Conexus plans to increase natural gas transmission tariffs by 39%

  • 2023-05-31
  • LETA/TBT Staff

RIGA -  Conexus Baltic Grid (Conexus) has submitted to the Public Utilities Regulatory Commission a draft tariff for the natural gas transmission system service for the next three years, LETA learned from Conexus. 

Although the value of the submitted tariff will increase by EUR 0.00074/kWh or 39 percent, it is expected to have a minimal impact on the total bill of natural gas users - in the range of 0.5-1.1 percent on average.

The submitted draft tariff has been developed in accordance with the methodology for calculating the tariffs for the natural gas transmission system service, bringing together all technologically and economically justified costs for the maintenance of the natural gas transmission system, its safe, uninterrupted operation and necessary for the efficient provision of the transmission system service.

Although Conexus overall costs have decreased, the planned increase in tariffs is driven by a decrease in natural gas consumption. Conexus has calculated a charge for the use of the exit point for the supply of Latvian users of EUR 0.00267/kWh. Compared to the current transmission tariff, the tariff value increases by EUR 0.00074/kWh, or 39 percent.

The expected changes in the tariff will have a minimal impact on the final price of natural gas for different user groups. For example, a household consuming 4 m3 of natural gas per month will see an increase in its monthly natural gas bill of EUR 0.04. For households consuming 250 m3 of natural gas per month, the monthly natural gas bill will increase by 1 percent or EUR 2.43. Meanwhile, for legal entities, the tariff increase will amount to around 1.1 percent increase in the monthly natural gas bill. Moreover, in the coming year, as the price of natural gas drops, the impact of the tariff increase will be less felt by the end-user. After the tariff change, the natural gas bill for legal entities in Latvia will be roughly on a par with Lithuania and lower than in Estonia.

"In circumstances where the cost of maintaining the transmission system is independent of the volume of natural gas transported, a tariff increase is inevitable as the volume of natural gas consumption decreases. Overall, we have succeeded in ensuring that the draft tariffs presented will have the lowest possible impact on the final bills of natural gas consumers. This is largely balanced by the upgrading work carried out in the past, including at the Incukalns Underground Gas Storage, which has significantly reduced the impact of material and service price increases on the transmission tariff. For example, the cost savings achieved by introducing compression withdrawal from natural gas storage allowed to reduce the cost of required gas reserves and thus offset the inflationary increase in other costs," informed Uldis Bariss, Chairman of the Conexus Management Board.

At the same time, Bariss emphasised that Conexus continues to invest in both long-term investment projects and the day-to-day maintenance of natural gas infrastructure facilities.

It is planned that before the tariff is approved, users will have the opportunity to get acquainted with the draft tariff, as well as to provide suggestions and recommendations.

Conexus Baltic Grid is a unified natural gas transmission and storage system operator in Latvia. The company manages the Incukalns underground gas storage, which is an important strategic object for the Nordic-Baltic region and one of the most modern natural gas storage facilities in Europe. Its 1,188 km natural gas transmission network connects the Latvian natural gas market with Lithuania, Estonia and Russia.

Conexus belongs to Augstsprieguma Tikls (68.46 percent) and MM Capital Infrastructure Fund managed by Japan's Marubeni (29.06 percent).