HEPI

Household Energy Price Index for Europe July 31st 2014

July 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 In This Month’s Edition

European energy price development Electricity

and

gas

indexes

continue

moving

in

opposite directions. Whilst European electricity prices keep increasing slowly but steadily since April, gas prices decreased significantly this month again (-1 index

point).

The

EU-15

electricity

price

index

currently stands at 117 index points and the EU-15 gas price index at 105 index points. One year after the first addition of Central and Eastern European countries to our study, our indexes including 22 EU countries shows that electricity prices (excluding taxes) are 3% higher than a year ago and gas prices (excluding taxes) 2% lower. (Figures 1 and 2.)

Residential electricity prices Figure 3 shows the end-user price of electricity in 23 European capital cities as of July 2014. It shows that depending on where a customer lives in the EU, the price that customer has to pay per kWh of electricity

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HEPI price trend – EU electricity and gas prices move in opposite directions; EU electricity prices excluding taxes 3% higher, gas prices excluding taxes 2% lower; Important price drops in Brussels and Rome gas prices; Eastern and Southern European countries have highest prices for energy when measured at PPS; Energy Price breakdown – Market forces represent less than half of the electricity bill.

can vary by as much as 142%. If we include Belgrade, the price varies by a staggering ratio of 4.9. Household customers in Copenhagen and (since January 2013) Berlin pay by far the highest prices in Europe (though the price of energy represents only a small portion of the total price, the lion’s share being taxes, in fact), while inhabitants of Belgrade pay the least.

The most significant price changes this month took place in Bucharest (-3.5% in national currency) and in Copenhagen (-1.4% in national currency).

When adjusted to purchasing power in each country, most CEE countries end up with prices which are above the European average (Figure 4). Berlin overtakes Copenhagen as the place with the most expensive electricity followed by Lisbon and Prague. On the other end of the spectrum, Helsinki has the cheapest electricity at PPS1 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 July 20142. 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 explained by the small size the market; there are only 33,000 household gas customers in the whole of Sweden3. Not accounting for Stockholm, Copenhagen becomes the most expensive city for gas where prices are 3.3 times as high as in Bucharest, the cheapest city for gas.

The most significant changes took place in Brussels (-7.1% due to a drop in the energy component of the price), Rome (-5.3% due to a drop in the energy component of the price) and Bucharest (+2.7% in national currency).

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

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.

3 The Swedish electricity and natural gas markets 2011 (2012: 61).

2

adjusted prices followed by Belgrade, Warsaw and Ljubljana, while Luxembourg, London and Brussels and 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 40% of the end-user price of electricity, distribution 34%, energy taxes 11% and VAT 16%, while energy (including retail margins) represents 53% of the end-user price of natural gas, distribution 23%, 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 38% (over three times Europe’s average) and 58% 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.

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.

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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

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Figure 3. Residential electricity prices including taxes (July 2014)

35 30.66

30

c€ per kWh

25

Change / previous month

29.87

23.57

Red: price increase Green: price decrease Black: no price change *: Price change due to exchange rates

22.86 21.20 20.74

20

19.61 19.57 19.43

18.95

18.21

17.16 16.67

18.00 15.96 15.38 15.35

15

15.12 14.80

13.58 13.42 13.03

12.62

10 6.21

5

Source: HEPI by Energie-Control Austria, MEKH and VaasaETT Ltd. © 2014 VaasaETT Ltd.

0

End-­‐user electricity price (July 2014)

Figure 4. Residential electricity prices including taxes at PPS (July 2014)

30

c€ per kWh

25 20 15 10 5

28.63 28.06 26.20 25.39 24.73 23.31 23.31 22.25 22.22 21.47 20.74 19.96 19.19 19.10 18.61 17.92 17.78 17.26 16.13 15.44 14.18 13.20 13.00 10.97 Source: HEPI by Energie-Control Austria, MEKH and VaasaETT Ltd. © 2014 VaasaETT Ltd.

0

End-­‐user electricity price at PPS (July 2014)

5

Figure 5. Residential gas prices including taxes (July 2014)

20

19.31

Change / previous month Red: price increase Green: price decrease Black: no price change *: Price change due to exchange rates

c€ per kWh

15 10.35 10.22

10

8.14 7.84 7.67

7.06 7.05 7.05 6.98 6.93 6.86

6.45

7.10 5.96 5.89 5.56 5.4

5

5.3 5.24

4.4 3.37 3.14

Source: HEPI by Energie-Control Austria, MEKH and VaasaETT Ltd. © 2014 VaasaETT Ltd.

