On Thursday, 11 February, the Saeima adopted in the final reading amendments to the Energy Law setting out the principles for opening the natural gas market to all sellers and providing households with the right to freely choose their gas supplier. The amendments also stipulate how the final phase of reforming the natural gas market is to be implemented.
“Opening the gas market to free competition is a very important step for Latvia’s economy and business in general. By stipulating effective rules for the natural gas market, we are opening the door to new gas suppliers, thus promoting competition in the sector. This will be beneficial to both the public and businesses, and the opening of the market will ensure a stable and predictable energy policy in future,” said Romāns Naudiņš, Chairman of the Economics Committee of the Saeima, which was responsible for drafting the amendments.
The Energy Law has been amended to include rules regarding the natural gas market, which stipulate that the price of gas will be set by agreement between market participants. Households will be able to purchase gas according to the tariff set by the regulator, based on rules set out by the Cabinet of Ministers. Prior to beginning sale of gas, all sellers will have to register on the natural gas seller register.
The amendments provide that the state holds the right of first refusal regarding shares of the joint gas transmission and storage operator, the gas transmission system or parts thereof, and gas storage facilities or parts thereof. If the state does not exercise these rights, and the shares are sold to another entity, such a transaction shall only be implemented upon express consent of the Constitutional Protection Bureau and the Security Police.
Company Latvijas Gāze has until 3 April 2017 to separate gas transmission and storage services from distribution and sales by setting up two different enterprises. In turn, by 31 December 2017 the natural gas transmission and storage company (system operator) must be legally independent from commercial operators that distribute and sell gas.
MPs supported the proposal that Latvijas Gāze must immediately provide third party access to the gas distribution system, by mutual agreement on the price for using the infrastructure.
The newly adopted amendments also lay out the rights and obligations of the regulator in regard to monitoring natural gas system operators, as well as imposing fines for violations.
The amendments also clarify the definitions of several terms used in the Law, such as “captive consumer”, which shall henceforth mean a gas consumer purchasing gas for a regulated price.
Currently there is only one company operating in the natural gas market in Latvia – joint stock company Latvijas Gāze, which procures, stores, transmits, distributes and sells natural gas. Latvia’s natural gas supply system is interconnected with the Lithuanian and Estonian systems, but not any other EU member state, and Latvia currently has only one gas supplier – Russia.
The Saeima already amended the Energy Law in March 2014 envisioning the opening of the gas market and splitting of Latvijas Gāze.
Saeima Press Service