Heating Bills Will Not Frighten Kaunas Residents

2009-07-30

Kaunas residents may wait for the coming heating season without any fear of more expensive heating because in autumn the heat price is likely to go down even. Declining oil and gas prices in the world market presupposes that the heat price is not likely to rise but go down even.

Interview with Antanas Pranculis, the Director General of Kaunas Heat and Power Plant (KHPP), about what awaits the inhabitants during the coming heating season and about other current issues:

- How is the price of heat, produced by KHPP, likely to change in the future after the reduction of the gas price?

- Decline in the gas price influenced also the price of heat generated by KHPP. From June heat production price has decreased by 2.28 cents per kilowatt-hour (down to 10.48 cents). Earlier the decline in the heat price occurred in April. From the very beginning of the year KHPP reduced the heat price even by 29 %. From the 1st of June National Control Commission for Prices and Energy approved the lower price to KAUNO ENERGIJA too, which distributes heat to the end user. Alongside with the reduction of gas price we will keep on reducing the price of heat production in the future.

We hope that this will not be precluded by the decisions of the Government and the residents will retain the preferential value-added tax (VAT) rate on heat of 9 percent instead of the rate of 21 percent.

- You have declared the plans to construct a new thermal power plant in Kaunas. In what way will it affect the heat prices to Kaunas residents?

- Based on modern technologies, the combined cycle combined heat and power plant will be significantly better than the current one. Fuel consumption for the production of one energy unit will be reduced in the new thermal power plant. It is planned that energy production costs in the new power plant will be lower by more than 20 %. This will allow us to reduce the price of heat production. In case our colleagues from KAUNO ENERGIJA manage to ensure efficient heat supply and distribution, heat should become cheaper to consumers.

- Technologies of what energy companies will be applied at the new thermal power plant?

- It will get clear after the tender on the basis of which technology the new power plant will be constructed. Currently, the tendencies in the global great energy sector are set by two companies, namely “Siemens” and “General Electrics”. Preparatory works under our project are being conducted not for the first year; technical parameters are being revised and feasibility studies are being created.

- Won’t the economic crisis both in Lithuania and in the world affect investment plans in Kaunas?

- The hard times will come to an end some day. The “good times” will begin both in the world and in Lithuania. Financial experts predict that in 2010 the economic situation will start improving. There are no doubts as regards the necessity of investment into the construction of a new power plant; in the beginning of 2013 the new power plant will come into operation. It is likely that at that time Lithuania’s situation will be at a considerably better level than at the present moment.

- Recently, a lot of critique has been targeted to KAUNO ENERGIJA. People are unsatisfied with inefficient company’s performance and the establishment of hot water prices. Energy experts have expressed their opinion that the companies, engaged in heat supply and production, must stay in one hands. What is your personal opinion on this issue?

- Advantages lie also in the separation of production and supply; in that case the pricing is more transparent. It is easier to distinguish which price is that of production or that of distribution and supply.

Reduction in management expenses may predetermine the final heat price to consumers. However, the company should be managed by the specialists and not politicians. In Lithuania a different practice is in force in many spheres, where economic benefit is ignored and consumers suffer because of that. Decision-making chain becomes too long. Modern companies are not able to exist under such conditions.

- Minister of Energy Mr Sekmokas has asked the managers of the Lithuanian thermal power plants to search for the possibilities to reduce electricity prices. Do you see any possibility to sell electricity, generated in KHPP, to the Lithuanian electricity network at a lower price?

- KHPP produces and sells quota electric power at the price established by the Commission for Prices, as well as addition power, which is exported. Currently, we have no conditions to compete with the price of electric power generated by Ignalina Nuclear Power Plant. Our major goal is to provide cheap heat to Kaunas city. KHPP makes every endeavour to reduce the heat production price and lead to the decline in the final heat price to consumers.

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