Gas giant founds new company, immediately hikes prices

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After establishing a new company, Conexus Baltic Grid, on December 22, the Latvijas Gaze gas utility submitted to the Public Utilities Commission a draft plan for raising gas transmission tariffs, the company’s representative Dace Baltabola told the LETA news service.

She explained that although legally the draft proposal was submitted by Latvijas Gaze, the tariff plan would be applied by Conexus Baltic Grid, which has been set up to take charge of the gas transmission and storage system.

After the new tariffs are approved, they will be binding to all gas suppliers and users of the system who will want to supply natural gas to consumers in Latvia or use Conexus Baltic Grid to supply gas from/to other countries or the underground gas storage facility in Incukalns.

According to the proposals submitted to the regulator, the price of gas transmission services will climb 4 percent. Arguing for the price hike, the gas company said that gas transmission operations had dropped by 46 percent from the last period of tariff calculation.

Natural gas transmission and storage operator Conexus Baltic Grid was established December 22 to take over gas storage and transmission from Latvijas Gaze natural gas utility.

Conexus Baltic Grid’s largest shareholders are Russian Gazprom (34.1 percent), Marguerite Fund (29.1 percent), German Uniper Ruhrgas International GmbH (18.3 percent) and Itera Latvija (16 percent). The new company has 4,830 shareholders. Other shareholders hold 2.5 percent in Conexus Baltic Grid.

The share capital of the new company is €39,786,089.

The Latvian parliament in February this year passed amendments to the Energy Law in the final reading to support liberalization of the gas market and rules on breaking up Latvijas Gaze. Under the legislative amendments, Latvijas Gaze has to be split up in two companies - one for operating the gas transmission and storage system and the other for dealing with natural gas distribution and sale - by April 3, 2017. The process of separating the natural gas transmission and storage operator from Latvijas Gaze should be completed by December 31, 2017. That means that the operator will be a company whose owners will not be affiliated with Latvijas Gaze or its shareholders in any way.

The hope ultimately is to increase competition and thus lower prices to the consumer.

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