Riga’s district heating company Rīgas siltums plans to increase its heating tariff by 19% from 1 December, the company announced.
Rīgas siltums has submitted a proposal to the Public Utilities Commission (SPRK) to revise its district heating tariff.
Under the proposal, the tariff would rise to 96.33 euros per megawatt-hour (MWh), excluding value-added tax, from 1 December.
This would represent a 16% increase compared with the previous heating season and a 19% increase from the currently applicable tariff of 80.96 euros per MWh.
Kalvis Kalniņš, Chairman of the Management Board of Rīgas siltums, explained that the sharp rise in energy costs is having a significant impact and that its effect on heating tariffs cannot be entirely eliminated.
Compared with the previous year, natural gas prices have already increased by 200%, biomass prices have risen by approximately 50%, and electricity prices have also climbed.
Together, these energy resources account for approximately 70% of the costs included in the district heating tariff.
The company had previously forecast that Riga’s heating tariff could increase by 20% to 30% from December.
However, according to Kalniņš, measures taken by the company have helped limit the increase to 16% compared with the previous heating season.
He stressed that tariff adjustments are directly influenced by energy prices, particularly natural gas prices, which remain volatile and continue to rise.
Over the past six months, increasing geopolitical tensions in the Middle East have driven natural gas prices significantly higher, creating additional pressure on district heating production costs, Kalniņš noted.
According to the company, Rīgas siltums has implemented a series of measures this year, as it did before the previous heating season, to minimise the impact of energy price fluctuations on its tariff.
In line with its fuel procurement strategy, the company purchased natural gas gradually and in advance, diversifying risks and reducing the potential impact of developments in the Middle East on Riga’s heating costs.
In cooperation with the Ministry of Climate and Energy, the company has developed a mechanism to separate the price of heat produced from biomass from fluctuations in natural gas prices within the market area by establishing a maximum heat purchase price.
The price cap has been introduced in accordance with amendments to the Energy Law.
A three-hour heat procurement mechanism has also been introduced, allowing cogeneration plants to use the heat they produce more efficiently during periods when electricity market conditions are favourable.
The measure is intended to support a more flexible district heating market, increase competition and reduce costs for consumers.
In preparation for the new heating season, the company has purchased natural gas and reached agreements with Latvenergo on heat purchases.
All these measures have helped reduce the impact of rising costs and keep the tariff increase below earlier forecasts, Valdovskis noted.
Kalniņš reiterated that Rīgas siltums has a strategic objective to gradually reduce its dependence on natural gas, whose price significantly influences heating tariffs.
Natural gas currently accounts for approximately 60% of the company’s energy resources, and the goal is to reduce this share to 35% within five years.
Nevertheless, natural gas will remain necessary to ensure sufficient heat production during periods of peak demand and in emergency situations.
The company also noted that additional natural gas purchases will be required during the heating season.
The volume purchased will depend on the severity of the winter, while the price will depend on developments in energy markets.
As a result, the company cannot completely rule out the need to revise the heating tariff again during the season.
However, management stressed that it is too early to assess whether further changes will be necessary.
The company promised that any such decision would be based on economically justified calculations and that the public would be informed in advance.