Sunday, February 25, 2024
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Lithuania to liberalise its electricity market

Lithuania’s parliament approved the amendments to the Law on Electricity moving from a regulated to a competitive electricity supply.

According to Minister of Energy Žigimantas Vaičiūnas, this is a long-awaited change that many European Union countries have already implemented. Electricity consumers will have to decide for themselves and choose the electricity supplier that best suits their needs.

“Until now, the power supply market has been monopolistic, with minimal conditions for competition,” said Minister Vaičiūnas. “Now, conditions for the consumer-friendly competition are being created. As more electricity suppliers enter the power supply market, consumers will be offered better quality services and new opportunities. With the development of the electricity market, monopolistic supply is already becoming an obstacle to the emergence of consumer-oriented services, so the time to take this important step is now.”

At present, almost all household consumers purchase electricity using the services of a public supplier (Ignitis), and the price of electricity is set by the National Energy Regulatory Council (NERC) no more frequently than every six months.

“These are major changes that will affect all electricity consumers, so in order for the transition to be successful and smooth, we will implement it in stages, starting with those who consume the most electricity and ending with the people who consume the least,” continued Mr Vaičiūnas.

In particular, during the first stage, starting next January, regulation of the final electricity price will be abandoned for the consumers who use the most electricity, except for vulnerable consumers and gardens, garages, blocks of flats, dormitories and other administrators or associations purchasing electricity for the common needs of association members. The second stage will start in 2022 and will affect those household consumers with annual electricity consumption of more than 1,000 kilowatts per hour (kWh). During the third stage, from 2023, final electricity prices will also be deregulated for those consumers who consume less than 1,000 kWh per year.

The Ministry of Energy underlined how consumers will also be able to choose an independent supplier at their own discretion at an earlier date. In addition, it has been established that more favourable guaranteed supply pricing will be applicable to vulnerable consumers in cases where they do not choose an independent electricity supplier.

These changes mean that the purchase and supply price of electricity, which accounts for approximately 48 per cent of the final electricity price, will no longer be regulated. The other part of the price – electricity transmission, distribution and public service obligation services – will continue to be regulated.

Along with the abandonment of electricity price regulation for household customers, smart meters will also be introduced. Smart electricity metering systems, smart grids and a common platform for data collection and exchange will, in the long run, make it much easier for residents to monitor and assess their electricity consumption needs and choose the most appropriate electricity supplier offer.

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