According to amendments to the Regulation No 221 approved by the Cabinet of Ministers of the Republic of Latvia on 30.07.2013 a support mechanism for electricity generation in CHP plants is changed. Consequently, the energy component, i.e. the electricity generation variable cost over the market price will not be compensated for Latvenergo AS CHP plants; however, capacity payment will be maintained at adjusted levels.

Capacity payment for Latvenergo AS CHP plants is logical and justified as CHP plants ensure more efficient fuel use in cogeneration mode thereby conserving the environment, as well as provide security of energy supply in cases where it can occur large-scale power outages or the electricity import price increases rapidly.

Thus, reduction of support envisaged by amendments to the Regulation No 221 of the Cabinet of Ministers will facilitate safe, continuous and uninterrupted functioning of power supply at national level, at the same time trying not materially negatively influence operation of CHP plants.

Latvenergo AS plans to adjust its CHP plants operation modes not to have material negative impact on Latvenergo Group financial results due to made changes to the support mechanism. It means that in unfavourable electricity and natural gas market conditions CHP plants will be operated to a lesser extent thus reducing the fuel costs.

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

www.latvenergo.lv/investors/eng

About Latvenergo:

The Latvenergo Group is the largest power supply merchant in the Baltics, engaging in electricity generation and trade as well as providing electricity distribution and management of transmission system assets. Latvenergo holds one-third of the entire Baltic electricity market. Latvenergo AS has been acknowledged as the most valuable company in Latvia for several years in a row. International credit rating agency Moody’s has assigned Latvenergo AS an investment-grade credit rating of Baa3/stable.

The Latvenergo Group includes the parent company Latvenergo AS (electricity generation and trade, thermal energy generation) and its subsidiaries Latvijas elektriskie tīkli AS (management of transmission system assets), Sadales tīkls AS (electricity distribution), Elektrum Eesti OÜ (electricity trade in Estonia), Elektrum Lietuva UAB (electricity trade in Lithuania) and Liepājas enerģija SIA (thermal energy generation and trade, electricity generation), as well as Elektrum Latvija SIA, a subsidiary of Elektrum Eesti OÜ.