ON A MORATORIUM ON THE „LIBERALIZATION” OF ENERGY PRICES

To:
His Excellency Mr. Gitanas Nausėda, President of the Republic of Lithuania
Ms.Viktorija Čmilytė-Nielsen, Speaker of the Seimas of the Republic of Lithuania
Ms. Ingrida Šimonytė, Prime Minister of the Republic of Lithuania

                               September 6, 2022 No 10-92

ON A MORATORIUM ON THE „LIBERALIZATION” OF ENERGY PRICES
The rise in electricity prices caused by the so-called „liberalization of electricity prices”, started by the previous Government and uncritically continued by the current Government, is a cause of great concern to Lithuanian workers.
According to the forecasts by energy experts, prices will reach 5 euros per kilowatt-hour of electricity in the near future. Such predictions terrify Lithuanian residents. Furthermore, statements made by representatives of relevant state authorities that 4 euros per kilowatt-hour of electricity is a normal tariff cause legitimate indignation of Lithuanian citizens and raise doubts about the ability of the Lithuanian Government to rule the country.
Currently, Lithuania can produce only 20-30 percent of its own electricity needed for consumption. It should be noted that only a decade ago, even after the closure of the Visaginas NPP, Lithuania could generate about twice as much electricity as it needed.
The transition to „green energy” carried out in Lithuania took place too fast. Fossil fuel plants generating electric energy were closed down, thus drastically reducing generation capacity, although no „green energy” generating capacity of similar power was developed to replace them.
Despite the repeated protestations of the Lithuanian trade union „Solidarumas”, all the governments in power during the period in question were focused on carrying out urgent dismantling of equipment within the facilities generating electricity, thus reducing electricity generation capacity, and selling expensive electricity generation equipment as scrap metal at a knock-down price. Conversely, other countries made an attempt to maintain and preserve the energy generation equipment which could not compete on the market at its cost. The reason for such decision is obvious – if need be, it would be possible to accomplish a strategic goal of ensuring electricity generation capacity by using all available options, to meet the national demand for electricity, a product of utmost importance for the entire state.
Some of the persons responsible for the destruction of Lithuania’s electricity generation structure and reduced generation capacity during this period still work in state energy companies and institutions, and enjoy their lives getting salaries that are equivalent to the salaries of the highest Lithuanian state officials.
Having no electricity generation capacity of its own, Lithuania is currently forced to buy electricity from abroad at much higher prices than it would have produced with the electricity generation capacity it has destroyed over the past decade.
Currently, Lithuania buys electricity at the highest prices in Europe, which are twice as high as in neighboring Poland and four times higher than those in Spain and Portugal.
A further surge in prices can also be accounted by the poorly thought-out „liberalization” of the electricity market, obligating to purchase electricity at the highest rather than average prices. Furthermore, this „liberalization” does not even allow to use the full capacity of the Lithuanian power plant in Elektrėnai, which could to a certain extent reduce extremely high electricity prices!
The statements made by responsible state officials that increased electricity prices will encourage a faster and smoother transition of Lithuanian residents and companies to cheaper renewable energy sources are infuriating – it is impossible to achieve such a goal in a short time. Many Lithuanians suspect that this is an attempt to hide the fact that a tiny handful of businessmen are receiving huge surplus profits by taking unfair advantage of the unreasonably favorable conditions created for them. As a result, the majority of the population are impoverished, and the whole economy of Lithuania is ruined.
We strongly believe that it is wrong to compensate consumers for the increase in electricity prices using their own money, that is, the taxpayers’ money. Taxes are collected to finance social projects and solve social issues, rather than to ensure the excess profits of electricity speculators, which have come to the fore due to the faulty regulation of the electricity market.
This very winter, due to increased electricity and gas prices, many Lithuanian companies that withstood the challenges caused by the pandemic and successfully developed their business are most likely to go bankrupt; unemployment will increase, and an economic crisis will begin in Lithuania. This will result in social unrest, which is a very dangerous phenomenon given the unstable geopolitical situation due to Russia’s aggression in Ukraine .
Therefore, we call for the introduction of a twelve-month moratorium on the „liberalization” of electricity prices as soon as possible. During that time, the identified flaws in the laws should be fixed. The other European Union member states and the European Commission have already launched the process of fixing legal loopholes.
If urgent measures are not taken to stop the unbridled increase in electricity prices, the Lithuanian trade union „Solidarumas” will start protests of indeterminate duration. We will call on all Lithuanian population to join us in opposing the impoverishment of Lithuanian citizens and destruction of the Lithuanian economy. The first protest action will be held on October 7 this year, commemorating the World Day for Decent Work.

Sincerely yours,
Chairperson Kristina Krupavičienė