Dainius Kreivys: “The current methodology for trading electricity from third countries artificially raises electricity prices in Lithuania and distorts the EU market”

“As long as there is no trilateral agreement between the Baltic States on the rules for trading electricity from third countries, not only our security suffers, but also the EU electricity market,” says Minister of Energy Dainius Kreivys after a teleconference with Ditte Juul Jørgensen, Director General of the European Commission’s DG Energy.

Dainius Kreivys informed Ditte Juul Jørgensen that the unilateral methodology applied in Latvia and Estonia creates opportunities to artificially raise the electricity price in Lithuania.

“We have repeatedly said that the current methodology does not prevent electricity produced at the Belarusian nuclear power plant from entering the Baltic market. However, it is now clear that it pushes drives up the price of electricity in Lithuania and distorts the EU electricity market,” the Minister said.

Dainius Kreivys informed that this is due to the difference between the actual and declared capacities of the Lithuanian-Latvian electricity connections. According to the above rules, declaring large volumes of imports from Russia to Latvia requires reserving the capacity of the Lithuanian-Latvian electricity interconnectors, which are not actually used. Electricity market monitoring data shows that, as a result, the electricity price differential between Lithuania and Latvia reached up to EUR 20/MWh at certain times in March.

“This is intolerable both for consumers and for the transparency and competitiveness of the market. We need to reach a consensus on the methodology in time, and we want the European Commission to play a more active role in the negotiations, as the current pace and content of the negotiations are not satisfactory,” said the Minister of Energy.

Lithuania has already submitted its proposal in the negotiations on the new methodology for trading electricity from third countries. On the Minister’s instructions, an official explanation from the Latvian electricity transmission system operator on the price difference will also be sought in the near future. The State Energy Regulatory Council has also been asked to assess the situation. 

According to Mr. Kreivys, the Lithuanian and Estonian energy market participants, who are experiencing losses in the Latvian trading zone due to the unilateral application of the methodology for trading electricity from third countries, have already contacted the relevant European regulatory authorities.

Dainius Kreivys and Ditte Juul Jørgensen also discussed the implementation of synchronisation and the development of renewable energy.