Energetics

Energy: Lithuanian industrial users will suffer an increase in power price

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Performance of energy sector was weak. In January–November 2013, production of power, gas, steam and air conditioning decreased by 5.5 per cent. Nevertheless, other news was more encouraging.

European Commission has officially approved construction of LNG terminal in Klaipėda and allocated financial support of nearly EUR 450 million to the project. Lithuanian government also plans to support the project by granting state guarantees to credits to cover initial investment costs for construction of LNG terminal. European Commission has stated that the support for LNG construction will not have a negative effect on competition. On the contrary, Lithuania will be able join EU gas market and competition on Lithuanian gas market will rise. Commission’s investigation has revealed that LNG terminal will help securing gas supply and therefore offering support is indispensable and adequate. In addition, third countries will be able to use the terminal under undiscriminating terms.

The government has redistributed quota of power production in 2014. The quota for Lithuanian Power Plant (LPP) was left unchanged as compared with 2013 at 900 million kWh. This sets a ceiling for production while actual production may be lower. The quota for thermal plants was reduced from 800 million kWh in 2013 to 700 million kWh in 2014 in line with the plan to reduce the share of public service obligations. According to energy minister, new quota allocations will contribute to the stability of heating price.

The quota for power from biofuels was set at 105 MW meanwhile total capacity of biofuel plants already made up 107 MW at the moment of setting the limit. Therefore, the owners of biofuel plants are not sure whether their power production will be purchased and claim their rights citing protection of legitimate expectations and principles of legal certainty.

National Control Commission for Prices and Energy has approved new power price rates for households in 2014. As compared with 2013, power price for households decreased by 0.022–0.028 LTL/kWh. The decline owes the most to decrease in public service obligation as the government decided to reduce the purchasing quota of power from LPP and cogeneration plants.

Nonetheless, industrial users will suffer an increase in power price as they buy power from independent suppliers. In autumn of 2013, industrial power price soared to unexpected heights which will lead them to migrate to more green equipment including air compressors, to learn more about air them click here.

Suppliers who worked according to long-term agreements made losses and will try hedging this risk in the future.

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