The tariff for supplying natural gas users in Latvia will decrease by 4,9%

The unified natural gas and transmission operator JSC “Conexus Baltic Grid” (Conexus) informs that the fee for the use of exit point for the supply of natural gas users in Latvia will decrease by 4,9%, reaching 2.004 €/Mwh from 1 October 2020 to 30 September 2021. The tariff reduction was affected by the successful auction on the storage of natural gas in Inčukalns Underground Gas Storage (Inčukalns UGS) in the event of an energy crisis or national threat for 2020-2021, as well as the creation of the unified natural gas market.

The tenders received during the auction that was arranged this year on the possibility to ensure the storage of natural gas in the event of energy crisis and national threats exceeded the required auction volume by about 2 times compared to 2019, thus significantly reducing the total costs of the auction. The high interest in the auction was facilitated by the opening of the unified natural gas market on January 1 this year, which has attracted the users of natural gas system from Finland and Estonia to use the services of Inčukalns UGS services for their needs. The auction costs are part of the costs included in the natural gas tariff, resulting in a reduction in the tariff for the use of the exit point to the Latvian transmission system, reaching 2.004 €/MWh in the following season.

Zane Kotāne, Chairperson of the Board of JSC “Conexus Baltic Grid”: “The good results of this year show that auction is a way not only to ensure the compliance with Cabinet Regulations, which require continued availability of natural gas in certain circumstances of complexity, but this is also a mechanism to ensure predictability and stability. At the same time, the auction results demonstrate the need to create a unified market, as it makes Inčukalns UGS more accessible to transnational users, the use of its infrastructure becomes more efficient and competition in the market is generally enhanced. If such interest were to remain in the future seasons, the users of Latvian natural gas system will also benefit in the long term."

In accordance with the Cabinet Regulations "Procedures for the Supply of Energy Users and Sale of Heating Fuel During Declared Energy Crisis and in Case of Endangerment to the State", Conexus must ensure that 2 845 000 megawatt-hours (MWh) of active natural gas are stored at Inčukalns UGS from the start of the removal season until 1 March 2021.