Household Energy Price Index for Europe February 5th 2015 January Prices Just Released The most up-to-date picture of European household electricity and gas prices: VaasaETT and two leading European energy market authorities collaborate to track monthly energy prices in 23 European countries European energy price development There have been numerous changes in energy prices this month compared to last. Remarkably however, changes in electricity prices seem to have compensated each other since the value of the electricity index remained unchanged. The gas price index on the other hand decreased by 1 index point in January compared to December (Figures 1 and 2.) Residential electricity prices Figure 3 shows the end-user price of electricity in 23 European capital cities as of January 1 st 2015. It shows that depending on where a customer lives in the EU, the price that customer has to pay per kwh of electricity can vary by as much as 142%. If we include Belgrade, the price varies by a staggering ratio of 5.2. Household customers in Copenhagen and (since January 2013) Berlin pay by far the highest prices in Europe (though the price of energy In This Month s Edition HEPI price trend electricity prices excluding taxes stable, gas prices keep decreasing Numerous significant changes in energy prices in Europe as distribution prices and taxes are revised; Energy Price breakdown Market forces represent less than half of the electricity bill. 1
represents only a small portion of the total price, the lion s share being taxes, in fact), while inhabitants of Belgrade pay the least followed by inhabitants of Budapest. As mentioned earlier, various price components were changed in numerous countries (as is traditionally the case in January). The most significant changes were: Price increase in Lisbon (+3.9%), Madrid (+5.4%), Paris (+2.4% due an increase in energy taxes), Vienna (+3.9%), Prague (+6.9% in local currency) and Bucharest (+5.7% in local currency); Price decrease in Brussels (-5.1%), Bratislava (-3.9%) and Rome (-2.2%); Other interesting changes took place in Luxembourg where both the PSO and the VAT rate increased but were offset by a decrease in the distribution prices; Finally in Finland, the electricity tax increase (+18%) was almost offset by a decrease in the distribution price. When adjusted to purchasing power in each country 1, most CEE countries end up with prices which are above the European average (Figure 4). Lisbon overtakes Copenhagen as the place with the most expensive electricity followed by Prague and Berlin. On the other end of the spectrum, Helsinki has the cheapest electricity at PPS followed by Stockholm and Belgrade. Residential gas prices Figure 5 shows the end-user price of natural gas in 22 European capital cities as of January 2015 2. The highest price by very far is paid by inhabitants of Stockholm (nearly twice as much as the second most expensive city for gas). This can be 1 PPS is an artificial common reference currency unit that eliminates price level differences between countries. One PPS thus buys the same given volume of goods and services in all countries. It is developed by Eurostat to accurately compare prices across Europe. 2 Please note that Helsinki has been left out of this analysis on gas prices. Indeed, there is virtually no residential gas market in Finland. 2
explained by the small size the market; there are only 33,000 household gas customers in the whole of Sweden 3. Not accounting for Stockholm, Copenhagen becomes the most expensive city for gas where prices are 3.2 times as high as in Bucharest, the cheapest city for gas. The most significant changes this month were: Price increase in Stockholm (+11% in local currency), Ljubljana (+3%), Prague (+3.3% in local currency) Price decrease in Amsterdam (-2.1%), Brussels (-5.4%), Copenhagen (- 9.2% in local currency), Luxembourg (-2.7%), Madrid (-3.2%). Prices at PPS (and ignoring Stockholm) offer a very different outcome. Lisbon (where the municipal tax charged has more than doubled this July) has the highest adjusted prices followed by Belgrade, Ljubljana and, while Luxembourg, Brussels and London have Europe s lowest adjusted prices for gas (Figure 6). Energy price breakdown The breakdown of end-user energy prices into four components (energy, distribution, energy taxes and VAT) also shows major variations. (See Figures 7 and 8.) Our survey shows that on average, the energy price component (including retail margins) represents about 38% of the end-user price of electricity, distribution 35%, energy taxes 11% and VAT 16%, while energy (including retail margins) represents 52% of the end-user price of natural gas, distribution 24%, energy taxes 8% and VAT 16%. Copenhagen is a very unusual case; the cost of energy as a commodity represents less than a fifth of the end-user electricity price, by far the lowest of all surveyed cities, whereas the energy taxes represent an astonishing 31% (over three times Europe s average) and 51% if we include VAT. A similar (albeit to a lesser extend) case is Berlin where since the introduction of the Energiewende, the energy tax component represents 29% of the end-user price of electricity. 3 The Swedish electricity and natural gas markets 2011 (2012: 61). 3
Overall, the results show that market forces represent only about half of the enduser price (both for electricity and gas) whereas national fiscal and regulatory elements are responsible for the other half through distribution tariffs, energy taxes and VAT. 4
