Parts posts bitter letter to Baltic ministers, on electricity market

Photo: Peeter Langovits / Postimees

 Estonia’s economy minister Juhan Parts has sent a sharply worded letter to his colleagues in Latvia and Lithuania, reprimanding them for not opening up electricity markets as agreed.

Mr Parts noted that, as early as in 2009, the Baltic States signed a memorandum (BEMIP) on development of energy market, a pillar of which was opening up of electricity markets and removing controls from home users’ electricity tariffs. «Estonia has followed the action plan agreed,» Mr Parts wrote in the letter sent to Latvia’s economy minister Daniels Pavļuts and Jaroslav Neverovič, the Lithuanian energy minister.

«At the same time, there is a need to improve the functioning of the Baltic electricity market,» stated Mr Parts.

The minister wrote that the June electricity price hike did not correspond to the real market situation, as a notable amount of Latvian and Lithuanian producers are not making offers to the joint electricity exchange. As a large part of producers declines to make offers, periods of electricity deficit occur – this, in turn, leading to price hikes, which could be avoided if all Baltic producers would make their offers. As we know, Eesti Energia sells all its electricity unto the exchange.

Mr Parts added that Estonia is, via the exchange, setting limits to electricity’s movement on Latvian border; Latvia and Lithuania, however, are not taking steps to liberalise their electricity markets. The latter would, first and foremost, mean that our Southern neighbours should force their household consumers to purchase electricity from the exchange – according as it is being done in Estonia, starting this year.

A corresponding order has also been given, by Mr Parts, to Elering. The total Estonian-Latvian border being at the electricity exchange’s disposal, since start of this summer, the minister demands that the electricity company would partially restore limits on the border. Meaning that the power companies would be able to purchase part of the transmission capacities on auction. In that case, Eesti Energia could export electricity via its own line, so to speak, not having to buy it, for its consumers in Latvia and Lithuania, at super high exchange prices. 

Mr Parts’ anger was stirred by electricity exchange’s price hike this summer, a megawatt-hour costing €104: thrice the price households were paying a year ago. In economy ministry’s estimation, the hike was caused by electricity deficit in Latvia and Lithuania.