Price of universal service of natural gas will likely be lower than current tariff from May

RIGA - The price of universal service of natural gas for households after the full opening of the market on May 1 will most likely be lower than the current tariff, the chairman of the board of joint-stock gas supply company Latvijas Gaze Aigars Kalvitis said in an interview with LETA.

He explained that the currently approved tariff for households with consumption above 250 cubic meters is 78 euros, and the difference between 78 euros and the value of the stock was compensated by the state. On the other hand, the price of natural gas in the market is currently around 60 euros per megawatt hour (MWh).

Kalvitis said that if the price remains lower than the tariff on May 1, then, most likely, the universal service offers from all traders will be lower than the current tariff. On the other hand, if it happens like last year, when, for example, in April the price reached 160 euros per MWh, and the prices suddenly rise again, then the price will probably be higher in the free market.

"My current forecast is that the price of the universal service will most likely be lower than the current tariff," said the chairman of the board of Latvijas Gaze.

Kalvitis also noted that servicing households requires huge expenses for companies. "Of course, those who have established a customer service infrastructure and sell electricity to households will definitely be on the market. For other traders, this would require both human and financial resources," said the head of Latvijas Gaze, adding that he does not expect that anything will change a lot and suddenly a new merchant will arrive on the scene.

When asked if the market share of Latvijas Gaze could change after the market opening, Kalvitis stated that this is not an end in itself, because the goal in the free market is to make money.

"If we are currently obliged to supply households and we are actually suffering losses from supplying households, then when the market opens up, the fight will be for paying customers. Completely different motivators appear here," said the head of the company.

Kalvitis also explained that, for example, currently Latvijas Gaze has a profit ceiling of 70 cents for a heating customer, and if the price is 100 euros per MWh, it does not even cover the cost of loan interest. "We have been in such a situation all these years, and when the market opens up, it will no longer be a question of how many customers you have, but how much you can earn. There will be a fight between merchants for this," emphasized Kalvitis.

RIGA, March 16 (LETA) - The price of universal service of natural gas for households after the full opening of the market on May 1 will most likely be lower than the current tariff, the chairman of the board of joint-stock gas supply company Latvijas Gaze Aigars Kalvitis said in an interview with LETA.

He explained that the currently approved tariff for households with consumption above 250 cubic meters is 78 euros, and the difference between 78 euros and the value of the stock was compensated by the state. On the other hand, the price of natural gas in the market is currently around 60 euros per megawatt hour (MWh).

Kalvitis said that if the price remains lower than the tariff on May 1, then, most likely, the universal service offers from all traders will be lower than the current tariff. On the other hand, if it happens like last year, when, for example, in April the price reached 160 euros per MWh, and the prices suddenly rise again, then the price will probably be higher in the free market.

"My current forecast is that the price of the universal service will most likely be lower than the current tariff," said the chairman of the board of Latvijas Gaze.

Kalvitis also noted that servicing households requires huge expenses for companies. "Of course, those who have established a customer service infrastructure and sell electricity to households will definitely be on the market. For other traders, this would require both human and financial resources," said the head of Latvijas Gaze, adding that he does not expect that anything will change a lot and suddenly a new merchant will arrive on the scene.

When asked if the market share of Latvijas Gaze could change after the market opening, Kalvitis stated that this is not an end in itself, because the goal in the free market is to make money.

"If we are currently obliged to supply households and we are actually suffering losses from supplying households, then when the market opens up, the fight will be for paying customers. Completely different motivators appear here," said the head of the company.

Kalvitis also explained that, for example, currently Latvijas Gaze has a profit ceiling of 70 cents for a heating customer, and if the price is 100 euros per MWh, it does not even cover the cost of loan interest. "We have been in such a situation all these years, and when the market opens up, it will no longer be a question of how many customers you have, but how much you can earn. There will be a fight between merchants for this," emphasized Kalvitis.