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Kaunas Heat and Power Plant Attempt Circumventing Heat Price Harmonization through Court
2008-07-29
Kaunas Heat and Power Plant (KHPP), managed by the Russian GAZPROM, applied to Vilnius Regional Court with the request to cancel the undertaking by the Control Commission for Prices and Energy to harmonize prices of heat it sells.
As the press release of KHPP implies, Commission’s claim contradicts the contract for the purchase and sale of heat energy, concluded in 2003 between the heat supplier KAUNO ENERGIJA and KHPP.
The contract established that during the first five years from its enforcement the heat price would not be subject to any substantial changes and later it would be recalculated according to the formula specified in the contract. However, in June the Commission forwarded KHPP’s letter with their claim to provide data necessary for the calculation of the basic price of heat production, following the methodology for determining the heat price.
“Such Commission’s claim infers that it basically fails to recognize the terms and conditions of the contract, signed five years ago, and it has an intention to establish the prices of heat sold by KHPP. We have applied to court for clarity”, said Antanas Pranculis, Director General of Kaunas Heat and Power Plant.
Unless the price of heat, produced by KHPP, is established, Control Commission for Prices and Energy may not consider the request by KAUNO ENERGIJA concerning the harmonization of the average district heat price at the rate being higher by 44 %. Following the estimates of the company, from August this price is likely to rise from 14.67 to 21.12 cents per kilowatt-hour (VAT excluded).
Based on forward estimates of KHPP, starting from the second half of this year it is planned that heat to KAUNO ENERGIJA would be sold at 12-12.5 cents per kilowatt-hour, getting roughly twice more expensive as it is now (6.58 cents per kWh).
© Litovskij Kurjer