The latest update of power market in Latvia

Ainārs Meņģelsons

Public Utilities Commission of Latvia

Director of Energy Department

21st Baltic Electricity Market Forum, Vilnius, May 3, 2016

Content

Some data of economics Latest on NP – Latvia’s price zone Cooperation, REMIT and Transparency Congestions and PTR auction results Lessons from full retail market opening Update on PCI Challenges/plans 2016

Some data of economics

Gross Domestic Product (GDP) 2013 versus 2012 + 3,0 % 2014 versus 2013 + 2,4 % 2015 versus 2014 + 2,7 %

Electricity consumption 2013 versus 2012 – 8,8% 2014 versus 2013 – 1,1% 2015 versus 2014 – 1%

Gas consumption 2013 versus 2012 – 0,8% 2014 versus 2013 – 10,9% 2015 versus 2014 – 10,0%

Inflation December 2013 versus December 2012 – 0,4 % December 2014 versus December 2013 + 0,2 % December 2015 versus December 2014 + 0,3 %

Load of NordBalt and LitPol Link

0%

82%80%

69%

26%

11%

4%

41%

65%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

January February March

Load of NordBalt and LitPol Link cables in % of total available capacity

SE4 > LT PL > LT LT > PL

Congestion on EE-LV border

82%

75%

24%

11%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Jan Feb Mar Apr Mai Jūn Jūl Aug Sep Okt Nov Dec

Congestion time from EE to LV, % of total

2015 2014 2016

Nord Pool Elspot volumes and prices in Latvia

60,72 53,96

30,92 31,10

-

10,00

20,00

30,00

40,00

50,00

60,00

70,00

0

100

200

300

400

500

600

700

800

EU

R/M

Wh

GW

h

NP bought amounts and weighted average prices, 2014-2016

2014 2015 2016 Price 2014 Price 2015 Price 2016

Nord Pool Elbas volumes in Latvia

0

1

2

3

4

5

6

7

8

9

10

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

GW

h

NP Elbas bought volumes

2014 Buy 2015 Buy 2016 Buy

0

1

2

3

4

5

6

7

8

9

10

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

GW

h

NP Elbas sold volumes

2014 Sell 2015 Sell 2016 Sell

REMIT implementation

CEREMP registration status: 25 MP registered

April 7, 2016: data collection started (ACER)

NRA’s co-operation – new challenges:

Another Nemo – EPEX Elspot (not in Baltic countries yet, but inNordic)

Common Nordic-Baltic Wholesale Market monitoring and common UMMmonitoring

PTR-Limited capacity auction on EE-LV border 2015, 2016

7,11

2,41

9,94

16,63

6,67

2,7

4,815,26

4,25

8,2

16,71

13,5414,33

12,7

6,586,1

2,830,59

0,00

2,00

4,00

6,00

8,00

10,00

12,00

14,00

16,00

18,00

EU

R/M

Wh

2015 2016

Prices and PTR-Limited auction results

-10

10

30

50

70

90

110

130

150

170

Sau Sau Sau Sau Sau Vas Vas Vas Vas Kov Kov Kov Kov

EU

R/M

Wh

Price difference EE-LV and PTR-Limited on EE-LV border auction results

EE->LV Yearly PTR Quarterly PTR Monthly PTR

Yearly PTR – 4,55EUR/MWh 1st Quarter – 2,42EUR/MWh January – 3,40EUR/MWh February – 3,03EUR/MWh March – 2,11EUR/MWh

Legislative changes/ actions

Draft amendments to Electricity Market Law introducing obligations and tasks of an aggregator (demand side response), as well as setting out principle how the public trader and the system owner shall pay the state fee for the regulation of public utilities;

Law on Energy Efficiency (entered into force on March 29, 2016)

New DSO tariffs In January NRA received an application from AS «Sadales tīkls» for

approval of new DSO tariffs Tariffs foresee the following changes:

For household customers fixed tariff component will be applied At the same time tariff variable component will decrease In average new DSO tariffs will increase for 12%

Public hearings on new tariffs were held with the following customer groups: Pensioners; Industry stakeholders; Agriculture stakeholders

100% opening of market in Latvia, first results

Introduced centric model – one bill to household customer Universal service – fixed price offer for one year Last resort supply provided by DSO based on competitive bid Easy switching of customers via DSO designed and successfully

implemented service platform

15 traders active in a retail market 4 traders are active in household segment, 100 % market opening

proceeded relatively quite: Lower wholesale prices Launching of informative campaign IT systems of DSO were prepared

Open electricity market for households

Main concerns of household users in open market conditions:Exchange Spot price offers

How Exchange Spot price is calculated

Smart meters

1.25% of households have selected Exchange Spot price, the rest are using Fixed price contract

Around 60 000 smart meters are installed to household customers today

Projects of Common Interest (PCI) On 18 November 2015, the European Commission has adopted the second Union list of

195 PCIs, including 108 in electricity, 77 in gas, 7 in oil and 3 smart grids: new PCIs - «Baltic corridor» for increase capacity through the Baltic countries till 600MW:

internal line Riga CHP2- Riga HPP (PUC received investment request on 23.03.2016.)

replacement of 330kV interconnection lines Tartu(EE) – Valmiera (LV) and Tsirgulina (EE) –Valmiera (LV) (Possible investment requests will be presented in 2017)

Status on PCI implementation: Kurzeme Link 3rd stage (Venspils, Tume, Imanta) – the board of AST accepted the results of

tender on construction company, in 2016 will continue geological monitoring in Ķemerunational park and preparing of topographical plan, planned commissioning – 2019.

3rd EE-LV interconnection (between Kilingi–Nõmme (EE) and Riga TEC 2 (LV) –Environmental impact assessment (EIA) will be performed also together with «Rail Baltica» project, public consultations has been finished, transmission line construction will begin at the end of 2016.

Challenges/plans 2016 April 7, 2016 – starts data collection on trades outside OMP IT security policy to receive wholesale market data from ACER Online date reporting and processing system will be commissioned in May 2016 Yearly responsibilities - TSO 10 year’s development plan, TSO Compliance with the

requirements of certification and independence and DSO independence review

Network Codes (NC) - plans for 2016: Supervision of designated NEMO Nord Pool; Waiting for all NRAs solution on Capacity Calculation Regions (ERF); MCO has been presented on April 14, 2016, evaluation in the CACM WS - All NRAs started to evaluate common grid model methodology, generation and load

data provision methodology, the congestion income distribution methodology (will be presented by the TSOs in 2016)

HAR – will be presented after the FCA NC will be in force, coordination between the NRAs within the WG

sprk@sprk.gov.lv www.sprk.gov.lv Sabiedrisko pakalpojumu regulēšanas komisija

THANK YOU!Ainārs Meņģelsons

Public Utilities Commission of Latvia

Director of Energy Department