hepi monthly update
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Household Energy Price Index for Europe
March 3, 2016
February 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 29 European countries
Energie-Control Austria, the Hungarian Energy and
Public Utility Regulatory Authority (MEKH) and
VaasaETT are delighted to publish the results of our
study of residential electricity and gas prices now
covering 29 European countries. VaasaETT was
recently commissioned by Hungary's MEKH to
expand the coverage of HEPI to the remaining 6
countries that were not yet part of our study,
namely, Estonia, Cyprus, Latvia, Lithuania, Malta,
and Bulgaria. Our price survey now includes all of
the 28 EU member countries in addition to Serbia
who is a full candidate to membership. We would
like to use this opportunity to thank the energy
market authorities for their time and cooperation to
ensure the quality and accuracy of the data.
If you would like to know more about the latest
developments in residential energy prices, visit our
project webpage at www.energypriceindex.com
and subscribe to the free monthly update of the
HEPI index for Europe.
In This Month’s Edition
HEPI price trend – European
energy prices stable around
their all-time high
Important decrease in
electricity prices in Nicosia
and Madrid
Important increase in
electricity prices in Tallinn
Important decrease in gas
prices in Ljubljana; London,
Athens, Brussels and
Copenhagen
Prices at PPS highest in
Central and Eastern Europe
Energy Price breakdown –
Market forces represent less
than half of the energy bill
Topic focus: Finnish DSO
faces public outrage after
announcing price hikes
2
European energy price development
Figure 1 shows the evolution of residential energy and distribution prices excluding
taxes between January 2009 and February 2016 in 15 European capital cities. The
index is calculated by weighing prices in each of the capital cities by the respective
national electricity or gas residential consumption.
Residential electricity prices steadily decreased over the first half of 2009 and
reached a trough at 96 index points in June 2009 as the economic crisis took its toll
on demand and wholesale prices plummeted. Prices started to recover in the
second half of 2009 together with (temporary) green shoots in economic activity
and a general feeling that the worst of the crisis was behind us. They have been on
an upward trend since then. The index for electricity reached its highest value in
January 2015 at 121 index points. The index currently hovers around its all-time
high at 116 index points.
The economic downturn which impacted energy demand and wholesale prices in
2009 is much more visible in the development of residential gas prices. The gas
price index dropped significantly in 2009 and reached its lowest value only in
February 2010 at 82 index points (eight months after the lowest value in the
electricity price index). Retail prices started to recover in the winter of 2010 when a
cold wave hit many parts of Europe. The index steadily increased until the
beginning of 2013. It remained between 105 and 110 index points ever since
despite a significant drop in natural gas prices on international markets during the
year 2015. It currently stands at 102 index points.
3
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-28
Residential electricity prices
Figure 3 shows the end-user price of electricity in 29 European capital cities as of
February 1st 2016. It shows that depending on where a customer lives in the EU,
the price that a customer has to pay per kWh of electricity can be three times the
4
price. If we include Belgrade, the price varies by a staggering ratio of 4.8.
Copenhagen and, since January 2013, Berlin are by far the most expensive cities
for household customers in Europe though the price of energy represents only a
small portion of the total price, the lion’s share being tax, in fact. Inhabitants of
Belgrade pay the least followed by inhabitants of Tallinn and Sofia. In nominal
terms, prices in the capital cities of Central and Eastern Europe (CEE) tend to be
lower than average; Prague is the only capital city among the CEE countries in
which the price of electricity is above the European average.
Figure 3 Residential electricity prices including taxes (February 2016)
Some changes took place in the electricity market this month; the most significant
ones were:
A 7% price decrease in Nicosia
A 5% price increase in Tallinn
A 2% decrease in Madrid
When adjusted to purchasing power in each country1, the picture changes
dramatically. Indeed, most CEE countries end up with prices which are above the
1PPS is an artificial common reference currency unit that eliminates price level differences between countries.
