2013]

83. The duties referred to in Sub-paragraphs 78.1 and 78.2 and Paragraph 80 or 81 of this Regulation shall not apply to a merchant which has obtained the right to sell the electricity produced in cogeneration within the framework of the mandatory procurement or the right to receive a guaranteed payment for the installed electric capacity, and which must put the unit into service until 31 December 2013.

[30 July 2013]

Informative Reference to European Union Directives

This Regulation contains legal norms arising from:

1) Directive 2004/8/EC of the European Parliament and of the Council of 11 February 2004 on the promotion of cogeneration based on a useful heat demand in the internal energy market and amending Directive 92/42/EEC;

2) Commission Decision of 21 December 2006 establishing harmonised efficiency reference values for separate production of electricity and heat in application of Directive 2004/8/EC of the European Parliament and of the Council.

Prime Minister I. Godmanis

Minister for Economics K. Gerhards

Revised by the Ministry of Economics

Annex 1
Cabinet Regulation No. 221
10 March 2009

[28 August 2012]

Efficiency Coefficients

I. Harmonised Efficiency Coefficients with Climate Correction for Separate Production of Electricity

II. Efficiency Coefficients for Separate Production of Thermal Energy

Minister for Economics K. Gerhards

Revised by the Ministry of Economics

Annex 2
Cabinet Regulation No. 221
10 March 2009

Correction Factors z for Avoided Grid Losses that are Applicable to the Calculation of Efficiency Coefficient for Separate Production of Electricity

Minister for Economics K. Gerhards

Revised by the Ministry of Economics

Annex 3
Cabinet Regulation No. 221
10 March 2009

[5 November 2013]

Submission for Obtaining of the Right to Sell Electricity Produced in a Cogeneration Unit within the Framework of the Mandatory Procurement or for Receipt of the Guaranteed Payment for the Capacity Installed in a Cogeneration Unit

On the basis of Paragraph 12 of Cabinet Regulation No. 221 of 10 March 2009, Regulations Regarding Electricity Production and Price Determination upon Production of Electricity in Cogeneration,

submits a submission for obtaining of the right (mark one appropriate option with an X):

1. Information regarding the submitter:

1.1. registration number in the Commercial Register ___________________________

1.2. legal address ______________________________________________________

1.4. telephone number of the contact person ___________________________

1.5. fax number (if any) ___________________________

1.6. e-mail address (if any) ___________________________

2. Information regarding the cogeneration unit:

2.1. the following information regarding the permit of the Ministry of Economics for increasing the capacity of electricity production or for introduction of new production installations:

2.1.1. the date ___________________________

2.1.2. the number ___________________________

Note.

To be completed if there is a wish to obtain the right to sell the produced electricity within the framework of the mandatory procurement or the right to receive a payment for the electric capacity installed in a cogeneration unit for a planned cogeneration unit or an existing cogeneration unit, for which the installed capacities shall be increased.

2.2. number of the licence for electricity production ___________________________

Note.

To be completed if the need for such licence is specified in legal acts.

2.4. Cogeneration unit connection:

2.4.1. The system operator, to whose grids the cogeneration unit is connected or is planned to connect it to ______________________________________________________;

2.4.2. Connection voltage _________ kV.

2.5. The type of the fuel used ___________________________

2.6. the type of cogeneration technology (mark as appropriate with a cross):

If "other technology" is marked, specify the type of technology

2.7. installed capacities of cogeneration installations:

¹ To be completed regarding a cogeneration unit in operation.

² To be completed if there is a wish to obtain the right to sell the produced electricity within the framework of the mandatory procurement or the right to receive a payment for the electric capacity installed in a cogeneration unit for an existing cogeneration unit, for which the installed capacities are changed.

³ To be completed only regarding a planned cogeneration unit.

2.8. users of the useful thermal energy and the useful thermal energy sold to them

3. Information regarding the operating data of the cogeneration unit.

A table shall be completed with the actual operating data regarding the previous year for the cogeneration units in operation. A table shall be filled in with the planned data regarding the planned cogeneration units or cogeneration units in operation, for which it is planned to increase the capacity.

3.1. Information regarding the fuel consumed in cogeneration installations for the production of electricity and useful thermal energy¹

3.2. Information regarding the energy produced in a cogeneration installation

¹ Information regarding those types of fuel, which are consumed or are planned to be consumed in a cogeneration unit, shall be provided. Gaseous fuels shall be indicated according to the sample of natural gas. Bulk fuels (woodchips, wood shavings, biomass to be measured in cubic metres) shall be indicated according to the sample of woodchips. Types of liquid fuel shall be indicated according to the sample of fuel oil. Only the amount of fuel consumed in a cogeneration installation shall be indicated, not including therein the amount of fuel consumed for the production of thermal energy in separate water hot-water boilers or steam boilers.

