Elektrum is the largest electricity trader in Latvia (it is a substructure of the largest electricity producer in the country, Latvenego): the company has 744 thousand customers, of which about 680 thousand are in Latvia. The vast majority are natural persons, and more than two thirds of them have fixed tariffs in their contracts. However, if earlier “Elektrum” mainly offered a fixed price for 12–24 months without any reservations, then this year such a tariff has been removed from the portal Elektrum.lv.
Now the main offer of the market leader is the tariff “Elektrum Ekonomiskais” – it also seems to have a fixed price, but with a fundamental difference: the company can change it twice a year depending on the fluctuations in the electricity exchange “Nord Pool”.
Where did the customer who was yesterday?
Andrejs lives in a private house near Riga. There are three children in the family, the wife does not work, so the electricity consumption is relatively high – 450-500 kilowatt hours per month. For the past several years, Andrejs has been a client of Elektrum and had an agreement to tie the price to fluctuations in the Nord Pool exchange. In the past, this was advantageous compared to fixed tariffs.
However, at the end of August, the average price on the stock exchange had doubled on an annual basis, and Andrejs switched to a fixed tariff, concluding a contract for a year. The price of electricity in this period – seven cents per kilowatt-hour (as well as, of course, delivery charges, taxes and fees). “I was lucky to be able to receive such an offer in August. Then I checked online – it was already offered for nine to 11 cents. But the stock price in September in the main [vakara] consumption was already 15-16 cents, and in some cases more than 20 cents. About four to five times more expensive than I paid a year ago. Yes, prices are lower at night, but in a large family, most of the electricity will be consumed in the evenings during the morning and evening hours, when prices are highest, ”he says.
Andrei had to change his electricity supplier. Why? The former customer says that he has not found a service with Elektrum whose price would not change during the entire term of the contract.
“It simply came to our notice then [uzņēmuma] on the website and I did not find the tariff I needed. I didn’t call, I thought – why? Do they then hide their offer from customers? Somehow illogically – in a situation of rising prices, when customers probably thought, shouldn’t the price be fixed without any reservations, would it be strange for them to hide such an offer, wouldn’t it? What they offer, however, is a pseudo-fixed tariff. Although the same “Tet” [bijušais “Lattelecom”], which is also controlled by the state, offers a constant price for up to four years! ”
Contrary to what the former customer thought about the logic (to hide the current offer from users), the previous tariff – with a fixed price – has been removed from the Elektrum portal, but it is still possible to receive it. All you have to do is know exactly what you want and call the call center.
The tariff is not visible, but it is
“You will not see it on the portal, it is a universal product, it can be received only by phone, for 12 months,” Rus.lsm.lv said at the “Elektrum” call center at the end of September. Offered a price of 10.73 cents per kilowatt hour plus taxes, delivery charges and mandatory procurement components (OIK). A month later, Rus.lsm.lv called again – the offered price had risen to 11.99 cents, but it was no longer possible to conclude a contract for 12 months – only for 18 or 24 months with an eight-euro penalty for premature termination of the contract. In addition, according to Rus.lsm.lv, prices on the Nord Pool exchange had slightly decreased during the month.
Electricity prices on the Nord Pool exchange (next day, LV zone)
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“When the price on the market [“Nord Pool”] is growing, it is risky to conclude a contract for a fixed price product for long terms, for example, for 24 months, ”says Andris Siksnis, Communications Director of Latvenergo Rus.lsm.lv, explaining why this service is no longer available on the Internet.
From this year, the main offer is the fixed tariff, where the price can change twice a year, adds Siksnis. According to him, it has its advantages. The contract is for an indefinite period and may be terminated at any time without penalty.
One price for three to four years
Are there frequent situations when customers who have previously opted for an exchange rate switch to a fixed price? Rus.lsm.lv surveyed traders do not see a clear trend.
“There are individual consumers [kuri tā dara], but this is not a trend, ”says Viktorija Kirsone, Tet’s electricity business manager. The company offers fixed-price contracts for a period of four years. About one-third of customers used to prefer three- and four-year contracts in the past – but it seems to be those who have switched to them a long time ago. “Especially in situations when electricity prices on the stock exchange are very favorable, customers often choose a contract for 48 months. However, it should be noted that currently about 85% of new customers choose a dynamic stock exchange tariff plan that does not have a fixed operating period, ”says Ķirsone.
The situation is quite heterogeneous and depends on the needs of a particular customer, says Krists Mertens, head of Enefit’s Latvian subsidiary in Estonia: At the same time, some choose a stock market product. I can say that now more and more customers are basically looking for alternatives, comparing the offers of different traders. ”
Competition is also boosted by the fact that the market leader Elektrum has revised prices for many of its expiring customers in recent months, says Mertens: “Prices have risen, and this is one of the reasons why many are interested in what else is on the market. In Latvia, the market has been open to private individuals since 2015, and it can be observed that the average energy consumer is becoming more and more active. Some change suppliers quite regularly. ”
Whether it is now worth fixing the price of electricity a year ahead or even longer depends on the specific customer and his priorities, says the head of Enefit.
“If stability and predictability are key, then it’s worth thinking about. It is very difficult to say exactly how prices will change in the coming months. There is no single dominant factor influencing the market. There are a number of reasons – weather, interconnections, water levels in Scandinavia [upēs]… And even if there will be a lot of water, interconnections with the Baltics do not have the capacity to fully meet the needs of our region during the day. This is not a problem at night, but not during the day. All these factors must be taken into account, but it is practically impossible to predict how they will develop. Therefore, it is not possible to say which is more advantageous to choose – the stock exchange tariff or the fixed price. It remains to be guided by the client’s priorities, ”explains Krists Mertens.
Latvian electricity traders have become more expensive by 100% on average during the year, including 50% in September, Latvenergo recently told LETA. The company pointed out that this situation is not unique and that all European countries have experienced a sharp rise in prices.
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