Electricity sector

Implementation of the Third Energy Package

In 2009, the EU adopted the Third Energy Package, a package of legislative measures aimed at liberalising EU energy markets.  Based on the ownership unbundling requirements of the Third Energy Package, Lithuania has reformed its electricity sector by separating transmission from generation and supply activities.  Ownership unbundling is aimed at increasing the overall efficiency of the electricity system, preventing discrimination against new market participants willing to connect to the grid, optimising the use and development of infrastructure, incentivising economic investment and ensuring competitive prices for electricity consumers.

In 2010, four blocks of energy companies were established, comprising energy transmission, production, distribution and maintenance activities.  The production block consists of Lietuvos Energijos Gamyba AB (“Lietuvos Energijos Gamyba”) which was established in August 2011 and includes the Elektrėnai Thermal Power Plant, the Kaunas Hydroelectric Power Plant and the Kruonis Pumped Storage Plant.  In July 2012, the Government adopted a resolution thereby approving actions necessary to conclude the separation of transmission of electricity activities from generation and supply activities.  At the end of September 2012 the implementation of EU Third Energy Package for the electricity sector was completed.

On 27 August 2013, the procedure for the certification of Litgrid, AB (“Litgrid”), Lithuanian electricity transmission system operator, was successfully completed in accordance with the provisions of the EU Third Energy Package that obliges Member States to separate the electricity transmission operations from power and gas generation and distribution. Both the national regulator and the European Commission have officially recognised that the company fully complies with the requirements for the separation, transparency and independence laid down for electricity transmission system operators in the EU and Lithuanian legislation.

Legal acts

Wholesale trade in the electricity sector

Wholesale trade in the domestic market for electricity is conducted by two methods: trading under bilateral agreements and trading on the electricity exchange. The aim is to make the trading on the exchange the main method of wholesale supply of electricity.

Since 18 June 2012, wholesale trading on the Lithuanian Electricity Exchange is administered by Nord Pool Spot AS, an operator of the Nordic and Baltic electricity exchanges.

Functions of Nord Pool Spot AS:

  • Organising the wholesale trade in electricity on the exchange;
  • Ensuring technical servicing and support at the trading location (the exchange);
  • Publishing information on wholesale electricity trading on the exchange as well as information on the terms of operation of the exchange;
  • Ensuring equal and non-discriminating conditions for all the participants in the exchange;
  • Informing and consulting the participants in the exchange and other market participants on matters related to the organisation and operation of the exchange.

The Lithuanian Electricity Exchange has been fully integrated into the Nordic Electricity Exchange and all the principles of operation applied by other countries of the region are applicable to the Lithuanian Electricity Exchange as well. All trading on the exchange is advance trading: all electricity supply contracts are concluded ahead of consumption. The market participants may choose between two trading methods – day ahead trading or intraday trading. The trading is conducted for each hour of the future period individually (hourly trading).

Baltpool UAB, which had performed the functions of an electricity exchange operator until 18 June 2012, currently offers the participants in the exchange an alternative to the registration of long-term contracts: a market for auxiliary instruments to protect against the electricity price fluctuations on the exchange.   

Retail trade in the electricity sector  

Retail trade in electricity (with the aim of supplying electricity to customers) can only be conducted by suppliers under agreements on retail sale – purchase of electricity concluded with customers. Customers are entitled to buy electricity from suppliers for their private use.

The public electricity price and tariffs are set by the public supplier for six calendar months. Electricity is supplied to customers by both public and independent suppliers.

PRICE STRUCTURE  =  electricity purchase price   transmission price  +  public interest service (PIS) fee  +  distribution costs  +  difference between public supply price and actual electricity purchase price, on the one hand, and estimated electricity price in previous period.

The National Commission on Prices and Energy Control (NCPEC):

  • Exercises state supervision over the energy sector;
  • Publishes the public electricity price and tariffs;
  • Publishes lists of public and independent suppliers

Customers are free to choose (and change) an independent electricity supplier and may enter into agreements with more than one supplier in order to meet their needs for electricity.

Guarantee supply is ensured to those customers that have not chosen an independent electricity supplier or if the chosen supplier fails to discharge its obligations, provided that electricity is not supplied to such customers at a public price for electricity.

Last updated: 14-09-2015