² All prices and tariffs shall be indicated without VAT. The tariff and consumption of natural gas shall be indicated, taking into account the lowest actual thermal capacity used in the information table.

³ Not to be completed if the electronic document has been drawn up according to the requirements specified in the laws and regulations regarding drawing up of electronic documents.

Minister for Economics K. Gerhards

Revised by the Ministry of Economics

Annex 4
Cabinet Regulation No. 221
10 March 2009

Proportion Between the Electric and Thermal Capacity Installed in a Cogeneration Installation for Different Cogeneration Technologies

Minister for Economics K. Gerhards

Revised by the Ministry of Economics

Annex 5
Cabinet Regulation No. 221
10 March 2009

[28 August 2012; 5 November 2013]

Annual Account of Cogeneration Unit

I. General Information Regarding a Cogeneration Unit

Notes.

1. If modernisation has been carried out in a cogeneration unit, the costs of which exceeds 50% from investment costs for an equivalent new cogeneration unit, such calendar year shall be deemed as the year of putting into service of the unit, in which the modernised cogeneration unit has commenced the production of electricity.

2. If due to objective reasons the merchant is unable to ascertain the person to be deemed the beneficial owner of the capital company or is unable to acquire separate data regarding the referred to person, or if there is no such person, the merchant shall indicate the reasons, due to which data regarding the beneficial owners of the capital company is not provided.

II. Information Regarding Operation of a Cogeneration Unit in _________ (Year)

¹ Information regarding those types of fuel, which have actually been consumed, shall be provided. Gaseous fuels shall be indicated according to the sample of natural gas. Bulk fuel (woodchips, wood shavings, biomass to be measured in cubic metres) shall be indicated according to the sample of woodchips. Other types of fuel shall be indicated according to the sample of fuel oil.

² All prices and tariffs shall be indicated without VAT. The tariff of natural gas and consumption shall be indicated taking into account the actual or regulatory lowest thermal capacity, which upon the choice of the applicant is used in the information table.

³ To be calculated, using the formula referred to in Sub-paragraph 29.1 of Cabinet Regulation No. 221 of 10 March 2009, Regulations Regarding Electricity Production and Price Determination upon Production of Electricity in Cogeneration.

⁴ Not to be completed if the electronic document has been drawn up according to the requirements specified in laws and regulations regarding drawing up of electronic documents.

Minister for Economics K. Gerhards

Annex 6
Cabinet Regulation No. 221
10 March 2009

[22 December 2009]

Values of the Coefficient k and the Amount of Natural Gas Consumption Depending on the Installed Electric Capacity of a Cogeneration Unit

Annex 7
Cabinet Regulation No. 221
10 March 2009

[30 July 2013]

Calculation of Adjustment of the Capacity Component

Notes.

¹ To be submitted commencing with the hour in which the amount of electricity produced by a cogeneration unit and sold to a trader is greater than the value calculated, using the following formula:

P × 1200 , where

P - electric capacity installed in a cogeneration unit (MW).

For cogeneration units, which are located in one licensing zone of a heating system operator, belong to one merchant and are connected to an electricity transmission system, the amount of electricity sold after reaching which calculation of adjustment of the capacity component must be commenced shall be determined by summing up, multiplying the total installed electric capacity of cogeneration units by 1200 hours. The accounting of electricity amount shall be commenced on 1 November of each year.

² The amount shall be indicated in MWh with accuracy of three digits after the comma.

³ The hourly electricity stock exchange spot price shall be determined according to the spot price of the price district of Latvia of Nordpoolspot stock exchange in EUR/MWh with accuracy of two digits after the comma.

⁴ Variable costs of cogeneration (EUR/MWh) with accuracy of two digits after the comma shall be calculated, using the following formula:

T_g - the final tariff for the trade of natural gas approved by the Regulator, without value added tax in accordance with the amounts of natural gas consumption (Annex 6) depending on the installed electric capacity of the cogeneration unit (EUR/thousands n.m.³);

T_a - excise duty for natural gas (EUR/thousands n.m³), if such is applied to the cogeneration unit;

CO2 - the price of EUA specified by the ICE stock exchange (EUR/t).

⁵ Additional revenue (EUR) with accuracy of two digits after the comma shall be calculated for each hour, deducting the variable costs of cogeneration (Box 4) from electricity stock exchange price (Box 3) and multiplying the outcome by the amounts of energy sold (Box 2).

⁶ Adjustment of the capacity component shall be calculated, multiplying the total sum of monthly additional revenue (Box 5) by coefficient 0.75. If adjustment of the capacity component is a negative figure, it shall be assumed as equivalent to zero.

Translation © 2015 Valsts valodas centrs (State Language Centre)