Energy, Latvia, Legislation

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Electricity market to be liberalized for Latvian households on April 1

BC, Riga, 21.01.2014.Print version
Today, the government approved the Regulations Regarding the Trade and Use of Electricity, which stipulate that, after the electricity market in Latvia is liberalized from April 1, 2014, approximately 850,000 households will have the opportunity to become active electricity market participants and buy electricity at the best available prices, informs LETA/

Those market participants who do not wish to change their electricity supplier or review other offers will have the right to stick with their current electricity supply contracts.

The Economy Ministry emphasizes that the main advantages of the liberalization of the electricity market include higher competition among traders and more electricity supply offers for consumers to choose from, as well as the opportunity for consumers to choose from several offers to select one that suits them the best and traders' ability to prepare offers for every individual customer.

Liberalization of the electricity market means that electricity rates will no longer be regulated by the government but that electricity traders will present consumers various offers, where electricity rates will be set depending on a number of conditions.

Electricity supply principles will also change via the inclusion of other services. For instance, electricity consumers currently only pay electricity rates, whereas effective April 1, electricity supply will be offered in combination with other services, such as telephony, Internet, television and suchlike. Therefore, electricity, as a commodity, will be sold in packages with other goods and services, of which consumers will choose ones that suit them best.

The electricity market deregulation for households will be simple and convenient, believes the Economy Ministry. Those households that decide to continue to buy electricity from the same trader will be supplied electricity according to the universal service conditions: fixed twelve-month agreements, which consumers will be entitled to terminate before term without incurring any penalties.

EUR 3.2 million has been earmarked in the 2014 state budget to compensate the risk of higher prices for the needy households. The Welfare Ministry is currently working on conditions of support mechanisms intended to assist households that will not be able to themselves cover all housing costs, including electricity bills.

The Public Utilities Commission will continue to supervise the electricity market, analyzing and approving electricity distribution and supply rates and mandatory procurement components. The liberalized electricity market will provide equal conditions for all electricity traders, thereby ensuring fair competition. The commission will supervise electricity wholesale market and review disputes between consumers and electricity traders, should the sides be unable to solve their dispute themselves.

In the near future, joint-stock electricity distribution company Sadales tikls and traders will begin to organize various events to inform the public about the possibility to switch from one electricity trader to another and the various market offers. Sadales tikls awareness campaign will be organized via the mass media, including television and radio, printing of articles in national and regional newspapers, and seminars for various non-governmental organizations.

The Cabinet of Ministers Regulations Regarding the Trade and Use of Electricity provide a detailed procedure of electricity supplies to individual consumers, the rights of electricity traders, system operator and consumers, payment for electricity supply services, as well as the procedure of changing an electricity supplier by a consumer, universal service conditions, and others.

Electricity markets are being liberalized all over Europe. Estonian electricity market was completely deregulated on January 1 last year, and all Estonian households buy electricity by choosing an electricity trader that suits them best. In Lithuania, the electricity market was deregulated for legal entities last year, and the market for households will be liberalized on January 1 next year.

The gradual liberalization of Latvia's electricity market began in 2007. At the moment, more than 24,000 entities, which account for 75 percent of total electricity consumption in Latvia, buy electricity from various traders.

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