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Sunday 23.04.2017 | Name days: Jurģis, Juris, Georgs
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CP supervisors concerned about Latvijas Gāze’s contract terms

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThe Competition Council is concerned about Latvijas Gāze’s behaviour in the process of liberalization of the country’s gas market. Economy Ministry has submitted a draft of the Gas Trade and Use Rules to the Cabinet of Ministers Committee for review.

Competition supervisors mentioned in their 10 January report regarding the rules that it was initially planned to include a specific tern that would provide gas consumers the right to select gas suppliers without application of contract termination fee. This particular regulation was excluded because, according to LG, «already gas supply contracts with added sanctions against their termination are not being signed».

«CC has information that LG includes terms in its gas supply contracts for 2017 that provide penalties for consumers for not following specific parts of the contract. With that, there is a risk that consumers will be forced to pay a fine if they decide to terminate their contract with LG and pick a different gas supplier after the opening of the gas market,» – as mentioned in the report.

According to CC, to prevent any obstacles for new market participants to enter the gas market and possible risks for consumers, it is necessary to clarify that previous gas supply contracts will no longer be viable from 3 April 2017 onward.

LG has not provided a comment on this. Economy Ministry intends to request one soon.

CC also notes that the transmission system operator also has the right to request from a gas trader wishing to sign a contract regarding transmission services to submit a contract performance guarantee (this includes a security deposit) in the event if gas trader fails to follow appropriate payment rules or misses a payment for transmission services.

CC is also concerned about the possible influence of the chosen trader’s centric model on the market’s liberalization and competition. Considering that the centric model (once contract, one receipt) is intended to be applied to all gas users, CC notes that it could be a major obstacle for the entry of new participants to the market.

CC does not oppose the centric model as long as solutions are proposed for the division of financial risks between the trader and transmission system operator.

The goal of Economy Ministry’s project of rules is to establish gas market functionality principles in relation to changes with the Energy Law, which are intended to open the country’s gas market from 3 April 2017 and end the regulation of natural gas prices for consumers.

Ref: 224.109.109.6987


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