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;
• 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.

Overall, the factors that affect the price of electricity may be divided in three groups:

1. 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).
2. Regional factors: the hydrological situation, outages at major power plants and transmission lines.
3. Local factors: the flooding season, limitations of the transmission network, power plant outages.

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.