Did you know that "Rīgas Siltums" sells itself more expensive heat and secretly earns millions? - asks deputy Andris Kulbergs on Pietiek.com.
You may have already heard about the so-called "competition" on the right bank of Riga, where several biomass boilers operate. They generate disproportionately high profits — up to 23–45% profitability — in a controlled market that is not actually free. Most of these private boilers supply heat to "Rīgas Siltums" during the winter season at the maximum possible price — 77 €/MWh, which is almost identical to the approved SPRK tariff cap of "Latvenergo".
The total capacity of the boilers of these five independent heat producers is 178 MW, but the largest of them – 96 MW – belongs to "Rīgas Siltums" (RS) through its 100% subsidiary SIA "Rīgas Bio Enerģija" (RBE).
Thus, RS sells heat to itself through its subsidiary – at a price of 77 €/MWh. At the same time, on the left bank of the Daugava, where there is no "competitive market", the same RS produces heat at a price of 54 €/MWh. Both boilers are almost identical, only one operates under "competition", while the other operates within its own network without intermediaries.
How is this possible? How can it be that on the right bank RS buys heat from itself for 77 €/MWh, while on the left bank it produces the same heat for 54 €/MWh?
The answer is that the cost price is artificially inflated to maintain the profits of the subsidiary and cover the losses of the parent company.
According to the financial reports of "Rīgas Bio Enerģijas" (RBE), in 2023 the company made a profit of 1.3 million euros, or 32.6% profitability. Without this profit, the core activities of RS would have incurred significant losses. Thus, RS sells overpriced heat to itself to ensure a positive result on the balance sheet.
Moreover, the thermal capacity of RBE accounts for 54% of the total thermal capacity of independent wood-fired boilers on the right bank, meaning RS itself is the dominant player in the market, dictating terms to itself and secretly inflating heat tariffs for all residents of Riga.
Who pays for this? As a result, the residents of Riga overpay millions of euros every year. According to calculations and public tariffs of RS, the residents of Riga overpay about 97 million euros a year more than the residents of Vilnius for identical thermal energy consumption.
What to do? The residents of Riga need an open and honest heat market, where heat procurement occurs without hidden restrictions and protectionism.
It doesn't matter who produces, what matters is who can provide the cheapest and most efficient heat.
If I were in charge of this company, I would implement a transparent management and procurement system at RS, and within a year I could reduce the tariff from 83 €/MWh to 60 €/MWh, and in three years Riga could have the lowest heat tariff in the Baltic States.
This is realistically achievable — it only requires willingness and professional management.
