Increases in electricity prices are largely a result of government add-ons, according to a new EURELECTRIC analysis of electricity prices in Europe. The analysis, published today, for the first time separates taxes from policy support costs, showing just how much governments influence the price that customers pay.
Our analysis for the years between 2008 and 2012 shows that energy & supply costs decreased by 4% and network costs increased by 10% for households. But taxes & levies rose by as much as 31%, wiping out any benefits derived from functioning wholesale markets.
Within the taxes & levies component,policy support costs (levies) have been increasing steadily, but taxes such as value-added tax and excise duties still make up most of burden: in 2012, European households spent an average of 39€/MWh on taxes and 25€/MWh on policy support costs.
The analysis also shows that bills are often carriers of policies that are unrelated to electricity, with customers financing pension schemes or even national broadcasters via their electricity bills.
To raise customers’ awareness on what they pay for, EURELECTRIC calls on governments to be more transparent on what goes into customers’ bills. EURELECTRIC also calls for standardised reporting obligations of price statistics to the European Commission, enabling an informed debate on energy prices at both national and European level.
A leaflet with main results of the analysis is available here.
A more detailed presentation of results and the methodology used is available here.
Background:
Electricity prices are made up of three main components: energy & supply costs (the costs of producing and supplying electricity), network costs (the costs of laying down the grids that deliver electricity to our doorsteps), and taxes & levies (government add-ons, from excise duties to support for specific generation technologies).
Under current reporting rules governments report policy support costs – notably costs for renewable support schemes – in any of the three different cost components. This makes a meaningful comparison of electricity prices across EU member states impossible. The EURELECTRIC analysis corrects this imbalance by attributing all policy support costs to the taxes & levies component, thereby providing a more accurate picture of electricity prices in Europe.
