From January 1, electricity will become the item which, like all other goods or services, will be selected and the provider will be chosen only by the consumer of electricity. During the first stage, the competition-based market will first of all be entered by those consumers which consume over 5 thousand electricity kilowatt hours (kWh) a year. NERC will not control approximately half electricity price in one kWh, another part (strategic state energy maintenance cost expenses) will still be established by the National Energy Regulatory Council (NERC).
Electricity price is comprised of many components: electricity sale, distribution, price components of SCPI (services corresponding to public interests), taxes and levies – very similar to the price of a litre of fuel as the price of fuel itself (as an item) in the whole price of 1 litre forms only a certain part, everything else is formed of state taxes, excise duties, fuel seller taxes, etc. The same is with electricity price – maintenance of electricity networks important to the state and the part of other services in electricity price makes about 52 per cent, and the part of electricity itself and the price of the service of its supply make about 48 per cent. Exactly this part will not be controlled by NERC, and the price of this part will be determined by the price of electricity exchange and the competition of electricity suppliers.
Such transformation in Lithuania has already happened to business clients. From 2010, NERC does not establish the electricity price for them. During the first quarter of this year, 92 per cent of electricity was purchased from electricity suppliers, the rest – purchased from the guarantee supply. According to the data of NERC, during the second half year of 2019, 27 suppliers of electric energy actively operated in Lithuania. [1]
"The residents of Lithuania really brightly experienced the competition of mobile network operators more than a decade ago, when the inter-competition began between many service providers. There was a change in the ratio of operator service quality and prices which was beneficial to consumers. Similar transformation should happen in the market of electricity suppliers, too. We can already see today that business clients can choose from not one ten of electricity suppliers. Some of them entered the market of private clients, too. Therefore it is possible that in slow process of changes, more and more suppliers will start offering their services to every resident of Lithuania", – states the managing director of ESO, Mindaugas Keizeris.
How will the electricity price change?
Although from 2021 NERC will control only about half of the price for electric energy kWh (infrastructure and systematic services provided by the companies Litgrid and ESO, the components of the price of SCPI), the role of NERC will stay really important. The specialists of the council will further attentively observe the market and transactions in electricity exchange Nord Pool so that consequent transition from monopolistic conditions, beginning with the residents consuming the biggest amount of electricity, does not put the consumers to trouble. But the latter ones will have to actively get involved when selecting the electricity supplier suitable to them.
"The consumer has to be interested, analyse the proposals of suppliers and finally decide. It is important for the consumer herself/himself to take the initiative. The price of electricity exchange is very variable, it is difficult to anticipate it – difficult but every consumer will be able to select the decision suitable to him/her: fixed electricity price, which can be bigger, but stable enough or regularly changing exchange price, which perhaps will be more favourable, but will vary more often. It is important for the consumer, when seeing and studying his/her electricity consumption, to assess the selection critically, but rationally. For example, if the price of electricity exchange is low at night and if the consumer has the plan related to the exchange price, then he/she can not only save, but at the same time reduce the consumption during the day", – says the chairwoman of NERC, Inga Žilienė.
The head of NERC hopes that in the process of slow prevalence of the competition of suppliers, the latter ones will offer not only yearly or monthly, but also week, day or even hour-based tariffs or plans for consumers. It is hoped that electricity suppliers will offer the consumers other complex proposals, too, related, for example, with the production of green energy or other services.
Consumer protection – guarantee electricity supply
For those who are not in time for selecting a new electricity supplier from the autumn of 2020, every resident will have the electricity supply from January 2021 guaranteed by providing the guarantee supply service as from January 1 public supplier will not supply electricity to those consumers, who consume the biggest amount of electricity, any more. Until the residents use the guarantee supply provided in the Law on electricity energy, they will settle for the services with ESO according to the price established in the law and comprised of the price of electricity exchange Nord Pool plus the supplement of 25 per cent.
"If today the component in electricity price of the public supplier makes 0.37 euro cent, then, if the resident uses the guarantee supply, it will approximately grow up to 1 cent for kWh. The final electricity kWh price will be tangibly bigger than the today’s price of publicly supplied 1 kWh. Therefore we encourage the residents to use the proposals of electricity suppliers and to choose the variant most corresponding to their needs so that there is no need of using the service of guarantee supply", – advises the chairwoman of NERC, I. Žilienė.
If socially vulnerable groups of residents do not manage to select the electricity supplier on time, a separate price of electricity energy guarantee supply will be calculated, which will be established by NERC till the end of the public supplier’s activity.
The website pasirinkitetiekeja.lt, where everyone will find the most important information about the possibility of selecting the electricity supplier by refusing the monopolistic conditions of public supply in Lithuania, was created for the convenience of residents.
[1] https://www.vert.lt/elektra/Puslapiai/leidimulicenciju-turetojai.aspx
