In the second half of last year, a steep energy resources price hike added to the epidemiological situation troubles in the whole world, including Latvia. The heating and electricity price hike, along with growing oil, and, thus, also food prices have made lawmakers to react and provide assistance to residents and companies.

Still, the end term for different support measures is a topical issue as experts predict that prices will not decline this year, therefore long-term solutions should be considered to diversify risks and increase use of different energy sources.

Heating price records in municipalities

Information from power transmission system operator Augstsprieguma Tikls suggests that the average electricity price in Latvia last year reached EUR 88.78 per MWh, which is 2.6 times higher than the average price in 2020. At the same time, in December, a new gas and CO2 emission quota price record was reached - EUR 92.37 per MWh and EUR 80.1 per MWh respectively. Natural gas price was six times higher than a year ago, while CO2 emission quota price increased 2.4 times. It will all now be reflected in tariffs to be paid by residents and companies.

The steepest rise in heating tariff prices in the middle of January was recorded in Olaine - growing 2.6 times to EUR 107.42 per MWh. Starting from May 1, the heating tariff is expected to grow another 5.2 percent to EUR 112,27 per MWh.

Daugavpils in February will see heating tariff hike by 64.4 percent to EUR 93.65 per MWh. Salaspils will see a rise by 26.6 percent to EUR 61.03, Jurmala by 8.5 percent to EUR 69.97 and Jekabpils by 5.8 percent to EUR 69.32 per MWh. For Jurmala and Jekabpils this has been a second heating price hike in the season so since October 2021, the heating prices have risen by 32.1 percent in Jurmala and by 27.8 percent in Jekabpils.

Even though in Rezekne the heating tariff will drop 13.2 percent to EUR 41.16 per MWh as of February 1, it increased by 57.7 percent in January.

Support to residents and companies

The government has decided to distribute EUR 450 million in different support measures to compensate heating and power tariff hike for residents. A new EUR 50 benefit has been introduced for every child in a period of four months, pensioners and disabled people will receive a monthly benefit of EUR 20 in this period.

The government will also compensate the "extreme heating and gas price hike" to households. The extreme price hike for heating is considered EUR 68 per MWh, which means that support will be provided to households in Daugavpils, Olaine, Ozolnieki, Marupe and Saulkrasti.

Commenting on the support measures, Gints Kaminskis, the chairman of the Latvian Association of Local Governments, told LETA that the most important is that residents, companies and local governments are able to pay their bills, and heating companies are able to borrow money for their working capital. He said that it is positive that the types of measures are different, covering a broad range of residents.

At the same time, not only short-term solutions should be considered but also solutions for the coming heating seasons if prices do not drop. Those are alternative energy sources. "One of the solutions is development of wind parks where a clear state program is necessary," said Kaminskis.

Energy resource prices not expected to drop this year

According to the information provided by Latvenergo energy utility, the future natural gas prices are high due to a number of factors. Latvenergo representatives reported that reduction of gas prices can be predicted only starting from the summer of 2023, when the world’s energy market is expected to achieve a balance between supply and demand.