Background information

On 28 October 2022, the procedure for granting and administering support for the reduction of electricity costs of non-domestic consumers for the electricity consumed, approved by Government Resolution No. 1062, came into effect in Lithuania, creating a measure that provided compensation to businesses for the increase in electricity prices. The measure was aimed at easing the burden of energy prices on businesses.

Content of measure

According to the procedure, 50% of the price of electricity above the minimum price thresholds will be compensated. The minimum price threshold will be 24 cents per kWh (excluding VAT and excise) in the first quarter of 2022 and 28 cents per kWh (excluding VAT and excise) in the first quarter of 2023. The partial price compensation will apply to all non-domestic consumers: business entities, the public sector, farmers, municipal enterprises and other non-domestic consumers, who purchase electricity directly from the electricity market. The partial price compensation for businesses will be applied from 1 October 2022 to 31 March 2023.

Use of measure

It is estimated by the Ministry of Energy that around 139,100 non-domestic consumers will benefit from the partial electricity price compensation.

Target groups

Workers	Businesses	Citizens
Does not apply to workers	Applies to all businesses	Does not apply to citizens

Actors and funding

Actors	Funding
National government Employers' organisations Public support service providers	National funds

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	No involvement	Consulted
Form	Not applicable	Any other form of consultation, institutionalised (as stable working groups or committees) or informal

Social partners' role in the implementation, monitoring and assessment phase:

• No involvement
• Main level of involvement: Peak or cross-sectoral level

Involvement

Employers organisations were partially involved in the design of the measure. E.g., on 8 September 2022, representatives of the country’s largest industrial companies attended a meeting of the Committee on Budget and Finance of the Seimas (Parliament) of the Republic of Lithuania, where they presented the current business situation and stressed the need for state aid.

Views and reactions

The measure was welcomed by representatives of major employers’ organisations in Lithuania. According to the head of the Confederation of Lithuanian Employers (CLE), the chosen model of compensation of electricity prices for businesses is fair and encourages undertakings to invest in energy saving solutions. According to the president of the Lithuanian Confederation of Industrialist (LCI), this model represents a certain sharing of responsibilities between the Government and business.

The electricity price compensation scheme, on the contrary, was viewed negatively by the president of the Vilnius Chamber of Commerce, Industry and Crafts (Vilnius CCIC). According to him, other European countries plan to provide for a much lower final price cap of 18 ct/kWh. He argues that the Government is offering a compromise to business, which will not be enough for Lithuanian business to remain competitive, as the price of energy in other EU countries will remain much lower than in Lithuania.

Sources

• 08 September 2022: Businesses ask for state support, warn of price spikes and bankruptcies (Verslai prašo valstybės paramos, įspėja apie kainų šuolį ir bankrotus) (www.15min.lt)
• 07 October 2022: Businesses welcome government's promised help: We've finally got a response (Verslas sveikina vyriausybės žadamą pagalbą: pagaliau sulaukėme atsako) (m.kauno.diena.lt)
• 26 October 2022: Resolution No 1062 of the Government of the Republic of Lithuani (www.e-tar.lt)