Electioneering keeps heating bills artificially high

Aug 22, 2012
From wire reports

Andrius Janukonis wants biofuels to replace gas.

VILNIUS - The government will not support the proposal from the Lithuanian District Heating Association (LSTA) to transfer electricity production at the Elektrenai power plant to thermal power plants in major cities, says Chairman of the LSTA Council, Andrius Janukonis, reports ELTA. He claims that though it is beneficial for consumers to have less costly heating, it is politically disadvantageous to the ruling parties.

Janukonis says that the government must approve of electricity production quotas on Sept. 1, but it will not make the necessary decisions that would allow cutting heating prices down to 0.04 litas/kWh (0.011 euros/kWh).
“We forecast that the government will not support our suggestion and continue their public discord policy. We think that the government will fail to make any formal decision. Heating price lessening is, economically thinking, beneficial for the people, yet that would be politically harmful to the ruling politicians. This is the main election platform for politicians,” he said.

On July 18 the government approved a new procedure, according to which it took over the obligation of approving electricity production quotas from the Energy Ministry. “(..) as the government is responsible collectively, there would be no individuals to blame for the wasting of heat,” Janukonis said.

The LSTA also stated that the long-term strategy of the State in seeking to reduce the heating price should be based on the transition to the use of biofuels in heating production. If such a shift is not made, the promotion of competition in the heating sector, which is heavily supported by the government, will not reduce prices.
“The claims of the PM that competition between suppliers of heat will benefit the customers, and that it is their long-term policy, is just another confirmation that the government is drifting in confusion. Competition will not produce the desired positive effect if the heat will be produced by expensive gas,” said Janukonis
According to Janukonis, heat made by gas will always be expensive. The price will go down only if the transition is to local biofuels, which is up to one-half cheaper, happens.

Considerable support for the biofuels projects is a necessary condition to ensure maximum benefits to people, because biomass boiler construction requires significant investment. However, he adds that the support would allow for not including a return on investment into the heating price, which would mean heating rates would drop as soon as a new boiler is up and running, as capital costs would be excluded from the pricing markup. This would be at a cost to overall society, as the government, under such a plan, wouldn’t see a financial return on its investment.

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