Baltic Power Market Rift Continues

Photo: ERR
10/29/2013 12:28 PM
Category: Economy

Eesti Energia has threatened to leave the Latvian and Lithuanian power markets, claiming that those countries are breaking market rules by withholding a large portion of the power they produce from the exchange.

Latvian and Lithuanian officials disagree, however, saying they have met all requirements, reported ETV.

"[C]onditions for creating an open energy market were already created by adopting necessary legislation transposing the Third Energy Package, so the energy market in Lithuania is fully opened, and every consumer that wishes can buy electricity from so-called independent electricity suppliers. We still have an obligation for the public supplier to sell electricity for consumers that wish to do so, but this obligation will be gradually reduced and will be withdrawn. We expect that to start in 2015," said Lithuania's deputy minister of energy, Žydrybe Juodkiene.

After the closing of the Ignalina nuclear plant, as required by the EU, Lithuania has been importing more power than it produces. Last year, the biggest portion was imported from Estonia. While Eesti Energia's subsidiary Enefit has gained a notable market share in the commercial sector, most households still buy power directly from the Lithuanian state supplier at regulated prices.

"Household consumers are not active, unless independent suppliers are approaching them and offering contracts. When it comes to commercial consumers then this market is really active and consumers are changing their supplier, so basically this works," said Lietuvos Energija production and services director Liudas Liutkevicius.

He said the Lithuanian market could see major changes in 2016, when power links with Poland and Sweden are completed.

Meanwhile, Latvia also has a production deficit and has to import, but still withholds the power it produces from the exchange. Estonian officials say this is driving up the price of electricity.

Tensions may be alleviated next year, in April, when Latvenergo plans to transition fully to the open market. The transition to the open market has been postponed on several occasions. It is expected to increase prices by a fifth.

But Latvenergo representatives said they don't believe the current situation, which has prompted Eesti Energia to threaten to leave the market, is unfair to competitors.

"There are no legal violations in the fact that Latvenergo does not sell all of the electricity it produces on the exchange, but instead directly to the consumer. It is in line with Nord Pool rules. Many firms in both Scandinavia and the Baltics do this. For example, in Scandinavia 30 percent of all of the electricity produced is sold directly to the consumer, not to the exchange," said Latvenergo sales director and Elektrum CEO Gatis Junghans.

Latvenergo's subsidiary in Estonia, Elektrum, buys just part of its power from the exchange, while obtaining the rest directly from Estonian producers.

Eesti Energia's head of regulator relations, Andres Tropp, claimed Latvenergo is supplying Estonia with power that is external to the open market. Junghans said this is not true.

"It's not possible to sell electricity directly from Latvia and Latvenergo to Estonia because the whole of Estonian-Latvian transmission is at the disposal of Nord Pool Spot," said Junghans.


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