The law On Regulators of Public Utilities specifies a model for financing of the Regulator’s operations which is independent from the state budget. The Regulator’s operations are financed by revenues from state fees for public service regulation. These fees are paid by all public service providers of the regulated sectors.
The state fees for regulation of public services in the regulated sectors are paid into the state budget and are deposited in the Regulator’s account in the Treasury. These funds are only used to provide for the Regulator’s operations.
The Regulator’s budget is determined by the law On the State Budget. Although the state fees for regulation of public services are paid proportionally to the turnover of regulated companies, the Regulator’s budget does not change along with the turnover of regulated companies. The size of the Regulator’s budget in accordance with the amount necessary for ensuring the Regulator’s operations is approved by the Saeima each year. If the payments made by companies exceed the required expenditures for providing operations of the Commission in the respective year, in the next year the state fee for the overpaid sum is reduced proportionally to the amount of the state fee paid by each public service provider.
This model of Regulator’s financing which has been introduced in Latvia ensures the independence of the Regulator from the state budget policy and political decisions.