OREANDA-NEWS. On 27 February 2008 Public Utilities Commission (PUC) approved the new electricity tariffs coming into effect as of 1 April 2008.

The main reasons for the increase of tariffs are the growing gas prices, infrastructure maintenance and development costs as well as the considerable rise of the imported electricity prices.

Due to the aforementioned conditions, the electricity tariff increases at an average of 37.6%. This means that the electricity tariff for residents will increase for 2 santims, that is, from 5.1 to 7.1 santim per kilowatt-hour (kWh). As a consequence, the monthly electricity bill will increase for no more than one lat and 69 santims for more than a half of the Latvian population. Like it was up to this time, the residential electricity tariff in Latvia will be among the lowest in Europe.

The tariff changes for legal entities will depend on several factors, such as the connection voltage and tariff chosen. Accordingly, the average increase in this case will make 36%.

These changes will pertain to those enterprises and other legal persons who choose a regulated electricity tariff and are not involved in the free electricity market, which is possible already since 1 July 2007, when the electricity market in Latvia was fully liberalised.

Notably, Latvia is a country that experiences the deficit of energy. For this reason, Latvenergo AS annually imports from Lithuania, Estonia and Russia approximately one third of the electricity consumed by its clients. By the end of 2007, the electricity suppliers have revised the agreements and increased the price of imported electricity. Currently, the purchase price of imported electricity has risen for 50% compared to the year 2007.

While the electricity market is rapidly developing in Russia, and the Baltic States begin an active involvement in the electricity market, the Scandinavian and Latvian markets are increasingly converging owing to the opportunity of making trade transactions through the Scandinavian power exchange Nord Pool Spot. Nord Pool Spot exchange reflects the electricity price offered by each electricity producer, including the amount of CO2 quota trading expenses within the total price.