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Essence of the electricity market – a customer’s right to choose an electricity supplier and price.
Major goal – to create conditions for competition; to effectively manage the electricity sector.
Since January 1, 2002, when the Law on Electricity came into force, the state controlled monopoly which used to be a former structure of the Lithuanian electricity sector was abolished and new conditions were introduced whereby choosing the supplier of electricity is done based on the quality of service and price of electricity.
The electricity market consists of:
- Wholesale electricity market − where transactions are concluded between suppliers and producers;
- Retail electricity market − where transactions are concluded between eligible customers and suppliers.
Electricity trade in the wholesale electricity market is done by signing direct bilateral purchasing-selling agreements between electricity producers and suppliers. The deficient or surplus electricity quantities may be bought or sold at auction.
Electricity trade in the retail electricity market is done by signing direct bilateral purchasing-selling agreements between eligible customers and their freely chosen suppliers.
Wholesale electricity market players can be companies holding a license of public or independent supplier or a permit to produce, export or import electricity. All market players are registered by the market operator while their relations are set forth by the Rules of Electricity Trade.
The Transmission System Operator is also a player in the wholesale electricity market.
Lietuvos Energija AB as the Transmission System Operator performs the function of national balancing – co-ordinates the necessary quantities of electricity production with the quantities quoted by producers and suppliers and co-ordinates the activity of the producers’ dispatch centres.
Public suppliers (the distribution companies Rytu Skirstomieji Tinklai AB and Vakaru Skirstomieji Tinklai AB) supply electricity at consumer tariffs defined by approved regulation when there is no possibility or preference to choose a supplier, while independent suppliers supply electricity to eligible customers at a contractual price.
In 2003, the status of eligible customer was granted to companies consuming more than 9 million kWh of electricity per year, and since the beginning of 2004 – to companies with a yearly consumption exceeding 3 million kWh. Starting from July 1, 2004 the status of eligible customer was given to all customers (excluding residential), and from July 1, 2007 all customers in Lithuania became eligible. Eligible customers can choose an electricity supplier by a preferred quantity of electricity at a contractual price. They can purchase electricity directly from independent suppliers at an agreed price or from a public supplier (Rytu Skirstomieji Tinklai AB and Vakaru Skirstomieji Tinklai AB) at prices approved by the National Control Commission for Prices and Energy.
Relations between eligible customers and selected suppliers cover only the electricity production area and are not related to the sphere of electricity transmission and distribution.
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