Estonian state-owned energy giant Eesti Energia has shelved plans to enter the Latvian household electricity market when it is deregulated next April.
Karla Agan, the Director of the Energy Sales Product Division at the company, said in a press release today that management considered the move, but balked at the expense of entering the household market sector. It has decided to continue working solely with business clients in the country.
“Latvian electricity clients, like those in Estonia, prefer rates fixed for a year or longer. Currently we are not able to agree on a price for the next three months, half a year or for longer periods, as we just don't know the price at which we ourselves can purchase electricity on the Latvian energy market,” Agan said, highlighting a second problem with entering the market.
He added that the erratic nature of the Latvian market was the main reason Eesti Energia has suspending signing new fixed-rate contracts with larger clients in Latvia and Lithuania.
The company's manager of regulatory affairs, Andres Tropp, said that a decision must be made as to whether the Estonian energy market should continue to be connected to those of the other Baltic states.
“Currently Latvian electricity, which is more expensive 75 percent of the time, is being exported to cheaper Estonia, and that makes the trading between Estonia and Latvia the least efficient in the European Union,” Tropp said, adding that if the decision is made to stay connected, the three nations must quickly agree on common trading rules.
Eesti Energia, known as Enefit abroad, has sold electricity to Latvian business clients since 2006, gaining a 13 percent market share.
According to Postimees, Latvenergo, Latvia's biggest energy company, sells only a small part of its production on the Latvian open market, preferring to sell directly to costumers and keep market prices high.
Meanwhile Latvenergo sells electricity to Estonia, which burdens cross-border connections and thereby limits possibilities for exporting Estonian electricity to Latvia.