Electricity market
Structure of power sector
The most important changes in the electricity market were introduced in 2007 when end-users were allowed to choose any supplier among the existing offers in the market. This meant the transition to a open electricity market. However, there have not been major changes in the market since the market innovation was introduced.
The State Joint Stock Corporation Latvenergo is an energy utility company engaged in the production and sale of electricity and heating energy, and as such provides electricity transmission and distribution services. Latvenergo is responsible of:
- Generation: Large hydropower plants on the river Daugava: Kegums HPP (264MW), Plavinas HPP (870MW) and Riga HPP (402MW) and two large CHP plants: Riga TEC-1 (144MWel) and Riga TEC-2 (657MWel)
- Transmission: HVEN (High Voltage Electricity Network) is the transmission network, which receives electricity from the hydroelectric and thermo-electric centrals located in Latvia, as well as from Lithuania, Estonia, Russia and Byelorussia and passes this onto distribution network companies. Currently, the HVEN has fourteen 330 kV voltage sub stations; a 1248 km 330 kV current electric transmission line; a 3925 km, 110 kV current overhead line, a 26 km, 110 kV current cable line and 113 110 kV current sub stations. The combined capacity installed is 6783,5 MVA
- Distribution: There are seven regional companies, which are all 100% subsidiaries of Latvenergo
- District Heating: production and selling of heat energy to the district heating system of Riga
The public liability company Latvenergo Group is a state-owned energy utility. In 2000, a reorganisation programme in agreement with the European directives was adopted by the government, with the aim of separating production, transport and distribution operations in the accounting plan production. Within Latvenergo, a separate High Voltage Network was established as an independent Transmission System Operator (TSO).
Status of deregulation
Even though the market was fully liberalized in 2007, the dominant role in the electricity supply is still played by the state company JSC “Latvenergo”, which provides approximately 90% of all electricity generated in Latvia and ensures imports, transmission, distribution and supply to consumers. In addition there are more than 100 small power plants and 10 licensed distribution and sales companies. The conceptual document on “Key pre-conditions for creation of electricity market in Latvia” was prepared for this aim. The document described preconditions for creation of the electricity market in Latvia, including also electricity market structure and identifies the status of the Transmission System Operator and Distribution System Operator in this market as prescribed by the EU Electricity Directive (Directive 2003/54/EC of the European Parliament and of the Council concerning common rules for the internal market in electricity and repealing Directive 96/92/EC).
Opening of the market:
The opening of the Latvian Power market has started in 2000.
Eligible Customers: consumption over 40 GWh (since 2001). [Ekodoma]
There is state competition in the Baltic electricity market. Estonia, Lithuania and Russia, all electricity exporting countries, are looking for possibilities to sell electricity to Latvia or other interested participants.
Access to the network:
Legal Regulated Third Party Access
Regulator:
The Public Utilities Commission, an independent public regulator under the supervision of the Ministry of Economy: (see: Public Utilities Commission)
Competition in generation:
There is no competition in generation.
Unbundling:
The unbundling of accounting in the national electricity utility, Latvenergo, has already been achieved.
Concerning unbundling of TSO, the Third Party Access model is used.
Tariff setting
Tariffs are uniform throughout the country. The Regulatory Authorities are responsible to approve the tariff plans submitted by all energy utilities.[Enerdata, Eurelectric, Ekodoma
Oil and gas market
Oil, and Gas
Oil
There are two oil terminals: Ventspils Nafta, and Butinge Nafta, commissioned in 1999. Before the recent expansion of export capacity in the Baltic region - led by the construction of Russia's Primorsk facility (see below) - Ventspils was the largest port in the Baltics and the second largest oil export terminal for Russian crude after the Black Sea port of Novorossiysk. The two primary owners of Ventspils Nafta are the Latvian government and a private concern, Latvijas Naftas Tranzits. Several firms from around the world have expressed interest in acquiring a stake in the port's management, including Russia's Transneft and Rosneft, the Russian-UK joint venture TNK-BP, Kazakhstan's Kaztransoil, and the U.S. investment company BroadStreet Group. The ability of the Ventspils shareholders to secure a reasonable selling price and award a tender will be largely determined by the future of Russian pipeline deliveries to the port.
The distribution is carried out by the State company Latvijas Nafta and by private companies (Neste, Lukoil, Statoil, Shell, etc). The distribution network counts approximately 300 service stations. In 2000, Latvia announced tenders for licenses for exploration (5 yrs) and exploration and production (30 yrs) in a 2,000 square kilometer area in the Latvian territory of the Baltic Sea.
The winner of the exploration tender was the only bidder - TGS-Nopec, an American-Norwegian joint venture. Latvia awarded it a 5-year non-exclusive oil exploration license in April 2002 that covers only exploration and not extraction. As for production of any discovered oil, the Latvian government will own 10% of the new exploration and development company to be formed by TGS-Nopec. There will be an additional state duty of 2-12% of its revenues from its oil sales. The winner of the 30-year exclusive oil exploration and drilling license tender (announced in May 2002) was the only bidder, Odin Energy
Gas
Exclusive license for natural gas supply is issued to JSC Latvijas Gaze. This company according to licences issued by the Public Utilities Commission (PUC) carries out distribution, storage, supply and sales on the whole territory of Latvia. The company is completely privatized (47.23% E.ON Ruhrgaz International AG, 34% Gazprom, 16% Itera-Latvija, 2.77% - others.
Latvia's natural gas comes from the Russian natural gas exporting company Gazprom. The seasonal pattern is to import the gas in summer and put it into storage facilities; during the winter the gas in storage is drawn down. Gazprom makes use of the large natural gas storage facility at Inculkans for its gas trade. Gazprom exports part of the natural gas from that storage facility and charges Latvijas Gaze for the remainder which goes to the Latvian market. [Enerdata, US DoE FE]
On October 23, 2001 the government approved the Gas Market Liberalisation Concept. [Ekodoma]
Coal market
Latvia has no own coal resources. It imports coal and coke from Poland and other nearby countries.[US DOE FE]
Heat market
District heating (DH) in Latvia forms the backbone of the heat market. Approximately 70% of households are connected to a district-heating network, and district heating accounts for 39% of the primary energy consumption. District heating enterprises are located in more than 300 Latvian municipalities. The main actors in the DH market in Latvia are located in the larger cities. For example:
- JSC Rigas Siltums, the main heat suppliers of Riga (approx. 800 000inhabitants). The shareholders are Riga City Council (49.000%), the State-owned JSC “Privatisation Agency (48.995%), the Baltic Transit Bank (2.000%) and the State-owned JSC “Latvenergo” (0.005%). The company is engaged in production, distribution and sale of thermal energy, and also ensures technical maintenance of inner heat supply systems in buildings.
- JSC Daugavpils is the heat supplie of Daugavpils (approx. 117 000 inhabitants). The company is 100% municipal owned.
- JSC Liepajas siltums is the heat suppliers of Lipeaja (approx. 97 000 inhabitants). The main shareholders are Latvenergo (43%), Liepaja municipality (40%) Liepajas steel plant (14%) and Lauma (2,3%).[Ekodoma]
