Published: 2019-06-12 10:10:54 CEST

On distribution tariffs

Riga, 2019-06-12 10:10 CEST -- Sadales tīkls AS is currently implementing an ambitious Efficiency Programme. As part of the framework of a long-term development plan of the electricity grid, the Programme facilitates reducing of the resources required for the operations of the company and revising distribution tariffs. The results of the Efficiency Programme are already present today, while a full completion of the programme will allow reducing the distribution tariffs. To reflect the impact of cost reduction on distribution tariffs and lower the price for customers even before the entire Efficiency Programme is completed, there is a need for change in the regulatory enactments regulating the sector. Therefore, in a foreseeable future Sadales tīkls AS will turn to the Public Utilities Commission, proposing changes in the methodology of calculation of electricity distribution tariffs aiming at introducing regulatory instruments that would foster long-term efficiency.

Sadales tīkls AS keeps optimizing its operational processes and, taking into account the results of its activities, has developed an Efficiency Programme, which was introduced in 2017. The Programme provides for ambitious changes scheduled through 2022 that will lead to an overall economy of company resources. Through the end of the programme, it is planned to cut 810 jobs, reduce the operating transport base by 407 vehicles, reduce the number of technical bases, improve the processes and foster mobility of employees, thereby reducing the operating expenses by approximately EUR 26 million. In order to reduce the electricity bills for business and household customers in Latvia, since April representatives of Sadales tīkls AS have been participating in the working group of the Ministry of Economics of the Republic of Latvia. They have developed a plan for possible reduction of the eligible part of distribution tariffs by 10% thereby decreasing the total distribution tariff by 8%.

For customers, the distribution costs form about one third of the electricity bill, and approximately 25% of these costs comprises the cost of services provided by the independent transmission system operator Augstsprieguma tīkls AS.

Sadales tīkls AS is a subsidiary of Latvenergo AS, which maintains and develops Latvian distribution system grid, ensuring supply of electricity to more than one million customer facilities, covering 99% of the territory of Latvia. In 2018, the revenue of Sadales tīkls AS was EUR 323.7 million, net profit – EUR 33.7 million with EUR 1.66 billion assets as of the end of the year.

Additional information:
Jānis Irbe
Group Treasurer
Phone: +371 67 728 239

About Latvenergo

Latvenergo Group is one of the leading energy suppliers in the Baltics operating in electricity and thermal energy generation and trade, natural gas trade, electricity distribution services and lease of transmission system assets. Latvenergo AS has been acknowledged as the most valuable company in Latvia for several times. International credit rating agency Moody's has assigned Latvenergo AS an investment-grade credit rating of Baa2/stable.

Latvenergo Group is comprised of the parent company Latvenergo AS (generation and trade of electricity and thermal energy, trade of natural gas) and seven subsidiaries - Latvijas elektriskie tīkli AS (lease of transmission system assets), Sadales tīkls AS (electricity distribution), Elektrum Eesti OÜ (trade of electricity and natural gas in Estonia), Elektrum Lietuva UAB (trade of electricity and natural gas in Lithuania), Enerģijas publiskais tirgotājs AS (administration of mandatory electricity procurement process) and Liepājas enerģija SIA (generation and trade of thermal energy in Liepaja, electricity generation). All shares of Latvenergo AS are owned by the state and held by the Ministry of Economics of the Republic of Latvia.