Market Competitive Intensity (MCI): Latvia

Datamonitor's Market Competitive Intensity Index (MCI) is a robust framework for measuring and benchmarking the development of competitiveness and market conditions in a range of gas and electricty markets. The MCI assessment draws on nine underlying metrics grouped into three broad clusters: Market framework; Supplier Push and Customer Pull.

Report Highlights
Datamonitor's MCI Index offers a robust framework for measuring the development of utility Market Competitive Intensity. MCI scores are calculated using two different methods. The first, the simple weighted average (additive) measure shows overall competitive intensity. The second, the multipliative method, is more complex. It prevents markets with an overly wide spread of underlying raw scores from exerting undue influence over, or skewing, the final result.
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DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
ANALYSIS 2
Introduction: Datamonitor's MCI Index offers a robust framework for measuring the development of energy Market Competitive Intensity 2
The MCI Index shows how attractive a particular market is to new entrants in terms of the competitive environment 2
The MCI assessment draws on nine underlying metrics grouped into three broad clusters: Market framework; Supplier Push; Customer Pull. 3
The MCI Index measures competitive intensity in EU 27 and 6 related markets 4
The MCI Index assesses markets as they stood in early 2008 and forecasts conditions likely to be prevailing three years after full market opening 4
Each of the nine pillars has an assessment scale to allow for the comparison of diverse markets (see appendix for more details) 5
Two differing overall MCI scores are calculated to ensure full clarity of results 5
A simple weighted average (additive) measure shows overall competitive intensity 5
A weighted multiple (multiplicative) measure shows overall competitive intensity 5
The MCI framework has a number of applications for your organization 6
Context: Latvia's lack of gas and power competitive intensity sees it remain bottom of the markets surveyed 7
The competitive intensity ranking of Latvia's power market will deteriorate over the period 7
Latvia's gas position remains weak over the forecast period 7
Power MCI: None of Latvia's current or forecast scores break through the midpoint on the scale 9
None of the Market Framework factors show particular improvement over the forecast period 9
Effectiveness of Regulator [2008: 3/10 2010: 4.5/10] 9
Ease of Third Party Access [2008: 2.5/10 2010: 3.5/10] 10
Effectiveness of Balancing and Data Transfer [2008: 2/10 2010: 3/10] 10
The dominant position of Latvenergo throughout the value chain will continue to constrain the supplier push metrics 10
Wholesale Market Fragmentation [2008: 1.5/10 2010: 1.5/10] 10
Retail Market Fragmentation [2008: 0/10 2010: 2/10] 10
Traded Market Maturity [2008: 0/10 2010: 0/10] 10
Customer Pull metrics will remain at the lower end of the scale in 2010, despite the development of full market opening in 2007 11
Access to Market Information and Assistance [2008: 1.5/10 2010: 2/10] 11
Consumer Representation [2007: 0/10 2010: 1/10] 11
Propensity to Switch [2008: 0.5/10 2010: 1.5/10] 11
Gas MCI: Developments in Latvia's gas score will remain modest across all metrics 12
All of the Market Framework factors will remain modest throughout the forecast period 12
Effectiveness of Regulator [2008: 2.5/10 2010: 3/10] 12
Ease of Third Party Access [2008: 0/10 2010: 1/10] 12
Effectiveness of Balancing and Data Transfer [2008: 1/10 2010: 1/10] 13
None of the supplier push factors will develop in any meaningful way over the forecast period 13
Wholesale Market Fragmentation [2008: 1/10 2010: 1/10] 13
Retail Market Fragmentation [2008: 0/10 2010: 1/10] 13
Traded Market Maturity [2008: 0/10 2010: 0/10] 13
Customer pull metrics will remain weak for the forecast period 13
Access to Market Information and Assistance [2008: 1/10 2010: 2/10] 13
Consumer Representation [2008: 0/10 2010: 1/10] 13
Propensity to Switch [2008: 1/10 2010: 2/10] 13
Outlook: Latvia is unlikely to create significant commercial opportunities for new market entrants in the near term 14
Limited progress in competitive intensity over the forecast period results in zero multiplicative scores for both gas and power in 2010 14
Power scores 14
Gas scores 14
The ongoing position of Latvenergo significantly limits the attractiveness of Latvia to new market entrants 15
New Market Entrant Opportunities, Power 15
New Market Entrant Threats, Power 15
Low MCI scores indicate that few, if any, commercial opportunities exist in the Latvian gas market during the forecast period 15
New Market Entrant Opportunities, Gas 15
New Market Entrant Threats, Gas 15
MCI Scores 16
APPENDIX 19
Definitions 19
Ask the analyst 24
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Table 1: Market Competitive Intensity, Latvia 2008-10 16
Table 2: MCI Additive, Europe 2008-2010 17
Table 3: MCI Multiplicative, Europe 2008-2010 18
Figure 1: MCI Assessment Scale 2
Figure 2: MCI Assessment Framework 3
Figure 3: MCI Market Coverage 4
Figure 4: MCI Scales 5
Figure 5: MCI Applications 6
Figure 6: European Power Market Competitive Intensity, 2008-10 7
Figure 7: European Gas Market Competitive Intensity, 2008-10 8
Figure 8: Power Market Competitive Intensity, Latvia 9
Figure 9: Gas Market Competitive Intensity, Latvia 12
Figure 10: Market Competitive Intensity, Latvia 14
Figure 11: Scale for MCI Assessment, Effectiveness of Regulator 19
Figure 12: Scale for MCI Assessment, Ease of Third Party Access 20
Figure 13: Scale for MCI Assessment, Effectiveness of Balancing and Data Transfer 20
Figure 14: Scale for MCI Assessment, Wholesale Market Fragmentation 21
Figure 15: Scale for MCI Assessment, Retail Market Fragmentation 21
Figure 16: Scale for MCI Assessment, Traded Market Maturity 22
Figure 17: Scale for MCI Assessment, Access to Market Information and Assistance 22
Figure 18: Scale for MCI Assessment, Consumer Representation 23
Figure 19: Scale for MCI Assessment, Propensity to Switch 23
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