Electricity licensing and trading rules in Latvia Mini-Forum, July 3, 2006 Sandija Audzere, Head of Energy Unit, Legal Department Public Utilities Commission of Latvia

Basic Legal Acts:  Electricity Market Act (in force from June 8, 2005)  Energy Law (in force from October 6, 1998)  Law “On Regulation of Public Services” (in force from June 1, 2001) Rules for Licensing of Public Utilities (in force from September 15, 2005)

Main Conditions for the Operation of the Electricity Trade:  A Trader – electricity market participant, who operates (purchases and sells) in the electricity market in accordance with the principle of voluntary participation;  In an electricity market the participants shall execute mutual transactions in accordance with agreements concluded in writing;  The producers, traders and users shall determine the price of electricity by mutual agreement, except the cases provided in the Electricity Market Law.

A Trade of electricity may be executed by:  a licensed producer of electricity;  a distribution system operator to the distribution networks of which less than one hundred thousand users are connected;  an electricity trader who has received a license. One Public Trader shall supply all captive users

Main requirements to receive a license:  Registered company in Commercial Register of Latvia;  Technical objects necessary for providing service;  Statement issued by the State Revenue Service on applicant’s accession to the tax payers and fulfillment of budget liabilities;  Overview of the applicant’s last year activities and planned activities;  Structure of existing or potential consumers.

Main requirements into a license:  Rights to trade and duty to provide service;  Date of beginning to provide service;  Term of a license operation is 5 years. Fees:  State fee for issuing a license – 143 EUR;  Regular fee - each year in amount of 0.2% of net turnover in previous year regarding to the public services provided by a company.

Issues:  What is the date of beginning to provide service – the ability provide service or real energy supply by contract;  Trader Financial guarantee fee.

Thank you!