Figure 1. Evolution of residential energy and distribution prices excluding taxes in the EU-15 Figure 2. Evolution of residential energy and distribution prices excluding taxes in the EU-22 5
c per kwh c per kwh Figure 3. Residential electricity prices including taxes (January 2015) 35 30 25 30.86 29.80 23.80 23.75 23.40 Change / previous month Red: price increase Green: price decrease Black: no price change *: Price change due to exchange rates 20 15 20.63 20.44 19.60 19.25 18.87 18.22 18.02 16.69 16.33 16.21 15.37 14.87 14.76 13.89 13.32 13.30 12.18 18.24 10 5 0 5.97 End-user electricity price (January 2015) Figure 4. Residential electricity prices including taxes at PPS (January 2015) 30 25 20 15 30.46 28.38 28.35 26.78 25.98 25.98 10 22.6 21.94 21.73 21.6 21.19 19.13 19.08 19.08 18.46 17.86 17.44 20.42 5 0 16 15.57 14.76 13.04 12.89 11.26 End-user electricity price at PPS (January 2015) 6
c per kwh c per kwh Figure 5. Residential gas prices including taxes (January 2015) 20 15 20.92 Change / previous month Red: price increase Green: price decrease Black: no price change *: Price change due to exchange rates 10 5 10.21 10.04 8.53 7.77 7.43 7.26 7.18 7.15 7.05 7.05 6.81 6.66 6.08 5.73 5.71 5.34 5.29 5.16 4.60 3.36 3.15 7.20 0 End-user natural gas price (January 2015) Figure 6. Residential gas prices including taxes at PPS (January 2015) 16 14 12 10 8 16.63 6 12.87 4 10.06 9.02 9.01 8.89 8.46 8.43 8.41 8.24 7.86 7.48 8.01 2 6.95 6.71 6.4 6.34 6.33 6.21 6.05 5.68 5.4 4.73 0 End-user gas price at PPS (January 2015) 7
Figure 7. Residential electricity price breakdown (January 2015) 100% 90% 80% 70% 60% 50% 40% 30% 10% 0% 38% 29% 13% 16% 29% 23% 32% 12% 6% 25% 57% 18% 17% 17% 5% 4% 23% 34% 50% 27% 45% 34% 27% 5% 11% 26% 58% 17% 15% 30% 37% 9% 7% 4% 40% 47% 16% 39% 37% 17% 13% 38% 32% 6% 7% 49% 15% 33% 38% 32% 11% 8% 22% 59% 18% 19% 17% 19% 19% 21% 28% 11% 36% 3% 33% 33% 35% 45% 0% 50% 33% 16% 24% 40% 10% 43% 28% 3% 32% 44% 41% 47% 37% 17% 16% 1% 11% 35% 35% 38% Energy Distribution Energy Taxes VAT Figure 8. Residential gas price breakdown (January 2015) 100% 90% 80% 70% 60% 50% 40% 30% 10% 0% 17% 16% 17% 17% 18% 3% 9% 12% 9% 16% 31% 25% 38% 27% 37% 24% 34% 22% 47% 46% 37% 40% 41% 30% 27% 11% 14% 16% 9% 21% 32% 23% 30% 59% 6% 13% 47% 48% 12% 5% 52% 17% 26% 11% 46% 5% 6% 23% 66% 17% 5% 25% 53% 7% 2% 22% 69% 17% 17% 19% 0% 19% 31% 16% 23% 64% 52% 64% 59% 9% 5% 86% 21% 19% 21% 28% 24% 58% 16% 8% 52% 52% Energy Distribution Energy Taxes VAT Visit our project webpage at www.energypriceindex.com and subscribe to the free monthly update of the HEPI index for Europe. 8
For More Information Christophe Dromacque HEPI Project Manager Office: +358 (0)9 4159 0344 Mobile: +358 (0) 44 906 6822 Email: christophe.dromacque@vaasaett.com (English / French) Anna Bogacka Analyst Office: +358 (0)9 4159 0344 Mobile: +358 (0) 44 906 6823 Email: anna.bogacka@vaasaett.com (English / Russian) Silke Ebnet Regulation and Competition Office: +43 (1) 24724 715 Email: silke.ebnet@e-control.at (English / German) László Szabó Head of Unit Department of Market Monitoring Email: szabolaszlo@mekh.hu (English / Hungarian) 9
About the Authors Energie-Control Austria Energie-Control Austria was set up by the legislator on the basis of the new Energy Liberalisation Act and commenced operation on 1 March 2001. Energie-Control is headed by Mr. Walter Boltz and Mr. Martin Graf as managing directors and is entrusted with monitoring, supporting and, where necessary, regulating the implementation of the liberalisation of the Austrian electricity and natural gas markets. More at: www.e-control.at The Hungarian Energy and Public Utility Regulatory Authority The main responsibilities of the Hungarian Energy and Public Utility Regulatory Authority are consumer protection, providing regulated access to networks and systems, carrying out regulatory competencies in order to maintain security of supply and fostering competition. The scope of the infrastructures, which have to be overseen by the Hungarian Energy and Public Utility Regulatory Authority has been extended in 2011 with the complete regulation of district heating and in 2012 with the water public utilities. As market progresses are becoming more widespread, we put emphasis on our market monitoring task and we pay specific attention to regional market integration both in electricity and natural gas. More at: www.mekh.hu VaasaETT Global Energy Think Tank VaasaETT is a research and advisory consultancy dedicated to customer related issues in the energy industry. VaasaETT advises its clients based on empirical evidence brought about from extensive research in the area of customer behavior and competitive market behavior (including smart energy offerings, demand response, energy efficiency, smart home, smart grid). VaasaETT s unique collaborative approach enables it to draw on an extensive network of several thousand energy practitioners around the world who can contribute to its research activities or take part in industry events it organizes allowing VaasaETT to integrate global knowledge and global best practice into its areas of expertise. VaasaETT s truly global focus is reflected by research and strategic support having been provided to a diverse array of organizations on 5 continents including for instance 28 of the Fortune Global 500 companies, the European Commission, Government and public research bodies in Europe, Japan, the UAE, the Middle East and Australia. More at: www.vaasaett.com 10