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Sadales tīkls AS submits a tariff project on reduction of distribution tariffs
Riga, 2019-10-11 08:18 CEST --
On October 10, Sadales tīkls AS has submitted a project on electricity distribution service tariff to the Public Utilities Commission. The project provides for a reduction of the distribution service tariff by 5.5% on average (decrease corresponds to 8% of the variable tariff component). Changes in distribution tariffs must be approved by the Public Utilities Commission. It is planned that the changes in distribution service tariffs may come into force as of January 1, 2020.
Changes in tariffs are related both to activities implemented by Sadales tīkls AS to increase the efficiency and changes in the methodology of calculation of distribution tariffs. Amendments to the methodology for calculating distribution tariffs provide for the introduction of an incentive regulation of revenue cap, which allows for setting the distribution tariffs for a period of 5 years, while introducing a regulatory account. Such tariff regulation methodology provides incentives to reduce service costs meanwhile ensuring recovery of actual service costs.
Lower distribution tariffs are also made possible due to Sadales tīkls AS ambitious operational efficiency improvement program, which includes process improvement, reduction of head count and number of vehicles and operation sites.
Sadales tīkls AS is a subsidiary of Latvenergo AS, which maintains and develops the distribution network, providing electricity to more than one million customers, covering 99% of the territory of Latvia. The revenue of Sadales tīkls AS distribution service in 2018 was 304.4 million EUR, EBITDA - 110.1 million EUR, assets –1,659 million EUR.
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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.