As from March 2013 the JSC “Valmieras stikla šķiedra” has enforced a new method of electricity procurement for the period starting from Year 2014. The method is unique in the Baltic States yet at the same time common in Scandinavian countries. Within the framework of a new procurement approach several suppliers will simultaneously ensure electricity supply, incl. JSC “Latvenergo”, LLC “Enefit”, LLC “Inter RAO Latvia”; whereas the balancing services will be delivered by a sole supplier- LLC “Enefit” that will supply the volatile share of electricity consumption.

“Up to now JSC “Valmieras stikla šķiedra” has been purchasing electricity based on short or long term fixed price supply agreements. Considering that electricity expenditures is one of the most important cost positions for the company, our consultants suggested to apply more advanced and effective solution for the procurement purposes,” says Andris Oskars Brutāns, the chairman of JSC “Valmieras stikla šķiedra”. He admits that the new procurement method is tailor-made for JSC “Valmieras stikla šķiedra” specific needs and results both in reducing the electricity price fluctuation risks, as well as, in providing specified information to the shareholders about the principles of electricity price fluctuation management and that is of high importance for a public listed company. “Within the framework of the selected procurement model, the supplier of the balancing services will ensure that we purchase planned electricity volume for the respective hourly price listed on the electricity exchange, whereas, in the situation when electricity consumption is lower than expected – it will be bought back by the supplier,” says A.O.Brutāns.

The analysis of electricity procurement needs and respective electricity procurement processes has been developed in cooperation with energy consultants Prudentia Energy Markets that has created JSC “Valmieras stikla šķiedra” electricity procurement risk policy for the first time. Among a number of aspects the policy defines the strategy of managing the major risk – electricity price fluctuation. The chosen electricity procurement approach provides a possibility of gradual price fixing grasping the best moments and ensuring that the electricity cost is not overcharged. The increase of the Mandatory procurement component (green tax) starting with April 2013 results in growth of total electricity costs for JSC “Valmieras stikla šķiedra”. We have managed to reduce the pace of the growth by decreasing the costs of the electricity component,” explains Anna Ņikuļina, the business development manager at Prudentia Energy Markets.