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Ceturtdiena 09.04.2020 | Name days: Valērija, Žubīte
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Electricity tariff rise to reach 39% this year

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 Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RU

After evaluating the tariff changes, the Latvian Association of Local Governments (LALG) believes Latvenergo’s statement that the tariff increase will affect only half of the households and the average tariff will change by 21% starting from April 1, is not true.

We would like to draw attention to the fact that already starting from this year ‘s January 1, the electricity costs for all households are by 12% higher due to the VAT increase, and the tariff increase in 2011 will amount to 39%, informs the LALG.

According to the LALG, the tariff changes for different household groups are not properly assessed. The claim that 49% of households are consuming less than 100kWh per month is not correct, because the AS Latvenergo’s analysis is based on the subscriber’s consumption record, not on the actual electricity consumption in households.

The LALG urges to review the street lighting consumption methodology and tariff volumes, because the street lighting tariffs in January 2008 were raised without any explanation by 60%, but the currently projected tariff increase of 45% per day and 24% at night (+ VAT impact) will result in number of local governments refusing this service at nights. Moreover additional funding for the street lighting costs in 2011 has not been approved yet in the local governments’ budgets.

Similarly, the Association calls for examination of how the tariff policy is affected by the fact that each year Latvenergo directs 35 million lats from its profit to the state budget, and how will it promote Latvenergo’s interest in developing the infrastructure. The company’s profit is generated from the electricity trade on the open market, while the activities on the regulated market create millions of lats worth losses and the company must recover them.

It is necessary to assess how much Latvenergo should strive to earn and how to use this profit. We believe that it should be invested in business development in order to provide services to the national economy, including – the provision of timely connection for investment projects, thus creating more jobs, emphasizes the LALG.

The Association also suggests finding by how much the volume of consumed electricity will drop, if the new tariff is implemented, whether the tariff increase is proportionate to the population’ solvency, because currently in 42% of the households the income per person does not exceed 143 lats, and residents’ wages have decreased by 10% over the year.

The LALG does not understand the motivation for the tariff increase, if this year, with the new VAT rates coming to effect, Latvia’s households are already paying for the electricity more than in Lithuania and Estonia. If the Regulator approves the new tariff draft, households spending more than 1 200 kWh of electricity per year, will be charged 10.7 santims per kilowatt-hour for the over-consumed electricity.

We believe that in case of tariff raise the principle of proportionality is not taken into account, because for households consuming on average 200 kWh per month, the electricity bill will grow by 28%, compared to last year, or by 49.56 per year. While households spending on average 300 kilowatts of electricity will pay by 33%, or by 89.12 lats a year more than in 2010. The goal to establish a minimum consumption of 200kWh per year is not clear, statistically significant or economically viable, indicates the LALG.


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