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Enefit: why pay more?

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Baltic news, News from Latvia, BNN-NEWS.COM, BNN-NEWS.RU, SIA Enefit board chairman Aivars Tihane

SIA Enefit board chairman Aivars Tihane

The number of our partners in Latvia will double this year, SIA Enefit board chairman Aivars Tihane told the business news portal BNN, adding that the company could supply energy to Latvian households in two years time already.

How real is the alternative of Latvenergo services you offer? Is Enefit dealing with paper work on behalf with the new client?

Our offer is absolutely real. You contact SIA Enefit to get the electricity price list, you choose the best option and sign an electricity purchase agreement. In order to buy electricity on the open market, distribution system operator AS Sadales tīkls has to be informed about the electricity trader change. We will take care of all documents after the electricity supply agreement is concluded. Enefit clients do not have to worry about doing any other paper work. Neither does the change require any technical improvements. You will start consuming Enefit electric energy starting from the next month already. We can offer all Latvian companies options far more better than those of the current tariffs, that is for sure. We have announced we have a good offer and we can ensure this process to companies most efficiently. We sell electricity, not supply it. Basically, nothing is changed concerning the distribution, just the service contract.

Does that mean the higher Latvenergo tariffs, the more successful Enefit business activities?

Yes, certainly. So far we serviced only clients on the open market. Now we can also get those from the regulated market. Enefit is a Latvian company. Despite electric energy price is quoted in euro in EU, Scandinavian and Baltic stock exchanges, clients mostly opt for settling with us in lats.

How much lower exactly are your tariffs?

Basically, we offer two choices to businesses that are players of the open market. Firstly, it is fixed price with an agreement for one, two or three years. The price is slightly lower than what would come up with the regulated tariff – it is not a lot, but it is assured 5%. Such a saving is enough in a long term to switch to us. Why pay more? Secondly, it is the price tied to the electric energy bourse price. The client is applied the gap between the wholesale price and the regulated one. The benefit is not fixed, however with favourable conditions – it will be potentially bigger. In the second quarter of 2010, the market price was below 40 euro MW/h, while Latvenergo’s regulated tariff surpassed 50 euro MW/h. It is up to the client – maximum potential benefit depending on the bourse price fluctuations or security in a long term.

Are our businessmen rushing to join you?

Currently we have more than 115 stable partners in Latvia, but we expect this figure will double this year. There is huge interest. Our office is empty, because all the managers are meeting with clients.

After how many years will you offer energy for Latvian households?

In two years time the soonest, after five years – the latest. Estonian market will be completely open in 2013. Theoretically, it is already possible. We also need a safe way of ensuring electricity and the bills to each and every family. It is advisable that switching operators takes place with a few mouse clicks. Afterwards we will need a machinery (data and processes) to administer all this. We will not come up with this as long as we cannot offer impeccable service. We do not want to provoke confusion and problems. We will not be slow in launching this as soon as the Latvian market is ready for that.

How does Eesti Energi manage to produce energy with cheaper prime costs?

After Ignalina NPP closure Eesti Energia is the major energy producer in the Baltics. We simply have what to sell. Latvenergo basically services every new client with the help of imports. Their sales portfolio exceeds their own output considerably. Latvenergo purchases electric energy for a wholesale price through interconnections with Estonia and Lithuania and adds its surcharges.

Why did energy price drop 18.8% in January 2011 at Estonian stock exchange?

Mostly due to technical problems in Estlink, namely, the link between Estonia and Finland. In January, the average prices in Estonia were much lower than the ones in Finland, so when Estlink dropped out, only the domestic supply was left, which dragged the prices down. It is a characteristic of the Baltics that a lot of cogeneration is made use of during winter periods, thus prices are not much higher than in summer.

On January 25, you concluded an agreement on producing energy in Valka. Why do you want to do it in Latvia?

These matters are not linked at all. By no means are we basing our sales in Latvia on the output produced here. Valka output will make up only about 0.1% of the total Eesti Energia output capacity.

If businessmen are building a new factory and are interested in collaborating with you, will you also build transmission lines for them?

No, certainly not. Latvia is divided among network operators, with AS Sadales tīkls being the leading energy distributor. However, we can esnure energy from Estonia to any demands of the client.

There was an idea to merge Latvenergo and Eesti Energia 15 years ago. Will competition between two energy giants pay off, given the small size of the Latvian market?

Latvenergo and Eesti Energia are comparatively small companies, given the size of the European Union. The trend shows the Baltic states are becoming a part of the Scandinavian domestic market. We do not consider that we are fighting for a little Latvian market share, because we are preparing ourselves for the competition within the EU. When technical systems are integrated so that the market operates without any restrictions, it is likelty there will be only one major energy trader here. The rest of them would have either developed closer collaboration or one of them would have taken over the market share. And we are not speaking about one of them having a dominating market position. A sigle Fortum with cogeneration in Latvia and Estonia, and also a distribution network in Estonia would be able to cover all the Baltics with its production. In a few years time they will definitely start doing retail as well, just like in their domestic markets. Enefit has been taking up stable 5-6% of the Latvian energy market share. So far, this was ok with us. Now we have launched more active marketing, however we do not have any strategic aims on how big market share exactly we would like to reach.

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  1. Yuri says:

    Well, they seem to offer a very agreable price.

    Thumb up 0 Thumb down 0

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