A discussion has currently re-emerged about the model of unbundling of the transmission system asset ownership.

According to Directive 2009/72/EC, the European Union Member States had to choose and introduce one of the three models of unbundling of the transmission system asset ownership from 3 March 2012:

1) full ownership unbundling;

2) an independent system operator; or

3) an independent transmission operator.

All these models are considered equally effective in terms of both legal framework and market development as they are in line with the fundamental regulatory goal of Directive 2009/72/EC: removing any conflict of interests between transmission system operators and producers and traders.

An independent system operator model was introduced in Latvia, which, in assessing the impact on the state budget, market development, end consumers and other stakeholders, was chosen as the most optimum to manage in 2011. The existing transmission operator unbundling model was certified by the Public Utilities Commission (PUC).

As a result of the selection of the model, the transmission system assets are invested in Latvijas elektriskie tīkli AS (LET), while LET leases assets to the transmission system operator (Augstsprieguma tīkls AS). The lease payment is calculated according to the methodology set by PUC and the ownership of the transmission system assets, or the implemented asset unbundling model, does not affect the transmission tariffs paid by the end user of electricity. Latvijas elektriskie tīkli AS is a subsidiary of Latvenergo AS, which provides monitoring and management of Latvian power transmission network assets, as well as fund raising for the maintenance of existing transmission networks and the construction of new ones. In 2018, the revenue of Latvijas elektriskie tīkli AS was EUR 43.3 million, the profit was EUR 13.4 million and the assets at the end of 2018 were EUR 551 million. 

The choice of the most optimum model of unbundling of the transmission system asset ownership is within the competence of the Ministry of Economics and the Cabinet of Ministers. The Ministry of Economics has expressed the view that it is necessary to move towards the introduction of a full ownership unbundling model and to consider the most appropriate way of unbundling. Latvenergo AS will implement, in the most effective way, the necessary steps in regard to changes in the unbundling model, if accepted by relevant institutions.

Additional information:
Jānis Irbe
Group Treasurer
Phone: +371 67 728 239
E-mail: investor.relations@latvenergo.lv

www.latvenergo.lv

About Latvenergo

Latvenergo Group is one of the leading energy suppliers in the Baltics operating in electricity and thermal energy generation and trade, natural gas trade, electricity distribution services and lease of transmission system assets. Latvenergo AS has been acknowledged as the most valuable company in Latvia for several times. International credit rating agency Moody's has assigned Latvenergo AS an investment-grade credit rating of Baa2/stable.

Latvenergo Group is comprised of the parent company Latvenergo AS (generation and trade of electricity and thermal energy, trade of natural gas) and seven subsidiaries - Latvijas elektriskie tīkli AS (lease of transmission system assets), Sadales tīkls AS (electricity distribution), Elektrum Eesti OÜ (trade of electricity and natural gas in Estonia), Elektrum Lietuva UAB (trade of electricity and natural gas in Lithuania), Enerģijas publiskais tirgotājs AS (administration of mandatory electricity procurement process) and Liepājas enerģija SIA (generation and trade of thermal energy in Liepaja, electricity generation). All shares of Latvenergo AS are owned by the state and held by the Ministry of Economics of the Republic of Latvia.