1. BALTIC ELECTRICITY REGIONAL INITIATIVE Riga, 24 April, 2009 LATEST UPDATE IN LATVIA Ainārs Meņģelsons Public Utilities Commission

2. CONTENT MARKET OPENING LICENSING MARKET ENVIRONMENT TARIFFS

3. MARKET OPENING Legal market opening: – July 1, 2007 - 100% Big companies (more than 50 employees and turnover 7 milj. Euro) are forced to go to market Real opening ~ 46% from May 2008 Status on March 1, 2009 –consumers switching suppliers – 109, it represents ~9,2 % from the total number of market participants –renegotiated agreements – more than 1000

4. MARKET OPENING Legally separated transmission and distribution companies provide services based on tariffs approved by regulator Hourly balancing prices for customers are publicly available on a web page of TSO Standard draft service agreements among TSO and trader is also available on a web page of TSO

5. LICENSING No obstacles for trade: No import/export licence required Licensed market participants: –5 pure power traders –9 distribution and supply companies –2 hydropowerplants (above 1 MW) –36 CHP plants - production and sales –28 windfarms - production and sales

6. LICENSING –Jan 1, 2008 17 wind farms in operation – installed capacity 26 MW –April 1, 2009 11 wind farms received licenses with the total capacity to be installed - 320 MW –in licensing process – 220 MW

7. MARKET ENVIRONMENT Latest development. Cabinet of Ministers adopted changes in –cogeneration in force from March 15, 2008 –support of renewables in force from March 15, 2009 PUC : –in April 2009 adjusted regulations for connection of customers to the grid

8. TARIFFS Latest development: Gas sales tariffs average decrease from May 2009 for industrial customers by ~ 15%, and for domestic users from June 2009 by ~14%. CHP tariffs reduced from May 2009 according to changes of fuel component In March 2009 PUC rejected tariff proposal of TSO S/C “Augstprieguma tikls ” and DSO S/C “Sadales tikls”

9. FUTURE ACTIVITIES Tasks of the Baltic ERI activities within the framework of ERGEG and CEER Complete adjustment of heat and electricity tariffs for CHPs Involvement in activities of High level working groups on Electricity Interconnections and Baltic power and Gas market Tasks after adoption of the 3rd energy legislative package

10. THANK YOU FOR ATTENTION Web page of PUC : WWW.SPRK.GOV.LV