Questions and answers
Overall, the factors that affect the price of electricity may be divided in three groups:
- Global factors: fuel, oil, and CO2 prices, political situation (e.g., the unrest in Libya, abolishment of nuclear power plants in Germany), and natural disasters (e.g., the tsunami in Japan).
- Regional factors: the hydrological situation, outages at major power plants and transmission lines.
- Local factors: the flooding season, limitations of the transmission network, power plant outages.
Mandatory procurement components compensate the additional expenses that a public trader incurs by purchasing electricity under mandatory procurement. The mandatory electricity procurement costs are covered by all end-users in Latvia in proportion to their electricity consumption levels regardless of the trader they have selected. The mandatory procurement components are approved by the Public Utilities Commission. They are reviewed and revised once a year on 1 April.
The electricity exchange is a meeting place for all electricity traders, who sell their generated electricity, while electricity buyers purchase the electricity that will be then sold to the end-user – their customer. The Nord Pool Spot exchange is an electricity exchange for Nordic countries, covering Norway, Sweden, Denmark, Finland, Estonia, Lithuania and also Latvia. The price on the Nord Pool Spot exchange has a direct impact on the electricity price in the Baltic region, which is why the Nord Pool Spot prices currently serve as the best, most truthful and objective source of price information. We need electricity every day at all times, and the Daugava HPPs and Riga CHPPs can fully provide the necessary amount of electricity only for a few months in a year. In the rest of the time, electricity is imported, and the foreign suppliers directly base their prices on the Nord Pool Spot exchange price, which ensures a transparent pricing mechanism.
Your total payment for electricity is made up of multiple components:
- The cost of electricity, which is affected by various factors, such as weather conditions, water level in rivers, supply-demand dynamics, availability of CO2 emission allowances, fuel costs, as well as prices on wholesale exchanges;
- Electricity supply costs, which are regulated by the State and approved by the Public Utilities Commission;
- The Mandatory Procurement Components (MPC), which are covered by all electricity users regardless of their trader, as prescribed by Latvian law. The MPC are paid by all users in Latvia, thereby supporting the environmentally-friendly producers and electricity types – green energy and co-generation;
- Value-added tax, which is set by the State and is identical for all electricity users.
Electricity prices are set for a particular period, thus allowing the customer to pay the same price during the term of the contract, with the exception of cases when the product offered is not pegged to the exchange price and does not change every month.
You can see your monthly average electricity consumption by authorising each of your contracts in the elektrum.lv portal under Consumption report section.
It is the supply of electricity to a user that has not concluded an electricity purchase contract. In such situations, the final guaranteed supply ensures the continuity of electricity supply. Users that have not chosen an electricity trader will receive electricity within the framework of the final guaranteed supply until the time when they conclude a contract with an electricity trader.
The price of the final guaranteed electricity supply for users whose electrical facilities are connected to the distribution system is the average weighted price of the electricity exchange in the settlement period which is published on the internet site of the electricity exchange and to which a surcharge determined by the final guaranteed supplier is added.
Before supplying electricity within the framework of the final guaranteed supply, the system operator chooses a trader that will supply electricity to the customer.
Energy risk insurance is an insurance product of Balta AAS insurance company that is designed specifically for our customers and is offered to legal entities to insure the company’s machinery, equipment, products and goods against various damage or loss caused by interruption in electricity supply.
This insurance product will help the company to avoid unexpected financial loss caused by different kinds of external interruptions in electricity supply:
- unplanned disruptions in electricity supply;
- prolonged voltage disruptions and imbalance;
- sudden voltage drop or overvoltage.
The balancing service covers the difference between the planned and actual consumption of electricity by the market participant (end user). The balancing service is provided by the transmission system operator (Augstsprieguma tīkls AS) or the electricity trader that provides the balancing service to other electricity market participants and that has concluded a balancing contract with the transmission system operator (Augstsprieguma tīkls AS). The volume of balancing electricity in each trading interval is determined as the difference between the actually consumed volume of electricity and the volume recorded in the supply schedule.
Have any additional questions? Ask here!