In the Seimas, passions for the prices of electricity and gas: I had to give explanations of why the price is rising

Renatas Pociai, president of the State Energy Regulatory Council (VERT), was invited to the meeting by the opposition faction of the Union of Peasants and Greens of Lithuania (LVŽS) to explain the increase in electricity and gas prices .

It has already been announced that the price of electricity will increase by an average of about 8% for most consumers starting in July, gas for households between 26 and 50% and the largest price increase, for those that consume greater amounts of gas.

The LVŽS faction criticizes the government for not interfering in the process and because the state energy companies “only seek profit and do not pay attention to how the population lives.” The rates are approved by VERT based on the data provided by the companies. The group also warns that rising electricity and gas prices will lead to higher prices for other goods.

However, R. Pocius assures that the price increase has objective reasons: they have to pay more for the gas and electricity purchased because their import price has increased.

Those who pay according to the single time zone “Standard” plan will no longer pay 14.1 cents, but 15.2 cents per kilowatt-hour for electricity. Rates for two time zones: 10.6 cents for nighttime electricity (through July – 10 cents) and 17.7 cents for daytime electricity (through July – 16.1 cents).

The costs of a standard home, which consumes an average of about 100 kWh of electricity per month, will increase by about 1.16 euros, Ignitis previously calculated.

A cubic meter of gas, which costs 50 cents, will rise to 63 cents from July, but the fixed part will not change: 56 cents, according to VERT decisions.

Pocius: We cannot determine the prices of purchased gas and electricity

The president of VERT, R. Pocius, assured that the majority of consumers will feel such a price increase. Bills for gas consumers will increase by about 59 cents per month, and for electricity, by 1.2 euros.

It explains that the rates have several components, but no component has changed since July related to gas or electricity distribution networks or other infrastructure – the price increase was mainly due to higher gas and electricity prices in the market – these Energy resources are bought and imported.

“The question is really relevant to everyone: consumers, as well as politicians, as well as the regulator, are not happy about raising rates, but it is as it is,” sighed R. Pocius.

It ensures that the natural monopolies in the market do not receive higher profits – their rates are not modified, since they are generally reviewed once a year – before the beginning of the next year.

“We cannot influence or determine the price of gas as a product in any way. (…) In fact, we had a pretty good time in terms of prices, because during the pandemic, in 2020, not only DGs, but also the prices of all raw materials in general, as well as oil, had even reached negative levels. Gas costs 5 euros per megawatt hour in Lithuania, but the economy is gradually recovering and demand is growing. According to the latest data, today the price of gas has already reached 25 euros per MWh. In April, the price increased more than 5 times “, says R. Pocius.

This price increase, he said, is reflected in the price of gas.

“Even though gas costs 25 Eur per MWh on the market today, when calculating rates, we estimate the expected price at 20.6 Eur per MWh,” says R. Pocius.

Gas is becoming more expensive on the market due to the prolonged cold winter in Europe, the recovery of the Chinese economy and the transportation of LNG cargo there; supply in Europe is declining, said the VERT president.

It ensures that even the increase in gas prices for the population is still lower than in 2019.

457 thousand consumers are in the first group, their average bill is currently € 3.42 per month, 59 cents more after July.

145 thousand Consumers heat their homes with gas, their average bill is currently 48 euros per month, for them gas will cost them 14 euros per month.

“Our consumers of natural gas pay one of the lowest prices in the EU. The first group, who use gas in stoves, pay almost 60 percent. Less than the EU average. And when it comes to those who heat their homes with gas, we pay practically the cheapest in the EU, like Latvians, 54 percent, less than the EU average, “said R. Pocius.

At that time, electricity rates are increasing more moderately, which, according to the VERT president, is also determined by changes in the price of purchased electricity; this cannot be controlled.

“As you can see, the tariff is growing by 8.7 percent, the share of the purchase price growth was 6 percent. A very small part of the growth was due to the adjusted structure of consumers, because part of it went to independent suppliers, ”said R. Pocius.

He highlighted that electricity prices in the markets have risen 19 percent, due to more expensive pollution permits and energy resources used in generating electricity.

For a “standard” plan used by 80% of consumers, the increase would be around € 1.2 per month, with these consumers consuming an average of around 112 kWh per month. (…) Our domestic consumers pay one of the lowest emails. Tariffs throughout the EU and the smallest pay more than 47%. less than the EU average, and the largest households pay 40%. lower than the EU average. Even this increase presupposes that our consumers pay one of the most favorable prices in the entire EU, ”said R. Pocius.

He asked if he remembered that prices would change by 50 percent.

Members of the Seimas working in the LVSS faction asked R. Pocius sharp questions.

“Historically, do you remember the time when prices went up 50%? Was there such a period in the history of Lithuania that there would be such a drastic appreciation? We had several crises ”, Arvydas Nekrošius was also surprised.

The president of VERT explained that the high percentage is due to the fact that it is calculated from the previous extremely low tariff base, since there have not been such record low prices either.

“In the markets, the import price has lagged behind those prices, the growth percentage may seem high enough, but if we look at the rates that have historically been applied to domestic consumers, they are lower than those paid. by domestic consumers in the pandemic period, “Pocius explained.

Lukas Savickas was concerned about VERT’s approach: “If prices are low, can they be increased?”

He also asked why growth doesn’t spread over a longer period of time, like 3 or 5 years. R. Pocius explained that there is almost no possibility of extension, at that time additional interest would have to be paid and eventually consumers would pay even more.

“It just came to our attention then. Historically we have had the lowest prices and until today the growth that has been, is the one that is maintained and does not exceed the previous level. But that does not mean that we were in a hurry to raise prices. due to low prices. It is not an easy decision and we imagine that we will receive criticism from politicians, people and the immediate environment. But there is an independent regulator for that, who must make decisions based on objective reasons “, said R. Pocius .

Aušrinė Norkienė, the president of the LVŽS faction, said she was concerned about the situation due to the increase in the price of electricity.

“Seeking such gains at a time when unemployment is so high is not only very insensitive, but also socially unjustified. It is clear that rising prices will inevitably hit low-income people first, who have no opportunity to heat their homes other than with gas. Meanwhile, the government does not speak of reimbursing the expenses incurred by the underprivileged, nor of benefits or other assistance for these people, ”says LVŽS elder A. Norkienė.