31,52 29,29
23,31 22,60 21,79 21,48 19,87 19,42 19,11 18,70 18,63 18,18 18,03
16,73 16,50 16,03 15,59 15,35 14,65 14,43 13,16 13,15 12,70 12,47 12,21 11,98 11,03 10,57
6,62
17,07
0
5
10
15
20
25
30
35
Co
pen
hag
en
(D
K)
Berl
in (
DE)
Lis
bo
n (
PT
)
Mad
rid
(ES)
Du
blin
(IE
)
Lon
don
(G
B)
Vie
nna (
AT
)
Bru
ssels
(BE)
Ro
me (
IT)
Pari
s (
FR
)
Pra
gu
e (
CZ)
Lux
em
bou
rg C
ity (
LU
)
Ath
ens (
GR
)
Am
ste
rdam
(N
L)
Rig
a (
LV
)
Nic
osia
(C
Y)
Sto
ckh
olm
(SE)
Lju
bljana (
SI)
Bra
tisla
va (
SK
)
Wars
aw
(PL)
Hels
inki (F
I)
Zagre
b (
HR
)
Viln
ius (
LT
)
Bu
ch
are
st
(RO
)
Vallett
a (
MT
)
Bu
dap
est
(HU
)
Tallin
n (
EE)
Sofi
a (
BG
)
Belg
rad
e (
RS)
Avera
ge
c€ p
er k
Wh
End-user electricity price (February 2016)
Source: HEPI by Energie-Control Austria, MEKH and VaasaETT Ltd.
5
European average (Figure 4). Again in this month, Lisbon is the most expensive
electricity followed by Prague and Berlin the same way it was in January. On the
other end of the spectrum, Helsinki has the cheapest electricity at PPS followed by
Stockholm, Belgrade and Luxembourg City.
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.
TOPIC FOCUS: News from Finland
Although it does not affect our price study directly as we concentrate on the
capital cities, we would like to share an interesting piece of news on the latest
developments in the Finnish electricity markets. In January 2016, a heated
discussion took place in the Finnish media after substantial increase in
distribution fees were announced by “Caruna Oy” which holds a monopoly
position in the electricity distribution networks of South, Southwest and West
Finland. The DSO announced that network fees were to increase by 27% in their
network area starting March 1st, 2016. This would have been the largest single
price jump we witnessed since starting this price survey. Faced with public
outrage and intervention of the Consumer Ombudsman the company agreed to
reschedule (albeit not lower) the price hikes to take place in several steps over
the years 2016 and 2017.
6
Figure 4 Residential electricity prices including taxes at PPS (February 2016)
Residential gas prices
Figure 5 shows the end-user price of natural gas in 26 European capital cities as of
February 1st 20162. The highest price by very far is paid by inhabitants of
Stockholm, who pay over twice as much as the second most expensive city’s does
for gas. This can be explained by the small size of 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 with Lisbon right
in its tail. The prices in Copenhagen are 3.1 times as high as in Bucharest, which is
the cheapest city for gas. Even more clearly than for electricity, household natural
gas is cheapest in the CEE countries.
This month included some changes for gas prices as well, and the most significant
ones are summarised below:
9% decrease in Ljubljana, due to drop in the energy component.
4% decrease in London.
3% decrease in Athens, Brussels and Copenhagen.
2 Please note that Helsinki, Nicosia, and Valletta have been left out of this analysis on gas prices as there is virtually no residential gas market in these cities. 3 The Swedish electricity and natural gas markets 2013 (2014: 51).
29,91 28,87 28,09
25,88 25,33 25,24 24,44 23,39 22,86 22,14 22,06 21,49 21,05 20,86
19,55 19,2 18,99 18,3 17,6 17,6 16,99 16,66 15,29 15,21 15,21 15,15 15,01
12,07 10,6
20,17
0
5
10
15
20
25
30
Lis
bo
n (
PT
)
Pra
gu
e (
CZ)
Berl
in (
DE)
Wars
aw
(PL)
Bu
ch
are
st
(RO
)
Mad
rid
(ES)
Rig
a (
LV
)
Co
pen
hag
en
(D
K)
Sofi
a (
BG
)
Bra
tisla
va (
SK
)
Ath
ens (
GR
)
Bud
ap
est
(HU
)
Viln
ius (
LT
)
Zagre
b (
HR
)
Du
blin
(IE
)
Lju
bljana (
SI)
Ro
me (
IT)
Vie
nna (
AT
)
Bru
ssels
(BE)
Nic
osia
(C
Y)
Pari
s (
FR
)
Lon
don
(G
B)
Am
ste
rdam
(N
L)
Tallin
n (
EE)
Vallett
a (
MT
)
Lux
em
bou
rg C
ity (
LU
)
Belg
rad
e (
RS)
Sto
ckh
olm
(SE)
Hels
inki (F
I)
Avera
ge
c€ p
er k
Wh
End-user electricity price at PPS (February 2016)
Source: HEPI by Energie-Control Austria, MEKH and VaasaETT Ltd.
7
Figure 5 Residential gas prices including taxes (February 2016)
Prices at PPS offer a very different outcome, even with Stockholm and Lisbon in the
lead with the highest adjusted price followed by Sofia and Prague, while
Luxembourg, Brussels and London have Europe’s lowest adjusted prices for gas.
