The development of European household electricity and gas prices between January 2009 and October 2023 is presented in another study by VaasaETT and two of the leading energy market regulators – Energie-Control Austria and the Hungarian Energy and Utilities Regulatory Authority ( MEKH). The index is calculated by weighting the prices in each of the capital cities according to the respective national consumption of electricity or gas.
The research, which is published every month, shows how household energy prices have changed before tax in October 2023 for end users in European capitals. It covers both EU member states and some of the countries of the European Energy Community (Montenegro, Norway, Serbia and Ukraine) plus Great Britain and Switzerland.
As of January 2022, the HEPI Electricity Index, which climbed the steepest step in historical data in January 2022 and reached a peak in October 2022, then followed a downward trend and is currently at 198 points (EUR-15 ).
As for gas prices, experts recall all the difficult periods of 2009, and that “the ongoing energy crisis strongly affected the price index of this fuel in 2021, going from 87 points in January 2021 to 163 points in November 2021. Subsequently, its value doubled again in November 2022 and reached 350 points. VaasaETT calculates that it is currently at the level of 179 index points.
Looking at average prices for end-users, both for electricity and gas, the following changes are observed: compared to a year ago (October 2022), electricity bills in all EU capitals fell by 27% , and those for gas – by 35%.
Depending on where in Europe an end-user lives in the 33 European capitals surveyed, as of October 2, 2023, the price they pay could vary by a ratio of more than 8. If Kyiv is included, the price is a ratio of more than 12. Once again, the research reports that for household customers in Europe, the most expensive cities are London and Dublin, followed by Berlin, Rome and Copenhagen, the research indicates. Kyiv (counting the state of war) has the cheapest electricity, followed by Oslo, Belgrade and Budapest.
In nominal terms, the price in the capitals of Eastern Europe (CEE) tends to be lower than the average. Prague, Riga and Tallinn are the only CEE capitals where the cost of electricity is above the European average.
The most significant changes that occurred on the electricity market in October are the following:
• 7% price increase in Copenhagen, due to an increase in the distribution component;
• 4% rise in prices in Dublin, due to a rise in the energy tax component, after the public service charge returned to zero (it had been negative for the last few months);
• 3% increase in the price in Vilnius, due to an increase in the price of the energy component;
• 2% increase in prices in Nicosia, due to the growth of the energy component;
• 21% price reduction in Oslo, due to a decrease in the energy component;
• 11% drop in prices in Vienna due to a reduction in energy and energy components;
• 9% decrease in the price in Helsinki, due to a decrease in the energy component;
• 8% price reduction in Stockholm, due to a decrease in the energy component;
• 8% drop in prices in Warsaw, due to cheaper energy and distribution components;
• 4% lower prices in London;
• 2% reduction in prices in Riga and Rome, due to a drop in their energy components.
About half of the capitals surveyed maintained their prices at the previous month’s levels, and 1/3 of them experienced price declines, with the most significant reductions once again seen in the Nordic countries. On the other hand, increases in retail electricity prices are mostly small-scale and limited to only 7 of the 33 capital cities. Electricity prices currently remain significantly lower than a year ago as mild weather across Europe delays the start of the heating season and thus puts pressure on energy prices, VaasaETT experts find. They also share the specific observations for some of the observed capitals.
For example, according to them, the increase in the price of electricity in Copenhagen is due to the adjusted network tariffs that came into force on October 1. Network costs during the winter period, from October to March, are historically higher compared to those during the summer months.
Dublin has seen prices rise by 4% this month as a result of the Public Service Obligation (PSO) charge, which is a result of supporting the country’s renewable energy production.
In Vilnius, the increase in the price of electricity for the end user in October was mainly due to the increase in the wholesale market, which in turn was the result of the decline in local RES production and the activity of the interconnection “Nord Balt” to Sweden, which led to a restriction of electricity imports.
