Latvian electricity transmission system operator Augstsprieguma tīkls (AST) has calculated that without new tariffs it would suffer approximately six million euros worth of losses every month in 2023.
This much was told by AST board chairperson Gunta Jēkabsone during a meeting of the Saeima’s Economic, Agricultural, Environmental and Regional Policy Committee on Tuesday, 29 November.
In the updated tariff project AST plans to increase it 2.1 times.
Power distribution system operator Sadales tīkls has plans to increase the electricity distribution tariff by an average of 75%. Currently it is planned for AST’s updated tariff to come into force on 1 March 2023, whereas the updated tariff of Sadales tīkls is planned to come into force 1 July 2023.
Jēkabsone explained that in accordance with existing regulations the AST tariff is to remain in force until 31 December 2022. A new tariff is to come to force on 1 January 2023. She stressed that AST is to review its tariff as soon as possible, as the current one does not fully cover the company’s costs.
The updated tariff project includes use of overload charge worth a total of EUR 54.3 million, co-financing worth EUR 300 million from the European Union, as well as various measures to optimise operations and operations. The tariff does not yet include the state benefit equal to 50% of electricity price that is applied when the price exceeds 160 EUR/MWh. There is also the electricity price outlook.
Sadales tīkls board chairman Sandis Jansons said over the past four years the company has carried out reorganisation, optimisation of the number of employees and reduction of technical bases. At the same time, he said that by planning out fixed electricity prices for the future, it would be possible to achieve a 15% reduction in the submitted tariff project.
Ministry of Economics state secretary Edmunds Valantis explained to the Saeima committee that currently there are ways to reduce tariff climb by changing the approach. This can be done by changing outlooks towards future electricity prices.
Representative of Ministry of Finance Olga Bogdanova mentioned it is necessary to find ways to make sure the proposed tariffs are as low as possible.
If AST and Sadales tīkls fail to find ways to save funds, the state will need to step in.
She explained that there are currently nine possible directions to take in order to reduce tariffs. The Cabinet of Ministers is expected to receive a full analysis on which solution would be the best one by 20 December.
Multiple deputies said it is unclear why the state capital association includes calculations of profits in a time when the state suffers from high inflation and rapidly growing energy prices. Jēkabsone explained that AST has legally regulated profits.
Chairman of the Economic, Agricultural, Environmental and Regional Policy Committee Linda Matison said at the end of the meeting that the committee invites AST and Sadales tīkls to correct and submit updated tariff projects based on their effect on their competitiveness, renewable production and the expected financial burden for households.
The committee also invites the Ministry of Finance to assess if tariff correction could require introduction of new support measures for residents. Matisone invited AST and Sadales tīkls to improve their mutual communication, considering their shared duty is providing services to residents, not focus on profits.
Also read: Latvian PM requests corrections of electricity distribution tariff projects