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JSC Sadales tīkls Electricity market update in Latvia

June, 2014

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Strategic goals of Latvian energy sector

Integration into EU energy market

Creation of common Baltic and Nordic

Energy market – Baltic energy market

interconnection

Liberalization of national energy market

from 2007 – in compliance with EU

directives

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OPERATING

PLANNED

850 MW

700 MW

Development of electricity network interconnections

Interconnections with Sweden,

Finland, Poland and Baltics

Market integration will enable

equal and transparent electricity

trading rules and effective

competition

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Sadales tīkls – leading electricity provider in Latvia

JSC Sadales tīkls is a part of state-owned power supply utility group Latvenergo

Reliable electric power supplier for households and business:

all seasons, any weather conditions

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Key company indicators

Total length of electricity distribution networks: 94 701 km

Employees: ~ 2 500

Turnover: 298 417 747 EUR

Ranked No. 3 in Companies Reputation Survey in Latvia (energy sector)

Ranked No. 59 in Companies Reputation Survey in Latvia (all business sectors)

Long-term business targets:

• implementation of a fully isolated electric network across Latvia;

• shift to smart technologies;

• significant improvements in management quality – the lowest level of

losses in distribution networks in the Baltic States.

Customers and open market structure

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Consumption 6 500 GWh: 75% business / 25% households

900 000 customers: 10% business / 90% households

24 000 business

customers from

2007

870 000 households

will join in 01/2015

75%

25%

Electricity traders: 21

Electricity traders: 4

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Business

Consumption falls in production sector

28%

25%

29%

9%

2%

7%

Consumption in 2013 by sectors

Consumers

Production

Non-production

Trade

Agriculture

Others

Consumption trends 2012 vs 2013

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Total consumption in GWh remains at the same level

4 062 3 869 3 650 2 431 1 758

2 081 2 510 2 549 4 038 4 688

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

2009 2010 2011 2012 2013

Regulated tariff customers Market customers

Changes in structure of electricity suppliers

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JSC Augstspriegumu tīkls is not the only supplier anymore

The number of local electric power plants and their output is growing

224 252

292

361

396 410

0

50

100

150

200

250

300

350

400

450

2010 2011 2012 2013 2013 01.06.2014

Local producers, number of stations

6 320 6 018 6 017 5 696

522 628 883 1 112

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

2010 2011 2012 2013

Local producers vs Augstsprieguma tīkls, GWh

from Austrsprieguma tīkls from local producers

Market opening date postponed

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21st of January 2014

All the legal basis necessary to open the market is approved:

• Amendments to the Electric Energy Market Law – the market is open as of

April 1, 2014

• Cabinet of Ministers regulations

3rd of March 2014

The market opening date is postponed => 1st of January 2015

The issue: electricity price compensation mechanism for low-income clients

Households

Latvia has the most customer friendly market model

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Estonian model as a prototype

Recommendations of industry professionals for the market model: • NORDREG – single bill, single contract and trader’s centralized model

• EURELECTRIC – trader as the central contact point

• EC & ACER – single bill

Households Households

LATVIA ESTONIA

Trader provides:

• Single bill

• Single contract

• Single client service

Trader provides:

• 2 contracts:

• 1 with trader

• 1 with supplier

• 2 bills

• Trader may not provide customer service

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Traders’ interest for households is high

Prior to market opening early in March: offers from 3 traders

Now: 4 traders

Traders mainly plan to compete with service, not prices

• 6 different tariff plans

• Possibility to buy electricity

for stock market prices

• Self-service portal = lower

prices

• Internet users as a main

target group

• Self-service on the portal

Packages: electricity +

Internet+ phone 4 tariff plans

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Infrastructure holder gets market communication function

Partner of traders

- ensures equal conditions for all

electric energy traders

- IT solution: a portal for traders

Adviser for costumers on new

market principles

− ad campaigns

− communication activities in

partnership with stakeholder

institutions and traders

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Industry trends in Latvia

• Energy efficiency and innovations

• Synergy between offers of IT and electric energy sectors

• Safety and energy independence of the state

• Growing need to educate consumers about opportunities

and offers of electric energy sector

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Thank you!

http://www.sadalestikls.lv

http://www.e-st.lv

E-mail: st@sadalestikls.lv

Tel.: +371 67726000

Address: Smerla iela 1, Riga, LV-1160, Latvia

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