Ainārs Meņģelsons Public Utilities Commission Latvia 10th Baltic ERI June 4, 2010 Kuressare, Estonia IMPLEMENTATION OF 3-rd EC PACKAGE IN LATVIA

2 10th Baltic ERI June 4, 2010 Kuressare, Estonia Electricity Market Opening All households and non household consumers with less than 50 employees and yearly turnover less than 7 million LVL have the rights to use the universal service of electricity; Universal service – ability to be supplied by economically justified price; The consumers which do not qualifies to get universal service are obliged to buy electricity from traders for contract price;

3 10th Baltic ERI June 4, 2010 Kuressare, Estonia Electricity Market Opening The Commission granted rights to JSC Latvenergo from January 1, 2009 to set the tariffs for the captive customers by the company itself:  Commission within 21 days asses tariffs conformity with the calculation methodology and justification;  if the Commission does not reject tariffs proposal, it enter into force on the date indicated but the company;  if the Commission rejects tariff proposal justified reason, tariffs do not enter in the force.

4 10th Baltic ERI June 4, 2010 Kuressare, Estonia Electricity Market Opening 35,6% of total electricity is traded for contract price (non-regulated); In a year customers switched the supplier, 4 of them switched back on 1st January 2010; On 1 January, % from free market customers purchase electricity from independent traders.

5 10th Baltic ERI June 4, 2010 Kuressare, Estonia TSO unbundling TSO – a/s “Augstprieguma tīkls” is legally unbundled from June 1, First reading of concept on TSO unbundling in line with 3-rd package will be presented to the Cabinet of ministers in June Initial option - Independent system operator The lead institution in adoption of package is Ministry of Economy, the first meeting of stakeholders is planed in June, 2010.

6 10th Baltic ERI June 4, 2010 Kuressare, Estonia Tariffs set up Transmission tariff calculation methodology approved by Regulator in 2002 with consequent amendments. The regulator approves tariffs after receiving of justified application form TSO or rejects them. The procedure described by the Law and could take max 4 months. Regulator has the rights to ask TSO to submit new tariff proposal, if the case is present. No subsidies present in the TSO – tariffs.

7 10th Baltic ERI June 4, 2010 Kuressare, Estonia Access to the system Regulators in 2008 accepted regulation for connection of costumers and generator to the grid Technical and operational requirements to the market participants described in the Grid Code TSO – a/s “Augstprieguma tīkls” has placed draft contracts of system services in web page Slight adjustment could be required in the Grid Code

8 10th Baltic ERI June 4, 2010 Kuressare, Estonia Retail market - electricity Already settled: universal services; last resort supplier. Adjustment required: provisions related to vulnerable costumers ; switching time today is 2 months – the new directive envisages only 3 weeks; providing more information to the customers.

9 10th Baltic ERI June 4, 2010 Kuressare, Estonia Investments in generations Authorization procedure – in line with 3 package Conducted in accordance with objective, transparent and non discriminatory criteria. Reason for refusal shall be objective, non-discriminatory, well founded and duly substantiated. Tendering procedure - in line with 3 package The procedure may be launch only where the authorization procedure and energy efficiency/demand side measures are insufficient to ensure security of supply. Details of tendering procedure should be published in Official Journal of EU 6 months prior of the closure of tender.

10 10th Baltic ERI June 4, 2010 Kuressare, Estonia Legal amendments To fulfill the Regulation on conditions for access to the network for cross-border exchanges in electricity in January 2010 the Grid code were amended : the general scheme for the calculation of the total transfer capacity and the transmission reliability margins; harmonized calculation and publication of hourly balance energy prices, the prices of previous months to be published till the date15 th of current month; The electricity importer/exporter from the non-EU (perimeter) countries should pay perimeter fee – 0,7 Euro/Mwh; For consumers with the load less than 100kW the standard load curve could be applied.