Latvian electricity market Latest developments

Current electricity market 2  Electricity market is open since July 2007;  Some consumers qualify to get the universal service while the others buy electricity in the free market and choose their electricity supplier by concluding supply contracts;  Universal service in Latvia currently means electricity for regulated price;  Since latest legislative amendments in April 2012, electricity at regulated price is ensured for all households and non household consumers with less than 50 employees, yearly turnover less than 7 million LVL and installed protection device under 100A;

Changes in April  April was a favorable timing for market opening since regulated prices were at that time higher than electricity price in the free market.

Next step in November 4  Considering the successful experience in market expansion in April, the government decided on August to expand the free market yet more.  Newly adopted legislative amendments foresee that from November 2012 universal service rights will remain only for household consumers without any other exceptions.

Consumer protection – last resort supply 5  Consumers not having signed the new supply contract with respective supplier will receive electricity from the last resort supply.  Last resort service will be rendered by JSC «Latvenergo» which won the open tender announced by our DSO «Sadales tīkls».

On our way to fully open electricity market 6  Heading towards a fully open electricity market, the Ministry of Economics soon plans to open discussions on this issue, suggesting to finalize the market opening by September Provisional market opening timeline June 2013April 2013November 2012October 2012September 2013 Overall analysis on the concept of full market opening Draft legislation amendments Legislation amendments in Parliament Start of electricity trading Fully open market – without regulated price

TSO unbundling 7  July 2011 – adoption of amendments to the Electricity Market Law transposing EU TSO unbundling requirements.  End of 2011 – sale of the JSC „Augstsprieguma tīkls” to the Ministry of Finance.  The TSO - JSC “Augstsprieguma Tīkls” is now unbundled from JSC “Latvenergo” and is an independent company providing transmission services and renting the transmission grid from the newly formed JSC “Latvenergo” subsidiary company JSC „Latvijas Elektriskie Tīkli”.

Net metering 8  Considering the growth of micro generation, the Ministry has developed amendments to the Electricity Market Law that foresees improvement of system services by establishing net payment system.

RES support 9  The current RES support - mandatory procurement - proved not to be efficient enough to promote the use of RES in long term perspective.  The Ministry is currently working on new support mechanism based on several preconditions: Flexible energy volume; Reasonable costs; Reaction to market signals; Technological neutrality.  RES long term support could be based on: Net metering CAPEX (investment) support Mandatory market share Sanctions Reliefs

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