RIGA - Latvia's state-owned utility Latvenergo announced June 22 that it has opened a subsidiary in Estonia to sell electricity in the neighboring market, a major step toward instilling competition in the region's energy market in accordance with EU directives.
Latvenergo Kaubandus will sell electricity on the Estonian market as soon as it receives a license, which it expects at the end of this summer.
Latvenergo spokesman Andris Siksnis said the company wants to maximize opportunities from the liberalization of the regional electricity markets, which are undergoing deregulation as part of membership in the European Union.
Siksnis said the adjustment in the market, a range of users choosing among a wider variety of suppliers, will require a couple years but that it was necessary for the company to position itself from the start.
The trend moves in both directions. Estonia's utility, Eesti Energia, has announced it would enter the Latvian market on July 1 with its firm, E.Energia. The company said it already has two clients: the Estonian Embassy in Riga and the Severstallat metal working company.
Initially, Latvenergo Kauban-dus will focus on buying power from small producers in Estonia, and later the company will start selling electricity to consumers as the market opens up.
Latvenergo believes that creating Latvenergo Kaubandus will enable the company to optimize power purchases from small energy producers and thus facilitate competition among market players, Siksnis said.
Latvia is also opening its electricity market as of July 1.
Another requirement will be to complete the legal separation of power transmission and distribution operators and to provide access to electricity transportation infrastructure for third parties.
Latvenergo said it was prepared for the process. Augstsprieguma Tikls, a legally independent entity, has been set up to operate the transmission system, while distribution system operator Sadales Tikls is expected to launch operations from July 1.