RIGA - Start tightening your belt, as another round of stiff price hikes is on the way and set to hit Latvian businesses and consumers in 2008.
Latvia's electric utility Latvenergo wants to raise prices by 25 - 27 percent next year, reports business daily Dienas Bizness. Gas utility Latvijas Gaze is planning on increasing tariffs by 40 - 50 percent from May, 2008, and public transportation fares in the capital Riga are going up by 33 percent, to 0.57 euros a ride next year, on top of a 50 percent jump just last February.
"The intention is to hike tariffs by 25 - 27 percent on average, depending on the voltage," says Latvenergo board member Uldis Bariss, and "Unfortunately, the category of consumers that uses higher voltage will be paying more."
If the Public Utility Commission approves the plan, Latvenergo will raise its tariffs from January 1 next year. Bariss explained that electricity tariffs are made up of three main components, which are infrastructure costs, mandatory purchase [of electricity] requirements, and the cost of power itself.
Electricity prices are going up despite competition in the marketplace. E.Energy, a subsidiary of Estonia's electric utility Eesti Energia and operating in the Latvian market, says that to a large extent the price of electricity itself is pushing up the tariffs in 2008.
E. Energy project manager Aivars Tihane said that his company also is set to raise tariffs. He declined to give exact figures, but said that their prices would be lower than those of Latvenergo.
The last change in electricity tariffs was on January 1, 2007, when electricity bills increased by 6 percent for consumers, and by 18 percent for business customers. The main reasons for the tariff hike were the increase in imported electricity prices and additional costs in Latvenergo's capital investment program. Latvenergo generates power at its two thermal power plants in Riga and three hydroelectric plants on the Daugava river. To make up for shortages, electricity is imported from Estonia, Russia and Lithuania, though surplus Lithuanian electricity will end when the Ignalina nuclear power plant shuts down in 2009.
Latvijas Gaze is set to submit its proposals for price increases by the end of this year, after it signs an agreement for its own gas supplies with Russia's Gazprom.
Earlier Aris Zigurs, board chairman at Rigas Siltums municipal heating utility, said that thermal power would go up in price 's by 33 percent 's if natural gas prices were to increase by 50 percent. "We are already asking the regulator for permission to increase heating tariffs beginning February 1, 2008, but it is clear that this will not be the only hike in heating charges in 2008," he said. Taking a ride to work on the bus will cost more starting in the new year, as public transport fares in Riga will go up due to a shortfall in the operating budget.
Riga City Council transport department spokeswoman Ieva Praulina said that a ticket price hike is needed because, though the government has allocated 10.8 million euros and Riga City Council has earmarked 63.8 million euros in public transport subsidies for next year, this is still insufficient to pay for all services and to guarantee discounts for certain social groups. At present only 30 percent of passengers pay full ticket prices.
