Annual Report on Electricity and Natural Gas Markets of the Republic of Lithuania to the European Commission
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Annual Report on Electricity and Natural Gas Markets of the Republic of Lithuania to the European Commission Prepared by: National Commission for Energy Control and Prices Vilnius, 2016 2 Table of content 1. PREAMBLE ................................................................................................................................. 7 2. MAJOR DEVELOPMENTS IN ELECTRICITY AND NATURAL GAS MARKETS ............. 9 2.1. Electricity sector .................................................................................................................... 9 2.1.1. Unbundling of vertically integrated companies .................................................................. 9 2.1.2. Security of supply ............................................................................................................... 9 2.1.3. Competition in electricity supply market and market supervision ............................ 10 2.1.4. Preparation of legislation implementing the Law on Electricity ...................................... 13 2.1.5. Pricing of regulated activities, setting transportation prices and connection fees ............ 13 2.1.6. International cooperation .................................................................................................. 17 2.2. Gas sector ............................................................................................................................. 20 2.2.1. Unbundling of vertically integrated companies ................................................................ 20 2.2.2. Substantial changes in the natural gas sector price regulation ......................................... 21 2.2.3. Formation of competition in the natural gas supply market, key changes in the monitoring of the gas market of 2015 ........................................................................................................... 23 2.2.4. Monitoring of the natural gas market ............................................................................... 26 3. ELECTRICITY MARKET ......................................................................................................... 27 3.1. Network regulation .............................................................................................................. 27 3.1.1. Unbundling ....................................................................................................................... 27 3.1.2. Technical functioning ....................................................................................................... 28 3.1.3. Network tariffs for connection and access ........................................................................ 33 3.1.4. Problems of cross-border trade ......................................................................................... 35 3.1.5. Compliance with legal acts ............................................................................................... 37 3.2. Promoting competition ........................................................................................................ 38 3.2.1. Wholesale market ............................................................................................................. 38 3.2.1.1. Monitoring the level of prices, transparency, efficiency of market opening and competition, Articles 37(1)(i), (j), (k), (l), (u) and 40 (3) ........................................................... 38 3.2.2. Retail market .............................................................................................................. 39 3.2.2.1. Monitoring the level of prices, transparency, efficiency of market opening and competition, Articles 37(1)(i), (j), (k), (l), (u) and 40 (3) ........................................................... 39 3.2.2.2. Recommendations on supply prices, market research and application of measures for promoting efficient competition ................................................................................................. 41 3.3. Security of supply (if and to the extent in which the Regulator is a competent authority) . 42 3.3.1. Monitoring the supply and demand balance ..................................................................... 42 3.3.2. Monitoring investments in generation capacities related to security of supply ................ 42 3.3.3. Measures to cover peak demand or shortage of suppliers ................................................ 44 4. GAS MARKET .......................................................................................................................... 44 4.1. Network regulation .............................................................................................................. 44 4.1.1. Unbundling of the vertically integrated undertakings ...................................................... 44 4.1.2. Technical functioning ....................................................................................................... 47 3 4.1.3. Network and LNG tariffs for access and connection ........................................................ 52 4.1.4. Cross-border issues ........................................................................................................... 61 4.1.5. Compliance with legal acts ............................................................................................... 69 4.2. Promotion of competition .................................................................................................... 70 4.2.1. Wholesale market ............................................................................................................. 70 4.2.1.1. Monitoring the natural gas price level, transparency, open market and competition efficiency in the wholesale market ............................................................................................. 70 4.2.2. Retail natural gas supply market ....................................................................................... 73 4.2.2.1. Monitoring the natural gas price level, transparency, open market and competition efficiency in the retail market ..................................................................................................... 73 4.3. Security of supply ................................................................................................................ 78 4.3.1. Gas supply and consumption ............................................................................................ 78 4.3.2. Projected future natural gas consumption ......................................................................... 79 4.3.3. Measures to cover peak demand or shortage of suppliers ................................................ 80 5. CONSUMER PROTECTION AND DISPUTE RESOLUTION IN ELECTRICITY AND GAS SECTORS .......................................................................................................................................... 80 5.1. Consumer protection ............................................................................................................ 80 5.2. Examination of enquiries ..................................................................................................... 82 4 List of tables Table 1. Electricity transmission and distribution service price caps for 2011–2016 (ct/kWh) ........ 13 Table 2. Connection fees of consumer electrical equipment to electricity networks (100 percent), EUR exclusive of VAT ............................................................................................................................... 15 Table 3. Connection fees of consumer electrical equipment to electricity networks for household and socially vulnerable** consumers, EUR exclusive of VAT................................................................ 16 Table 4. Connection fees of consumer electrical equipment to electricity networks for other consumers ***, EUR exclusive of VAT ............................................................................................ 16 Table 5. Performance of AB Energijos Skirstymo Operatorius transmission reliability quality indicators in 2015 ............................................................................................................................... 30 Table 6. Comparison of AB Amber Grid transmission service price caps in 2015 and 2016, EUR/MWh/day/year .......................................................................................................................... 56 Table 7. Calculation of a price ratio of unit of capacities at cross-border and domestic point .......... 57 Table 8. Change of distribution price caps in 2009–2016, EUR/MWh ............................................. 59 Table 9. Comparison of an average connection rate for Group II household customers ................... 61 Table 10. Technical capacities and their use at cross-border points .................................................. 62 Table 11. Impact of investment projects approved in 2015 on the transmission price ...................... 66 Table 12. Investment projects in the distribution activity approved in 2015 ..................................... 68 Table 13. Structure of the wholesale natural gas supply market in 2012–2015, GWh ...................... 71 Table 14. Natural gas tariffs for household consumers (inclusive of VAT), EUR ............................ 75 5 List of figures Figure 1. Sales market structure on electricity exchange by companies, in 2014–2015 ................... 10 Figure 2. Electricity purchase structure on the exchange by