VILNIUS — Lithuania’s National Control Commission for Prices and Energy (NCC) announced today that heating prices in Lithuania will decrease by an average of 15 percent starting this autumn.
Danas Janulionis, deputy director of the NCC, said companies providing heat want to lower the prices by 5 to 25 percent.
“Our prognosis is that from October the price for heating in Lithuania will decrease on average by 15 percent in comparison with the last heating season,” said Janulionis.
In Vilnius and Kaunas, the prices should decrease by 15 or 20 percent, he claimed.
Rimantas Germanas, the commerce director of Vilniaus Energija said today the company submitted its proposal to the Vilnius municipal government and the NCC to apply the price of 17.30 centai for kWh excluding VAT. If the proposal is accepted, the prices of energy will fall by 23 percent in comparison with the current price of 22.56 centai for kWh excluding VAT.
“In consideration of the difficult economic situation in the country, we suggest to prolong the period for compensation of losses suffered due to failure to recalculate heating prices in 2008 from two to four years,” Germanas announced.
The heating law establishes a maximum 2-year period of compensation, but the company says it will not ask for interest on a longer period of compensation.
Slow reaction to last winter’s increase lessens today’s decrease
The losses were suffered due to the failure of former authorities of Vilnius municipality to react timely to the increase in the price of natural gas last year, which resulted in a situation where Vilniaus Energija had to provide the heating to the Lithuanian consumers for lower prices than the cost price.
“The populist decision of former mayor not to react to increase of natural gas prices and to accumulate losses today has turned against all Vilnius residents who use central heating services. If the heating prices had been increased last year, today they could be lowered to 15.96 ct/kWh excluding VAT,” Germanas said.
Janulionis says the price will decrease because the heating law was amended for the resolution of debts for resources, but mostly due to the decrease of price of resources.
The price of heating is composed from constant and variable components. The constant element constitutes expenses of energy providers, which have not changed in the last five years and are equal to 4.81 ct/kWh. The variable part is the price of resources, mostly of natural gas.
From July 1 the NCC is entitled to change the variable price every month, depending on changes in prices of oil and gas while before that, prices could be changed only once per year.
Lithuanian energy market “does not function”
Also today the NCC announced its report to the European Commission for the year 2008. The report indicates that the Lithuanian natural gas market “does not function.” Currently all natural gas is imported from Russia. In retail market of natural gas, Lietuvos Dujos owns more than 70 percent of the market share.
As for the electricity market, the report highlights Lithuania’s “historic energy monopoly” since the Soviet era when the Ignalina Nuclear Power Plant was built. After the closure of second reactor scheduled in the end of this year, another major company Lietuvos Elektrinė will have 65 percent of all capacity in the country.
However, Lithuania’s government is pushing reform of its business competition law, particularly in the country’s energy sector. The government on July 8 adopted a resolution on Lithuanian energy market development to transition from a mandated near-monopoly to a more varied market.