Generally speaking, the CEE countries no longer exhibit Europe’s lowest gas prices
when adjusted to PPS. (Figure 6)
24,18
9,34 9,33 8,07
7,17 7,11 7,01 6,68 6,61 6,52 6,37 6,37 5,92 5,84 5,34 5,18 4,96 4,95 4,72 4,67 4,47 4,4 4,28 3,84 3,31 3,05
6,53
0
5
10
15
20
25
Sto
ckh
olm
(SE)
Co
pen
hag
en
(D
K)
Lis
bo
n (
PT)
Ro
me (
IT)
Vie
nna (
AT
)
Berl
in (
DE)
Am
ste
rdam
(N
L)
Du
blin
(IE
)
Mad
rid
(ES)
Pari
s (
FR)
Lon
don
(G
B)
Lju
bljana (
SI)
Pra
gu
e (
CZ)
Ath
ens (
GR
)
Bru
ssels
(BE)
Lux
em
bou
rg C
ity (
LU
)
Bra
tisla
va (
SK
)
Viln
ius (
LT
)
Zagre
b (
HR
)
Wars
aw
(PL)
Sofi
a (
BG
)
Tallin
n (
EE)
Rig
a (
LV
)
Belg
rad
e (
RS)
Bu
dap
est
(HU
)
Bu
ch
are
st
(RO
)
Avera
ge
c€ p
er k
Wh
End-user natural gas price (February 2016)
Source: HEPI by Energie-Control Austria, MEKH and VaasaETT Ltd.
© 2016 VaasaETT Ltd.
8
Figure 6 Residential gas prices including taxes at PPS (February 2016)
Energy price breakdown
The breakdown of end-user energy prices into four components; energy,
distribution, energy taxes and VAT, also shows major variations that can be seen in
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 32%, energy taxes 12% and VAT 16%, while energy (including retail
margins) represents 50% of the end-user price of natural gas, distribution 27%,
energy taxes 8% and VAT 16%.
Copenhagen is a very unusual case; the cost of energy as a commodity represents
just 11% of the end-user electricity price, by far the lowest of all surveyed cities,
whereas the energy taxes represent an astonishing 49% (over three times Europe’s
average) and 69% if we include VAT. A similar (albeit to a lesser extent) case is
Berlin where since the introduction of the Energiewende, the energy tax component
represents 30% of the end-user price of electricity.
18,72
11,98
9,68 9,17 8,71 8,38 8,2 8,02 7,96 7,49 7,49 7,38 7,14 6,93 6,82 6,6 6,41 6,34 6,19 6,07 6 5,93 5,92 4,94 4,84 4,31
7,60
0
2
4
6
8
10
12
14
16
18
20
Sto
ckh
olm
(SE)
Lis
bo
n (
PT
)
Sofi
a
Pra
gu
e (
CZ)
Belg
rad
e (
RS)
Wars
aw
(PL)
Viln
ius (
LT
)
Ro
me (
IT)
Lju
bljana (
SI)
Zagre
b (
HR
)
Bra
tisla
va (
SK
)
Mad
rid
(ES)
Ath
ens (
GR)
Co
pen
hag
en
(D
K)
Berl
in (
DE)
Vie
nna (
AT
)
Am
ste
rdam
(N
L)
Rig
a (
LV
)
Bu
ch
are
st
(RO
)
Tallin
n (
EE)
Du
blin
(IE
)
Bu
dap
est
(HU
)
Pari
s (
FR
)
Lon
don
(G
B)
Bru
ssels
(BE)
Lux
em
bou
rg C
ity (
LU
)
Avera
ge
c€ p
er k
Wh
End-user gas price at PPS (February 2016)
Source: HEPI by Energie-Control Austria, MEKH and VaasaETT Ltd.
9
Overall, the results show that market forces represent only about half of the end-
user 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. In places where the energy component (the competitive part of the price)
is lower, so is the incentive for customers to look for more competitive offers4.
Figure 7 Residential electricity price breakdown (February 2016)
4You may download the latest version of VaasaETT's survey of utility customer switching at
http://www.utilitycustomerswitching.com.
