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2021.06.18 15:05

Price for gas and electricity set to balloon in Lithuania – what’s behind the hike?

Gabrielė Sagaitytė, LRT.lt2021.06.18 15:05

In July, the price for electricity is set to go up by 8 percent, while the cost of gas is set to hike by 26-50 percent. What’s behind the increase?

“The changing costs are mostly influenced by the electricity price having gone up by more than 18.77 percent in the Nord Pool electricity market, which VERT has taken into consideration [...],” said Ignitis Group, a state-controlled energy holding company.

Some 1.36 million of Ignitis Group clients should expect to pay an additional 1.16 euro for 100 kWh of electricity. Meanwhile. households using up to 300 cubic meters of gas should expect to pay additional 0.59 euros, and the price will go up by 14 euros for those consuming up to 20,000 cubic metres.

While the growing gas costs were largely influenced by the changing prices in European gas markets, the subsiding Covid-19 pandemic as well as emptying European underground gas storage facilities all contributed to the change, according to Ignitis.

“Rates that come into effect on July 1 were recalculated solely due to changes in the market, meaning that it depends on gas products present in international markets, prices within power markets, and futures contract forecasts,“ says Renatas Pocius, chairman of the National Energy Regulatory Council (VERT). “In other words, the regulated portion is not recalculated mid-year. Both natural gas and electricity rates are currently increasing because of the growing cost of the product itself.”

The cost for consumption of up to 300 cubic meters of gas will go up by 26 percent, from 0.50 to 0.63 euros per cubic metre, with a fixed rate of 0.56 euros. For households consuming up to 20,000 cubic meters for gas, the price will increase by 46.4 percent, from 0.28 to 0.41 euro, and the costs for consumption of over 20,000 cubic meters will go up from 0.26 to 0.39 euro, with fixed rate remaining as 3.99 euros.

Clients with minimal gas consumption plans have been witnessing an increase in tariffs since January, while households with different plans paid the same amount or less.

Ignitis’ most popular ‘Standard’ single time interval tariff is set to go up by 7.8 percent to 0.152 euros per kilowatt-hour (including VAT), while the dual time interval tariff will reach 0.177 euros per kilowatt-hour for daytime, and 0.106 euros per kilowatt-hour for weekends and nighttime.

Electricity price is set to increase from 0.4240 to 0.5036 euros per kWh. According to VERT, the change is determined by growing costs for future transactions, emission allowances, and raw materials.

Government does not set prices

Earlier in June, Prime Minister Ingrida Šimonytė also commented that politicians have no control over electricity and gas prices since they are set by an independent regulator.

“When setting the prices, these institutions do not depend on the government and the government doesn’t interfere in the process,” she said, adding that the country provides financial support if people are unable to afford the costs.

“But the government definitely does not interfere in the setting of prices. That’s why an independent regulator was created, so there would be no interference,” said Šimonytė.

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