Latvian electricity transmission network maintenance company AS Augstsprieguma tikls (AT) plans to reduce transmission tariffs and increase the transmission capacity maintenance fee, according to the tariff project published in Latvian Herald.
The tariff project has been submitted to the Public Utilities Commission (SPRK) for approval.
Representatives of AT say transmission tariff changes directly affect only electricity consumers who are connected to the transmission network. The absolute majority of consumers, including households, may be affected only once transmission network companies have reviewed their own tariffs. According to estimates from AT, consumers who are not directly connected to the transmission network will experience changes to their electricity bill up to 1%.
“Although we have successfully reduced costs related to tariffs, we have to keep in mind that SPRK has developed a new tariff calculation method. It no longer allows for maintaining the transmission system from revenue collected from cross-border power network management revenue. This means that in spite of AT’s accomplished cost reductions, consumer-related costs will increase by approximately 8%,” says the company’s board chairman Varis Boks.
He also said the current tariff was already below the average EU level, whereas the new tariff would be equal to the average EU level.
AT representatives say the new method from SPRK provides for changing the ratio of the fixed and fluctuating tariff portion. This means some members of society may have to pay more for the transmission services, whereas fees for other consumers may reduce. Consumers who use their power output efficiently will see reduced costs. When compared to the current tariffs, the new tariff project reduces the cost of transmission of 1 kW/h by approximately 45%. At the same time, depending on the type of consumer connection, the maintenance fee will increase by an average of 30%.
The new method also provides for the adoption of a generation component, whose transmission fee is paid in accordance to the capacity available.
The company notes the current transmission tariff calculation method allowed for covering transmission network’s maintenance costs using revenue from cross-border transmission – if transmission output between different trade areas is insufficient and there is a difference in prices between countries, transmission system operators are able to secure revenue by liquidating congestion and receiving the difference between prices in both trade regions. Although EU regulation does not exclude diverting such finances towards reduction of the transmission tariff, the new tariff calculation method will no longer allow this as of 2021. Under the current tariff AT’s costs of EUR 6.5 million were compensated from this revenue. From now on this revenue will be diverted towards financing capital investments to reduce future tariffs and secure a long-term effect.
The company also mentions that it is also planned to finish reorganization this year in order to acquire ownership rights over power lines, sub-stations and transmission point. By increasing efficiency AT has been able to reduce service related costs by EUR 1.5 million annually or 2%.
Published information reveals that annual fee for electricity producers connected to the transmission system is planned to be set at 0.92958 EUR/kW in 2021.
Tariff changes are related to changes to the EU electricity transmission system service tariff calculation methodology. The proposed changes introduce an output maintenance fee for electricity producers as of January 1, 2021.
At the same time, in compliance with decision from Latvia’s Cabinet of Ministers, on June 15, AT received under its ownership the owner of the transmission system’s assets Latvijas Elektriskie tikli and the company commenced a reorganization process of this company, adding it to AT until December 31. As a result of this process, AT has accomplished improved efficiency and optimization of transmissions service-related costs.
AT is an independent Latvian electricity transmissions system operator. The company provides maintenance of the electricity transmission network’s operations and security. (BNN/Business World Magazine)
