Published: 2018-10-29 08:55:00 CET
Lietuvos energijos gamyba, AB
Notification on material event

Regarding the Decision Adopted by National Commission for Energy Control and Prices

Lietuvos Energijos Gamyba, AB identification code 302648707, registered office placed at Elektrinės str. 21, LT-26108 Elektrėnai, Republic of Lithuania. The total number of registered ordinary shares issued by company is 648 002 629; ISIN code LT0000128571.

The Company hereby informs that on a meeting held on 26 October 2018, the National Commission for Energy Control and Prices (hereinafter – the Commission) adopted the Resolution “Regarding the Electricity Transmission Service Prices and Publication of their Application Procedure”  whereby it publishes in the Register of Legal Acts the electricity transmission service prices and their application procedure (hereinafter – the Procedure) approved by Decision No. 2 (Minutes No. 24) of the Board of the transmission system operator. This Procedure lays down the electricity transmission service prices, their application procedure and key conditions to be applied by LITGRID AB as from 1 January 2019.

Compared to the procedure valid to this day, clause 7 of the published procedure no longer contains the provision according to which the transmission service and system service price was not paid for the amount of electricity transferred for loading the Kruonis Pumped Storage Hydroelectric Power Plant (hereinafter – KPSHP).

In the opinion of the Company, considering the fact that there were no amendments to legal acts governing the payment of the price of the transmission service that could affect the repeal of the above provision of the Procedure, this amendment to clause 7 of the Procedure is significant compared to the procedure that has been in place so far and contradicts the practice of some European Union countries that promote electricity trade and the development of renewable energy resources.

Having subjected the electricity used to load the KPSHP to transmission service and system service taxes as from 2019, the production in the KPSHP and, respectively, the amount of electricity used for loading, would decrease significantly. The preliminary assessment carried out by the Company revealed that having applied the said taxes and assuming that other factors do not change, production in the KPSHP in, say, 2017 would have decreased from 595 GWh to 73 GWh. In such a case, fixed costs borne by two KPSHP units that do not provide system services would significantly exceed the profit generated from the sale of the produced electricity. In light of this fact, the economical validity of continued operation of the KPSHP units that do not provide system services will have to be assessed.

The Company is assessing the potential impact of the adopted legal act on its activities and results as well as further solutions.

Valentas Neviera, Head of Communication Division, tel. +370 670 25997, e-mail.