The Ministry of Economic Affairs has dealt another open blow to Latvian and Lithuanian power markets, saying that Eesti Energia's decision to discontinue fixed price contracts to consumers in those countries is due to their poorly functioning markets.
When state-owned Eesti Energia announced its move earlier this week, it blamed a decision in June by the three Baltic transmission system operators, Elering, Augstsprieguma Tikls and Litgrid. With the opening of the Nord Pool Spot trading area in Latvia, they had waived border-crossing fees on the Estonian-Latvian border, reported uudised.err.ee.
Eesti Energia claims transmission fees now vary each day, fostering uncertainty in the market. High demand has led to regularly overloading transmission systems, causing major price differentiations between the markets of neighboring countries, the company said.
The Estonian Ministry of Economic Affairs has been critical of Latvian and Lithuanian partners with regard to the electricity market, saying they have failed to implement agreements by withholding a significant amount of production from the exchange.
"If political agreements in the framework of the Baltic Energy Market Interconnection Plan have not been fulfilled, it is not possible to move forward with technical solutions for further integrating the Nord Pool Spot trading areas," said Ministry of Economic Affairs Deputy Chancellor Ando Leppiman.
"Failing to honor agreements really affects the functioning of the electricity market - a large share of production in Latvia and Lithuania has been left out of the power exchange. Failing to adhere to jointly agreed plans of action also directly impacts the shaping of electricity prices in the Estonian trading area," Leppiman said.
"Yesterday's declaration from Eesti Energia also shows that differing organization of markets affects the Estonian market participants' behavior on the Latvian and Lithuanian market," he said.