Lithuania liberalizes electricity market Apr 21, 2010
Since 1st January 2010 the Lithuanian electricity market has changed significantly: a new stage in the development of the Lithuanian electricity market has started, Plan on the development of Lithuanian electricity market has come into force and new rules on the sale of electricity have taken effect. Based on these changes, the Lithuanian electricity market will start to operate on the basis of competition and market relations.
The current electricity market can be divided into two parts:
The electricity in the wholesale market shall be traded in two ways: following bilateral agreements or via the electricity exchange. Bilateral agreements are concluded between producers/importers and suppliers and are designated to guarantee the supply of the agreed volume of electricity at the agreed time and at the agreed price. Bilateral agreements serve as a proper means to plan for periods longer than one month. The remaining electricity shall be traded in the exchange market, which is operated by the Lithuanian company BALTPOOL UAB and is based on the principles of Scandinavian exchanges.
All consumers/customers in the retail market are entitled to choose an independent supplier. To reach this goal the consumer/customer in question must enter into an additional agreement with the distributor whereby the terms of the transfer of electricity are established. Such measures provide the customers with the powers to buy electricity at non-regulated prices.
The portion of the market where electricity is traded at market prices should increase constantly as the Plan on the development of Lithuanian electricity market refers to certain prohibitions: objects with power needs greater than 400 kW are forbidden from purchasing electricity at state regulated prices from 1 July 2010. From 2011, electricity should be purchased at non-regulated (i.e. market) prices by objects with power needs greater than 100 kW, from 2012, 30 kW and from 2013, all others (except household consumers). Despite these dates, every customer (including household consumers) is entitled to choose to purchase electricity at market prices even today. To this end the rights and obligations of the customers/consumers should be separated.
The abovementioned measures should create an effective and competitive Baltic electricity market, where electricity prices will be formed by the cheapest and most effective electricity sources and customers will have the right to choose suppliers that are providing the services of the best quality.
- Wholesale market (where producers and importers compete to sell electricity and national suppliers compete to buy the electricity as cheaply as possible);
- Retail market (where national suppliers compete to sell electricity purchased on the wholesale market to consumers).
The electricity in the wholesale market shall be traded in two ways: following bilateral agreements or via the electricity exchange. Bilateral agreements are concluded between producers/importers and suppliers and are designated to guarantee the supply of the agreed volume of electricity at the agreed time and at the agreed price. Bilateral agreements serve as a proper means to plan for periods longer than one month. The remaining electricity shall be traded in the exchange market, which is operated by the Lithuanian company BALTPOOL UAB and is based on the principles of Scandinavian exchanges.
All consumers/customers in the retail market are entitled to choose an independent supplier. To reach this goal the consumer/customer in question must enter into an additional agreement with the distributor whereby the terms of the transfer of electricity are established. Such measures provide the customers with the powers to buy electricity at non-regulated prices.
The portion of the market where electricity is traded at market prices should increase constantly as the Plan on the development of Lithuanian electricity market refers to certain prohibitions: objects with power needs greater than 400 kW are forbidden from purchasing electricity at state regulated prices from 1 July 2010. From 2011, electricity should be purchased at non-regulated (i.e. market) prices by objects with power needs greater than 100 kW, from 2012, 30 kW and from 2013, all others (except household consumers). Despite these dates, every customer (including household consumers) is entitled to choose to purchase electricity at market prices even today. To this end the rights and obligations of the customers/consumers should be separated.
The abovementioned measures should create an effective and competitive Baltic electricity market, where electricity prices will be formed by the cheapest and most effective electricity sources and customers will have the right to choose suppliers that are providing the services of the best quality.
For further information please contact Mr Mindaugas Rimkus
