Natural Gas prices
Prices in the gas sector shall be contracted and state regulated. Prices shall be regulated by establishing their price caps. In the natural gas sector, the following prices shall be regulated by setting the price caps of:
The National Control Commission for Prices and Energy shall set the price caps for a 5-year-term of regulation of natural gas prices. Prices may be adjusted by the Commission, but no more than twice per year and in cases provided for by the Law on Natural Gas. The Law on Natural Gas stipulates that gas undertakings shall set their specific gas tariffs to household customers for a period of 6 months.
The structure of gas Tariffs for household customers
According to used gas amount household customers are divided into three groups, for which different tariffs are set:
* Customers of the I group, who use gas for cooking and who consume up to 300 m3 of gas per year;
* Customers of the II group, who use gas for heating and who consume from 301 m3 to 20 000 m3 of gas per year;
* Customers of the III group, who consume more than 20 000 m3 of gas per year.
The gas price for household customers consists of two components. The fixed tariff component is paid monthly irrespective of the gas volume consumed. The variable tariff component is paid for the gas volume actually consumed. As UAB „Ignitis" supplies gas for the majority of the household customers in Lithuania, below is presented the structure of gas tariffs for household customers of this company.
The structure of the gas tariff for cubic meter
The gas tariff for cubic meter consists of imported gas price, the costs associated with gas delivery to the customer (transmission and distribution), funds required
to ensure security and reliability, the set profit margin for supplier and taxes. From 2022
July 1st the natural gas tariff also includes an additional
component to the natural gas distribution price for domestic consumers, which
consists of the difference between the natural gas purchase price included in
the tariff and the actual and/or predicted natural gas purchase price, as well
as the costs of the natural gas distribution operator due to the partial
compensation administration. In addition, the tariffs valid for the second half
of 2022 have been reduced by the amounts of compensation of the additional
component and the compensation related to the costs of natural gas acquisition,
determined by the Government.
The gas tariff for cubic meter for the I, II and III groups differs in the distribution service component. Since the costs of gas delivery are similar, no matter if customer consumes up to 300 m3 of gas or much more, when dividing these costs from the amount of gas consumed (in cubic meters), lower distribution service component is calculated for the II and III group.
The difference between dynamics of actual gas import price and the import price which is included in the tariff for household customers is presented in fig. 1.
Fig 1. The dynamics of gas import price for the period of 2011– 2021, as well as forecast for the 2nd half of year of 2022 and gas price included in the tariff for household customers, Eur/thousands m3
Source – Council
Since the 1st July of 2022, comparing with variable tariff component valid in the 1st half of year of 2022, variable tariff component for the customers of the 1st group increases by 27,5%, for the customers of the 2nd group by 40% and for the 3rd group it decreases by 41,51%.
Fig 2. The structure of variable gas tariff component for cubic meter for the 2nd half of year of 2022, Eur/m³
Source – Council
The expenditures for gas delivery to the customer and security of supply component are being regulated. Components that are not regulated are gas import price, supply margin and value-added tax.
The structure of fixed gas tariff component
The fixed tariff component is paid monthly in order to keep working capacity of the system and to ensure reservation of power in the transmission pipelines, as each customer must have the guarantee to receive quality service at any time. The fixed tariff also includes expenditures for accounting and for conclusion of contracts (price of supply).
Fig 3. The structure of fixed gas tariff in 2022, Eur/month
Source – Council
The price component set to ensure power in the transmission pipelines depends on power which is necessary for a certain customer group and on the number of customers in a certain group. The customers of the II and III groups need 6 times higher power than customers of the I group. The supply price for the customers of the I group is 0,42 Eur/month, while the price for II and III groups is 0,796 Eur/month. The difference between these prices is mostly due to the number of customers in a certain group.
about heating prices in European countries is published by the statistical
office of the European Union 'Eurostat'. Based on „Eurostat" data, gas
tariff in Lithuania on average was 0,0309 Eur/kWh in the 2nd half of
year of 2021 (excluding taxes).
Fig 4. The comparison of gas tariffs for customers, who use gas for heating in European countries, the 2nd half of year of 2021, Eur/kWh
Source – Eurostat.