why do Latvian residents still overpay for heat?

Should be lower

This strange situation is noticeable not only to ordinary residents of the country, who again received huge bills in the winter, but even to the deputies of the Seimas. The other day this issue was discussed in the parliamentary commission on national economy.

According to deputies, tariffs should be lower than now, and residents should have the opportunity to timely predict their expenses during the next heating season. To achieve this, the methodology for calculating tariffs should be revised.

Should I be patient?

But the Public Services Regulatory Commission (PSRC), whose budget is formed from contributions from organizations controlled by the PSRC, stood up for the energy monopolists (what a surprise!). They say that they all submit draft new tariffs in advance, and their tariffs consist of 80% of the cost of purchasing energy resources. Well, if someone somewhere else is overpaying, then we must remember that tariffs are revised with a delay, so consumers have to be patient a little more, and everything will be fine.

Well, yes, of course, I would like the monopolists to somehow react faster to the decline in stock prices. For example, the cost of a megawatt-hour of gas in Europe a year ago, in March 2023, was 50 euros, and now it is 25–27 euros. At the same time, the cost of gas and heating in Latvia for the population decreased by only 20% over the year. Were you unable to recalculate tariffs at new prices during the year? Or do you just not really want to count?

Just need money

Well, some monopolists don’t look at the stock exchange at all, they need money, and they simply raise tariffs. As Gaso, the operator of the natural gas distribution system, did on January 1, 2024. For some categories of gas buyers, the Gaso tariff has increased by as much as 36%! As a result, throughout Europe, gas prices have decreased since the new year, but in Latvia they have increased.

Gaso management explained the increase in tariffs by the fact that natural gas consumption in Latvia has decreased significantly recently. According to the Central Statistical Office, compared to 2021, gas consumption in Latvia has decreased by 30%. That is, they decided to compensate for the losses not through more efficient work, but by raising prices.

Inadequately expensive

All of the above leads to the fact that energy resources in Latvia are still inadequately expensive in comparison with the income of the population.

Thus, according to Eurostat data for the first half of 2023, natural gas in Latvia for households cost 0.1262 euros per kilowatt-hour. Gas was more expensive only in four EU countries, and these are some of the richest EU countries – the Netherlands, Luxembourg, Sweden and Ireland. In Estonia, blue fuel cost 0.0879 euros per kilowatt-hour, in Lithuania – 0.0465 euros.

The situation with electricity is a little better. A kilowatt-hour of electricity in Latvia in the first half of 2023 cost 0.2521 euros. It was more expensive only in 11 EU countries. Apart from Romania, these are all much richer countries than Latvia. We won’t even mention them, and everything is clear.

In Estonia and Lithuania, electricity is naturally also cheaper than in Latvia.