Economy Minister Warns Latvia, Lithuania Over Power Market Liberalization ({{commentsTotal}})

Minister of Economic Affairs and Communications Juhan Parts
Minister of Economic Affairs and Communications Juhan Parts Source: Photo: Postimees/Scanpix

The Ministry of Economic Affairs has threatened to restrict the flow of power to Latvia and Lithuania if the two do not take steps to liberalize their markets.

In a letter to his Latvian and Lithuanian colleagues, Minister of Economic Affairs Juhan Parts said Estonia's neighbors are not holding up their end of the deal, after the 2009 signing of a memorandum of understanding on the Baltic Energy Market Interconnection Plan, reported Postimees. That agreement provided that the three Baltic countries would all deregulate their power markets for household consumers.

Estonia took the final step in liberalizing its electricity market this January 1 when it deregulated the market for household consumers. Similar moves by Latvia and Lithuania have been dragging, the Postimees article said.

The development comes in the wake of a dramatic price hike in the Baltic trading area in June, when the megawatt-per-hour rate jumped to 104 euros - three times higher than the average from last year and much higher than in the neighboring Nordic countries. The ministry has partly blamed Latvian and Lithuanian producers, some of which have withheld from the exchange, resulting in lower periodical output and supply deficits.