PUK: last year, in general, the number of changes in electricity supplier and type of contract for households was low: building.lv

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The level of electricity prices included in electricity trading contracts between households and legal users remains different, the change of electricity trader and type of contract remains low. The Public Service Regulatory Commission (SPRK) explains the trends of the electricity market in the 4th quarter of 2023 and last year as a whole, and also invites households to review the contracts concluded on the fixed price of electricity in order to experience a reduction in the price of electricity on the exchange in their bills.

Both rising and falling price trends have been observed for electricity prices

In the past quarter, both upward and downward trends were observed in the next-day electricity price at the Nord Pool exchange. The decrease in prices in October was mainly due to an increase in wind energy development and the amount of precipitation in the Nordic countries, which was higher than the seasonal norm. On the other hand, in December, the decrease in prices was facilitated by higher air temperature and the development of wind energy, as well as lower natural gas prices and longer holidays in the second half of the month, which significantly reduced electricity consumption in the region.

Change of electricity trader and type of contract still low

Both households and legal users have the opportunity to choose the most suitable offer for their consumption, including both the electricity trader and the type of contract – for a variable price (linked to changes in the stock exchange) or a fixed price (fixed for a certain period of several months, usually there is a penalty for early termination of the contract) . In addition to these two mentioned types, households can also receive the universal service (fixed price for 12 months, typically more expensive than other offers at the time, no penalty for early termination of the contract).

Comparing the 4th quarter of 2023 with the identical period of 2022, the share of fixed-price contracts in the household segment increased (+8%), reaching 73%, while in the legal user segment it decreased (-7%) to 48%. Meanwhile, the share of variable or exchange price contracts increased (+3%) in the household segment to 15%, while in the legal user segment it increased (+7%) to 52%. On the other hand, the share of universal service among households decreased slightly to 12%. At the same time, last year there was a generally visible trend that the number of fixed and variable price contracts among households increased, while the number of universal service contracts decreased.

On the other hand, looking at the merchant switching indicator, a total of 27% of legal users switched merchants in 2023, which is approximately the same as in 2022. Meanwhile, in the household segment, the dealer switching rate decreased (-2%) in 2023 – only 4% did it. This could be explained by the fact that a relatively large proportion of households have a fixed-price contract with an early termination fee, which discourages switching traders.

The level of electricity prices in the Latvian retail market is different, it is affected by the concluded contracts

According to the weighted average price of electricity calculated by PUK, which reflects the average price level concluded in the contracts in Latvia, already from the beginning of 2023 there was a trend that there was a difference between the price of electricity for households and legal users. Positive – in the 4th quarter, compared to the 3rd quarter of the same year, the difference decreased by 6.00 EUR/MWh.

Therefore, the average weighted price of electricity calculated by PUK in the 4th quarter of 2023 in the household segment was 157.16 EUR/MWh (-9% compared to the 4th quarter of 2022) and in the segment of legal users – 125.96 EUR/MWh (-32 % against the 4th quarter of 2022).

“Such a difference is related to the proportion of different types of contracts in the relevant user segments, as well as the time and terms of their conclusion. Accordingly, a large number of households that signed contracts at a time when prices were high have fixed this price level for a longer period and do not feel the impact of the electricity price reduction on the exchange on payments. Therefore, it is useful for household users to consider whether it would be more beneficial to terminate the existing contract by entering into a new fixed or exchange price contract, in which the price of electricity would be lower,” explains Jānis Negribs, Director of the Energy Department of PUK.

The fee for the early termination of the existing contract will be different for each person, depending on the conditions of the concluded contract and the remaining term, therefore the possibility of revision of the contract must be evaluated individually. For users with higher consumption, it may be more profitable to terminate the existing contract by paying the contract early termination fee, thus not continuing to pay the previously fixed high price of electricity. This would also allow you to lower your overall monthly bill. In case of universal service, there is no early termination fee. It is also possible to change the dealer, choosing the most suitable offer for you.

In the Baltic countries, electricity consumption increased, the amount produced decreased

The total electricity consumption of the Baltic States increased by 4% in the 4th quarter of 2023 compared to the same period in 2022. On the other hand, the amount of electricity produced in the Baltic States was 4% lower. In Latvia, electricity production increased by 1%, in Lithuania by 46%, but in Estonia it decreased by 39%.

Latvia covered 77% of its electricity consumption in the 4th quarter of 2023. Looking at the types of electricity production, production increased by 14% in wind power plants and by 60% in hydroelectric power plants, while production volumes in cogeneration plants decreased by 30%. The increase in the amount of electricity produced by hydropower plants can be explained by a higher inflow of water due to precipitation and snowmelt, especially in December, when the average daily air temperature and precipitation were higher than normal.

Latvia’s electricity import and export decreased

Comparing the 4th quarter of 2023 with the identical quarter in 2022, electricity imports decreased by 3% and exports by 5%. Since the amount of imported electricity (1,148 GWh) exceeded exports (671 GWh), the foreign trade balance, or trade surplus, was negative: -477 GWh.

The data for the 4th quarter of 2023 can be found in more detail in the PUK interactive infographic.

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