Electricity trade war threatens Baltics

TALLINN - Estonia’s Economy Minister Juhan Parts sent an angry letter to his Latvian and Lithuanian counterparts, criticizing his neighbors over not opening up their electricity markets to competition the way it was agreed upon, reports Postimees.

Parts said that the Baltic States signed already in 2009 a memorandum (BEMIP) over development of the energy market and one of its basic premises was opening up the electricity market and abolishing the control over electricity tariffs for home consumers. “Estonia has followed the agreed upon the plan of action,” Parts wrote to Latvian Economy Minister Daniels Pavļuts and Lithuanian Energy Minister Jaroslav Neverovic.

“At the same time, the workings of the Baltic States’ electricity market have to be improved,” noted Parts.
Parts wrote that the electricity price increase in June does not correspond to the real market situation since a remarkable part of Latvian and Lithuanian producers don’t make offers at the common electricity bourse. Since a large part of producers don’t make offers, it results from time to time in an electricity deficit, and that causes price leaps that could be avoided if all Baltic producers made offers. Eesti Energia sells all the electricity it produces to the electricity bourse.

Parts added that Estonia will impose restrictions at the Latvian border to the movement of electricity via the bourse if Latvia and Lithuania don’t make steps to liberalize the electricity market. This means primarily that Latvia and Lithuania should force home consumers to buy electricity from the bourse, as has been done from the start of this year in Estonia.
Parts gave the corresponding orders to restore restrictions at the Estonian-Latvian border to state-owned grid company Elering.

The cause of the anger by Parts is the price leap at the electricity bourse in the summer, when a MWh of electricity cost 104 euros, which is over 3 times more than electric the energy cost for home consumers a year ago. The Economy Ministry estimated that the Latvian and Lithuanian energy deficit was the cause of the price leap.