The task given by the shareholder has been completed – the distribution tariff has been reduced
November 28, 2019
Latvenergo Group and the Ministry of Economics are pleased with the decision of the Public Utilities Commission (PUC) to reduce the electricity distribution service tariff for the next 5 years. Joint Stock Company Sadales tīkls has fulfilled the task given by the shareholder for society to obtain a high-quality service for economically viable costs. The ambitious objectives that, at the initiative of Ministry of Economics Ralfs Nemiro, had to be pursued in order to increase the competitiveness of Latvian companies have given a positive result – the electricity distribution tariff has been reduced for the first time.
The possibility of reducing tariffs of distribution system services is ensured by the benefits of the operational efficiency improvement programme launched in 2017, which already provides a substantial reduction of the company resources by 26 million euro. The operational efficiency improvement programme will continue until 2022, but the full cost-optimisation effect to be achieved during its functioning has already been used to reduce tariffs.
At the instruction of management of Latvenergo Group, since 2011, when a natural disaster damaged a large part of the electricity grid in Latgale and left tens of thousands of customers without electricity supply, Sadales tīkls AS systematically improved the state of its power line roots, restored the technical base, introduced digital solutions and implemented the operational efficiency programme (OEP) plan. Comprehensive digitalisation by installing smart meters has directly affected cost reductions – the majority of electricity, or 80% of national consumption, is recorded by smart meters that reduce personnel, administrative and transport costs. The purpose of Sadales tīkls AS is to be a European-level modern distribution system service provider.
On 27 November, PUC approved the changes in distribution service tariffs for the next 5 years starting from 1 January 2020. According to the changes, the average distribution system service tariff will reduce by 5.5%. Lower distribution tariffs are supported by an ambitious performance enhancing programme carried out by Sadales tīkls AS, which involves improvement of processes reducing the staff, vehicles and bases.