En­e­fit: Latvia re­duces elec­tric­ity price dif­fer­ence with neigh­bour­ing coun­tries

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«Although Lat­vian house­holds still pay the most for elec­tric­ity, these ex­penses will con­tinue de­clin­ing. The price dif­fer­ence with Es­to­nia, which his­tor­i­cally has the low­est whole­sale prices, has de­clined nearly twice,» says Bethers.

Ac­cord­ing to him, an­a­lyz­ing elec­tric­ity costs in every Baltic state, it is clear that new con­nec­tions and in­te­gra­tion of Baltic elec­tric­ity mar­ket into Scan­di­navia’s en­ergy mar­ket, as well as re­viewed tar­iff struc­ture, has brought a pos­i­tive re­sult in Latvia.

But the ques­tion re­mains top­i­cal if Latvia can cre­ate com­pet­i­tive elec­tric­ity costs without re­ly­ing solely on elec­tric­ity price de­cline, but rather fo­cus­ing on con­tin­ued re­duc­tion of other com­po­nents.

«A ma­jor de­cline of elec­tric­ity costs in Latvia was se­cured by the re­duced price on the whole­sale mar­ket, which was thanks to last year’s es­tab­lished NordBalt cable be­tween Lithua­nia and Swe­den. This pro­vides cheaper elec­tric­ity for Latvia and Lithua­nia and helps equal­ize price dif­fer­ences with Es­to­nia,» says Bethers.

At the same time, elec­tric­ity prices on Latvia’s and Lithua­nia’s open mar­kets have dropped sig­nif­i­cantly over the course of the past year.

He also notes that nei­ther Lat­vian nor Lithua­nian house­holds have yet to ex­pe­ri­ence any ma­jor pos­i­tive changes. Latvia’s mar­ket does not have suf­fi­cient com­pe­ti­tion, which is the main fac­tor for price changes on an open mar­ket. Only some house­holds use prod­ucts us­ing prices tied to the exchange.

Lithua­nia still has reg­u­lated prices. Be­cause of that, house­holds’ elec­tric­ity ex­penses are 27% and 20% lower in the com­par­i­son with Latvia and Es­to­nia. «Lithua­nian politi­cians stand be­fore brave de­ci­sions, be­cause it is clear that elec­tric­ity prices in­cluded in the reg­u­lated tar­iff does not com­ply with the ac­tual sit­u­a­tion on the mar­ket and is heav­ily sub­si­dized,» adds En­e­fit man­ager.

While the fluc­tu­a­tion of elec­tric­ity prices is a global process, the second half of the price com­po­nent – con­nec­tion ser­vice – is af­fected by lo­cal de­ci­sions and each coun­try’s choices. «This is proven by the fact that all Baltic States have re­viewed their trans­mis­sion sys­tem tar­iffs and have in­tro­duced fixed con­nec­tion fees, which had re­sulted in im­me­di­ate changes for elec­tric­ity bills. Com­pared with av­er­age trans­mis­sion ser­vice costs, Lithua­nian house­holds’ pay­ments to their trans­mis­sions sys­tem op­er­a­tors are the small­est,» Bethers says.

He says it is im­por­tant to find a so­lu­tion to re­duce MPC pres­sure on elec­tric­ity price level and re­solve the mat­ter en­tirely, not keep it di­vided among dif­fer­ent con­sumer groups.

Ieva Lūka/LETA

In re­cent years, Latvia has man­aged to re­duce the elec­tric­ity price dif­fer­ence with other Baltic neigh­bour­ing coun­tries, as re­ported by En­e­fit Chair­man Ja­nis Bethers.

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