0

End-­‐user natural gas price (July 2014)

Figure 6. Residential gas prices including taxes at PPS (July 2014)

16 14

c€ per kWh

12 10 8 6 4 2

15.05 12.28 9.35 8.99 8.77 8.49 8.43 8.19 8.09 8.04 7.95 7.81 7.50 7.04 6.75 6.42 6.34 6.16 6.10 6.04 5.68 5.29 4.80 Source: HEPI by Energie-Control Austria, MEKH and VaasaETT Ltd. © 2014 VaasaETT Ltd.

0

End-­‐user gas price at PPS (July 2014)

6

Figure 7. Residential electricity price breakdown (July 2014)

100%

40%

5% 9% 6% 6% 12% 12% 17% 19% 19% 20% 17% 16% 17% 20% 15% 18% 18% 17% 17% 11% 17% 20% 16% 21% 19% 4% 11% 7% 4% 8% 0% 1% 3% 5% 4% 11% 0% 8% 13% 14% 19% 11% 14% 20% 18% 26% 26% 19% 29% 37% 40% 51% 32% 36% 32% 37% 37% 48% 47% 34% 31% 47% 27% 36% 33% 44% 26% 34% 27% 23% 63%

30%

28%

90% 80% 70% 60% 50%

20% 10%

58% 32%

58% 42% 30%

37%

15%

50% 39%

43%

36% 36%

33% 32%

42%

35% 35%

46%

39%

44%

40% 29% 35%

Source: HEPI by Energie-Control Austria, MEKH and VaasaETT Ltd. © 2014 VaasaETT Ltd.

0%

Energy

DistribuIon

Energy Taxes

VAT

Figure 8. Residential gas price breakdown (July 2014)

100% 90% 80% 70% 60% 50% 40% 30% 20% 10%

5% 6% 9% 12% 14% 6% 12% 16% 17% 2% 17% 17% 20% 19% 17% 20% 20% 19% 16% 17% 17% 18% 16% 5% 21% 19% 5% 8% 3% 17% 0% 3% 5% 8% 7% 13% 12% 23% 9% 17% 21% 16% 16% 22% 25% 21% 21% 28% 31% 30% 33% 23% 27% 37% 27% 38% 25% 23% 13% 36% 11% 25% 75% 86% 66% 66% 58% 64% 21% 51% 59% 59% 53% 52% 52% 53% 50% 50% 47% 43% 47% 48% 47% 36% 38% Source: HEPI by Energie-Control Austria, MEKH and VaasaETT Ltd. © 2014 VaasaETT Ltd.

21%

0%

Energy

DistribuIon

Energy Taxes

VAT

Visit our project webpage at www.energypriceindex.com and subscribe to the free monthly update of the HEPI index for Europe.

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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)

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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 unique and world leading collaborative think-tank and consultancy that delivers best practice, data, analysis and highly specialised expertise from around the world to the global energy and utilities industry. We help turn the World’s best knowledge into local strategies and solutions. At the heart of our offering is a global knowledge sharing network of thousands of contacts in over 60 countries in six continents and a vast up-to-date and ever increasing store of global best practice, data and analyses. Our world-leading expertise include: customer behaviour and psychology, customer lifetime value, smart energy issues and market efficiency issues. VaasaETT is the world’s leading source of benchmark information on customer switching trends and dynamics; retail energy prices; and, smart grid, smart energy demand and demand response programs. VaasaETT is also a founding member and manager of the European Smart Energy Demand Coalition (SEDC); the World’s only organization that has tracked customer behavior data in every competitive electricity market globally since market opening, and a source of market tracking data in over 60 jurisdictions in six continents. VaasaETT delivers assistance to clients and its network through consulting, collaboration and its new energydatastore.com service. More at: www.vaasaett.com

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Sources

AERS (Energy agency of the Republic of Serbia),ANRE (Autoritatea Nationala

de Reglementare in Domeniul Energiei, Romania), Autorità per l'energia elettrica e il gas (Italy), BDEW (Germany), BnetzA (Germany), BRUGEL (Brussels), CEER, CNE (Spain), Commission for Energy Regulation (Ireland), CRE (France), Dansk Energi (Denmark), DECC (Great Britain), Energiamarkkinavirasto (Finnish Energy Market Authority), Energie-Control Austria, Energie-info (France), Energiezaak (Netherlands), Energy Customers (Ireland), Entidade Reguladora dos Serviços Energéticos (Portugal), Eurostat, Institut Luxembourgeois de Regulation (Luxembourg), ERO Javna agencija Republike Slovenije za energijo (Slovenia), ERU (Energetický regulační úřad, Czech Republic), OFGEM (Great Britain), MEKH (Hungarian Energy and public Utility Autoroty), RAE (Greece), Statistics Norway, Statistics Sweden (SCB), The Energy Markets Inspectorate (Sweden), URE(Energy Regulatory Office, Poland), URSO (Úrad pre reguláciu sieťových odvetví, Slovakia)

www.energypriceindex.com

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