29% 31%
64%
44%
54%
28%
11%
38% 38%
38%
35%
59% 53%
41%
53%
45%
32% 38%
37%
82%
40% 48%
28% 32% 35% 33% 35% 32% 29%
40%
29%
44%
20%
33%
25%
42%
21%
33% 25%
29%
19%
24%
16% 37%
29%
17% 34%
34% 43%
13%
34%
33%
53% 40%
42% 51%
34% 46%
31%
32%
26%
8%
0%
3% 5%
13%
49%
12%
17%
19%
30%
12%
19% 0%
6%
28% 16%
10%
13%
0%
8% 1%
11% 7%
0%
13% 4%
20%
12%
17% 17% 17% 20% 15% 17% 20% 17%
19% 14% 16%
5% 11%
21%
12% 9% 17% 17%
7% 5%
17% 19% 19% 17% 17% 17% 18% 17% 20% 16%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Vie
nna (
AT
)
Bru
ssels
(BE)
Sofi
a (
BG
)
Zagre
b (
HR
)
Nic
osia
(C
Y)
Pra
gu
e (
CZ)
Co
pen
hag
en
(D
K)
Tallin
n (
EE)
Hels
inki (F
I)
Pari
s (
FR
)
Berl
in (
DE)
Lon
don
(G
B)
Ath
ens (
GR
)
Bu
dap
est
(HU
)
Du
blin
(IE
)
Ro
me (
IT)
Rig
a (
LV
)
Viln
ius (
LT)
Lux
em
bou
rg C
ity (
LU
)
Vallett
a (
MT
)
Am
ste
rdam
(N
L)
Wars
aw
(PL)
Lis
bo
n (
PT
)
Bu
ch
are
st
(RO
)
Belg
rad
e (
RS)
Bra
tisla
va (
SK
)
Lju
bljana (
SI)
Mad
rid
(ES)
Sto
ckh
olm
(SE)
Avera
ge
Energy Distribution Energy Taxes VAT
Source: HEPI by Energie-Control Austria, MEKH and VaasaETT Ltd.
© 2016 VaasaETT Ltd.
10
Figure 8 Residential gas price breakdown (February 2016)
Visit our project webpage at www.energypriceindex.com and subscribe to
the free monthly update of the HEPI index for Europe.
41% 45% 51%
68% 62%
20%
66%
43%
56%
71%
52% 58%
51%
37%
49% 49% 58%
39%
57%
33%
45%
74%
50% 40% 43% 39%
50%
30%
33%
33%
12% 21%
26%
10%
36% 18%
21%
26% 21% 31%
24%
29% 29%
33%
10%
24%
40%
38%
17%
33%
32% 36%
30%
27%
12% 4%
0% 0%
0%
33%
8% 7%
10%
3%
10% 0%
6%
23%
4% 4%
2%
34%
0% 10%
0%
0%
0%
10% 4%
11%
8%
17% 17% 17% 20% 17%
20% 17% 14% 16%
5% 11%
21% 12% 16% 17% 18%
7% 17% 19% 17% 17%
9% 17% 18% 17% 20% 16%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Vie
nna (
AT
)
Bru
ssels
(BE)
Sofi
a (
BG
)
Zagre
b (
HR
)
Pra
gu
e (
CZ)
Co
pen
hag
en
(D
K)
Tallin
n (
EE)
Pari
s (
FR
)
Berl
in (
DE)
Lon
don
(G
B)
Ath
ens (
GR
)
Bu
dap
est
(HU
)
Du
blin
(IE
)
Ro
me (
IT)
Rig
a (
LV
)
Viln
ius (
LT
)
Lux
em
bou
rg C
ity (
LU
)
Am
ste
rdam
(N
L)
Wars
aw
(PL)
Lis
bo
n (
PT
)
Bu
ch
are
st
(RO
)
Belg
rad
e (
RS)
Bra
tisla
va (
SK
)
Lju
bljana (
SI)
Mad
rid
(ES)
Sto
ckh
olm
(SE)
Avera
ge
Energy Distribution Energy Taxes VAT
Source: HEPI by Energie-Control Austria, MEKH and VaasaETT Ltd.
© 2016 VaasaETT Ltd.
11
For More Information
Christophe Dromacque
HEPI Project Manager
Office: +358 (0)9 4159 0344 Mobile: +358 (0) 449066822
Email: [email protected] (English / French)
Rafaila Grigoriou
Analyst
Email: [email protected] (English / Greek)
Hanna Launonen
Assistant analyst
Mobile: +358 (0) 40 768 9394 Email: [email protected] (English / Finnish)
Silke Paizoni Regulation and Competition
Office: +43 (1) 24724 715 Email: [email protected](English / German)
László Szabó
Head of Unit of Analysis and Modelling Department of Analysis and Statistics
Office: +36 1 459 7910
Email: [email protected] (English / Hungarian)
12
About the Authors
Energie-Control Austria
Energie-ControlAustria was set up by the legislator on the basis of the new Energy
Liberalisation Act and commencedoperationon 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