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Wednesday 24.05.2017 | Name days: Marlēna, Ilvija, Ziedone

Energy market’s risk hedging satisfactory in Latvia, sufficient in Estonia and poor in Lithuania

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RULong-term transmission rights currently exist on Estonian-Latvian border in Latvia’s direction, but not Estonia’s, as explained by Public Utilities Commission. Because of that the regulator will have to consider possible solutions for the Estonian-Latvian border in Estonia’s direction and Latvian-Lithuanian border to ensure the function of the wholesale energy market.

Preventive measures for intermediate risk of transmission standby or risk hedging for traders in Latvia’s trade area are satisfactory. Measures in Estonia are sufficient. This means traders are sufficiently protected against price fluctuations, according to assessment of the Public Utilities Commission.

Lithuania’s trade area, meanwhile, suffers from insufficient protection. This creates the need for additional control measures in this country.

On 11 May, PUC approved the mutual agreement made by Baltic regulators on the need for solutions on the borders of Estonian-Latvian and Latvian-Lithuanian trade areas. The regulator made decision in accordance with requirement of the European Union for the Single European Electricity Market.

In accordance with EU regulations, if no long-term transmission rights exist on the borders of trade areas existed at the moment of coming into force of these regulations in 2016, regulators of affected member states have to make coordinated decisions on the introduction of long-term transmission rights and risk prevention, PUC explains.

It should be noted that risk hedging products offer benefits to energy traders and producers. They provide safety from price fluctuations in trade areas and between different trade areas. As a result, the function of the entire market is improved, prices of products are reduced for end consumers and the total number of offered products is expanded.

In accordance with requirements of EU regulations, Baltic regulators have performed assessments of risk hedging in their trade areas, the commission reports.

Baltic regulators have asked market members to share their opinions about the need of risk hedging. Latvian and Estonian regulators announced public consultations on 13 January 2017. Lithuanian regulators announced public consultations on 23 March.

Ref: 225.109.109.5098


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