Latvian businessman Gatis Lazda has turned to the Prosecutor General’s Office with an application. According to him, Sadales tīkls JSC charges end users for the maintenance of connection capacity that the company does not actually provide.
He says that this way Sadales tīkls potentially illegally receives excess profits, and that this situation needs to be reviewed in accordance with Part one and two of Section 117 of the Criminal Law.
[Gatis Lazda is a board member of renewable energy producer Evecon LLC. In the past couple of years he provided his opinion to various media as an expert of the energy sector on multiple occasions – BNN.]
On top of that, Lazda believes it is necessary to assess the actions of members of the Public Utilities Commission (SPRK) in accordance with Part one and three of the Section 319 of the Criminal Law.
The author of the application reminds that the 1st of July 2023 marked the coming into force of Sadales tīkls’ new electricity distribution system service tariffs, which made electricity much more expensive for many households in Latvia. A new component was added to the bill received in July – power maintenance fee. It was not part of bills in the past. It is a fixed portion for power maintenance that is affected by number of connection phases (F), connection load in amperes (A) and volume of kilowatt hours consumed (kWh).
Lazda explains:
“After analysing examples of 24 users’ connections in Ķekavā, I concluded that at a point in the electricity distribution system where the technically available total connection load is only 125 A, 24 customer connections with established with a total contractual connection load of 634 A. These connections have existed for years, before new tariffs came into force. Sadales tīkls maintains only 125 A availability at the transformer that has two cable lines connecting 24 users.
The difference between Sadales tīkls’ actually maintained 125 A and the formally connected 634 A is 509 A.
When billing users, the fee for maintaining capacity is applied to the user’s connection load for which each of them has entered into an agreement with Sadales tīkls. But the company technically ensures availability of only 125 A at transformer units, because higher capacity is not available in the existing transformer units.
Therefore, technically, both before and after the entry into force of the new tariffs Sadales tīkls has provided and continues to provide only 125 A connection load to all 24 users. It would be justified to charge a fixed fee to these 24 users for 125 A, rather than for 634 A, which is formally specified in household contracts.
Although Sadales tīkls is technically not in a position to provide these 24 households with the planned connection capacity of 634 A, it nevertheless receives a fixed fee under the new tariff for the maintenance of all the capacity provided for in the contracts. Thus, 24 users jointly pay not only 125 A, but also an additional 509 A connection capacity, which is not technically provided or maintained by Sadales tīkls at all.”
He reminds that tariffs are meant to cover economically and technically justified utility costs.
SPRK has a duty to serve users’ interests when approving tariffs.
And residents are justified in expecting economically justified costs to be applied only on the services Sadales tīkls actually provides. Charging residents for a service that is not provided cannot be considered economically justified public utility costs.
As an institutions responsible for supervising the sector, SPRK has a duty to monitor Sadales tīkls’ operations to prevent situations when end users are charged for the maintenance of electricity connection capacity which the Sadales tīkls does not maintain at all.
“This way we can justifiably believe that the negligence from SPRK officials has resulted in all responsibility for avoiding misleading is put the shoulders of users, preventing further unjustified increase in electricity service bills,” concludes the author of the application submitted to the Prosecutor General’s Office.
Also read: Energy expert warns: power network should be disconnected from Russia, but prices will go up