In Q1 2023 natural gas consumption in Latvia continued going down, as reported by the Public Utilities Commission (SPRK).
SPRK notes that in Europe the wholesale price of natural gas is down considerably. The average natural gas storage capacity is above its five-year level.
Between November 202 and April 2023, when compared with the same period of last year,
the total natural gas consumption in Latvia has gone down by 16%.
The drop was cased by a warmer than usual winter in 2022/2023 with an average air temperature above the climate norm, as well as high natural gas prices.
In May the average gas price at Dutch Title Transfer Facility (TTF) dropped to 31.58 EUR/MWh, which is close to the lowest level of the past two years.
The gas price drop was influenced by warm winter and stable supplies of liquefied natural gas. This helped lower concerns about a possible shortage of gas in Europe.
European exchange price indexes are often used for gas price referencing when signing procurement contracts for gas imports to Latvia.
This natural gas pricing is also popular for gas supplies on the retail market.
SPRK’s calculated weighted average retail market price, which reflects the average price level in Latvia, in the first quarter of this year, compared with the same period last year, had more than doubled, growing by 120% and reaching 120.03 EUR/MWh.
For legal persons, the average retail market price increased by 61%, reaching 104.38 EUR/MWh.
At the same time, it is necessary to keep in mind that the average price on the retail market and changes on the wholesale market usually reacts with a delay. The current price drop will be reflected on the retail market will be seen no sooner than Q2 or Q3 of 2023.
The delay is largely because many traders and users on the retail market use the option to maintain the gas price at a certain level for a specific period of time.
The price of natural gas is one of five components that compose users’ gas bills.
The price depends on the offer from the chosen trader. The rest of the price components are determined by SPRK. Taxes are determined by the state.
On the retail trade level there are currently nine natural gas traders in Latvia.
According to data from the Aggregated Gas Storage Inventory (AGSI) of the Gas Infrastructure Europe (GIE) Association, at the end of April, the average capacity of natural gas storage facilities in Europe was around 59% full, exceeding the last five years’ filling rate.
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