RIGA, July 1 (LETA) - The Riga Municipality in talks with the Economy Ministry (EM) has undertaken to find solutions that would allow to reduce the increase in heating tariffs, but it is unlikely that the price increase will be avoided completely, Riga City Council Chairman Viesturs Kleinbergs (Progressives) told members after a meeting with the management of municipal heating company Rigas Siltums (RS).

According to Kleinbergs, the problem is not related to the operation of RS, but to the tariffs at which the municipality has to buy heat energy from Latvenergo. He pointed out that RS is forced to buy heat from Latvenergo at a higher price, and this heat is partly a residual product from electricity generation.

In talks with the EM and the Public Utilities Regulatory Commission (SPRK), the municipality wants to find out whether there is fair competition in a situation where Latvenergo "makes a certain profit by generating electricity twice - and both times partly at the expense of the residents of Riga".

"Riga residents are to some extent held hostage in this situation because Latvenergo's tariff is higher than what we are currently able to produce ourselves or what small heat producers are able to provide," Kleinbergs said.

He stressed that the municipality is ready to look for solutions so that Riga residents do not have to overpay for heating, including the possibility of creating a connection between the two banks of the Daugava River. One of the possible solutions mentioned was the buy-back of EM shares, so that Riga would become the managing partner in the company.

"Otherwise we are hostages between a minority shareholder who takes one side or the other. Riga is ready to take control of the company," Kleinbergs said.

Commenting on possible sources of funding, the Mayor stressed that "it is not a question of money, but of priorities". In his view, such an investment would allow companies for which heating is an important raw material to reduce costs and improve competitiveness.

At the same time, it is currently unknown how much of a tariff increase Riga residents will have to cope with from the autumn. "Clearly, there will be some increase," Kleinbergs said, adding that various short- and long-term solutions are being evaluated.

One short-term solution could be to involve the municipality in regulating tariffs. The municipality promises not to delay in continuing talks with the EM in order to reach an agreement on solutions "as soon as possible", as the new tariffs will enter into force already this autumn.

As reported, in autumn, the price for heating energy in Riga will increase by about 22 percent, Rigas Siltums heating utility informed LETA.

The company has calculated a draft of the new heating tariff and submitted it to the Public Utilities Commission (SPRK) for review. The draft tariff provides for changes in the costs of energy resources and purchased heating energy, however, it is not revised in full.

The draft heating tariff submitted is EUR 88.1 per megawatt-hour excluding value added tax, plus a contingency/revenue smoothing component of EUR 2.05 per megawatt-hour.

The current tariff is EUR 77.77 per megawatt-hour and customers were actually paying EUR 74.17 per megawatt-hour including the component. The new draft tariff will be EUR 88.1 per megawatt hour, but customers will have to pay EUR 2.05 per megawatt hour more, or EUR 90.15 per megawatt hour, taking into account the increase in natural gas prices over the last year.

The company thus estimated that the price increase for heating energy in the next heating season is around 22 percent.

During the cold winter months, the cost of a two-bedroom apartment in a renovated or new apartment building can rise by around EUR 10: from EUR 45 to EUR 55 per month, the company estimates. In an unrenovated building with high heating losses, costs can rise by around EUR 15 to EUR 20 - from EUR 70 to EUR 85-90 per month, depending on the condition of the building and the outside temperature.

Although it is difficult to predict the exact date, Rigas Siltums expects the new tariff to come into force in September this year, gradually with the start of the heating season.

LETA also reported, the turnover of the Rigas Siltums municipal heating utility in the first half of the financial year from October 1, 2024, to March 31, 2025 was EUR 189.28 million, which is 12 percent less than in the corresponding period a year earlier, while the group's profit increased by 31.7 percent and reached EUR 33.38 million.

Rigas Siltums is one of the main suppliers of heat energy in Riga. The company's capital is 49 percent owned by the Riga City Council, 48.99 percent by the Latvian state, 2 percent by Energijas Risinajumi. RIX, and Latvenergo holds 0.005 percent of the shares.