On the other hand, this month saw significant price drops in Scandinavian countries, such as Oslo, for example. Specifically, the 21% reduction in consumer prices after the series of price drops in August and September. In particular, this leads to a cumulative drop in prices of more than 50% since July. Experts explain these low values with Nordpool’s spot prices. Accordingly, the price levels for end users in Helsinki (-9%) and Stockholm (-8%) are also lower. In the coming month, however, retail electricity prices are expected to shift to an upward trend in this region in line with increased winter energy needs.
Regarding Warsaw, according to the study, the 8% drop in the price of electricity for the end user in October was due to a change in the current support measures, according to which electricity prices are frozen to the 2022 levels applicable to specific consumption. The consumption threshold was increased in October from 2,000 kWh to 3,000 kWh per year, meaning there is now a price freeze on the total electricity needs of a typical household consumer, thereby further reducing their overall electricity bill.
When adjusted for purchasing power standards (PPS) in each country, the picture changes substantially. The PPS is an artificial common reference currency that eliminates common differences in price levels between countries. When expressed in PPS, energy prices are illuminated relative to the price of other goods and services.
The lowest adjusted household electricity prices are in Oslo, Valletta, Budapest and Helsinki, while the highest are currently in Prague, Riga and Dublin. Most of the CEE countries tend to have electricity prices that are relatively low compared to those in Europe. However, this is not the case in October for Bucharest, Prague, Riga, Tallinn, Vilnius and Warsaw. In these capitals among the CEE countries, where the price of electricity is above the average for Europe, the authors of the study come to this conclusion, and not for the first time.
The study shows that, on average, for EU capitals, energy (the disputed price component) represents 56% of the value of the final consumer’s electricity bill, distribution – 24%, energy taxes – 5%, and VAT – 14%.
In terms of the price of natural gas paid by residential customers in 28 European capitals as of 2 October 2023, the highest price once again falls to residents of Stockholm, who pay almost 3 times the average European end-user price. followed by those of Bern, which is the second most expensive capital. The study authors attribute this to the nature of the Swedish gas market and in particular its small size. Amsterdam is currently the third most expensive capital city. The price in Stockholm is almost 11 times higher than in Budapest, which is the cheapest city for this fuel in the EU, and over 14 times more if Kyiv is included. Natural gas for households is generally cheaper in CEE countries; Ljubljana and Prague are the only capitals among CEE countries where the price of natural gas is above the European average.
The most significant changes that occurred on the natural gas market in October are the following:
• 15% price increase in Tallinn, due to increase in energy and distribution components;
• 11% price increase in Brussels, due to the growth of energy and energy components;
• 11% jump in the price in Paris, due to an increase in the energy component;
• 4% price increase in Athens, due to an increase in the energy component;
• 2% price increase in Copenhagen, due to the growth of the energy component;
• 10% price reduction in Prague, due to a reduction in the energy component;
• 3% drop in prices in London;
• 2% decrease in the price in Sofia, due to a decrease in the energy component.
In October, the price of natural gas for end users followed a slight increase, on average for the whole of Europe, but maintained its general stability observed since the beginning of the summer. Retail prices remained unchanged in the majority of the surveyed markets, with an increase in 1/4 of them. On the other hand, only 3 of the 28 capitals examined are facing a price decline. Currently, gas stocks continue to remain at high levels due to a delayed start to the heating period associated with mild weather across Europe. In October, the benchmark TTF index fluctuated above the €50/MWh mark for the first time since mid-August as a result of the shutdown of the Baltic Sea gas pipeline and geopolitical tensions in the Middle East, reminding European energy markets of existing volatility, especially in the period anticipation of the heating season, the research indicates.
The price of natural gas for the end user rose by 15% in Tallinn after Eesti Gaas, the largest local gas supplier, announced new higher prices for household customers from October. According to the company, the increase is due to the general rise in prices on the European gas markets. In addition, gas prices are expected to rise further in the winter, with Eesti Gaas already announcing further price hikes from December onwards. Likewise, the rise in natural gas prices for end users in Paris and Brussels is linked to the overall growth seen in European gas hubs. The rising trend indicates that some markets have decided to pass on the increase in wholesale prices to consumers, experts said.
They also take into account the observed significant decrease in domestic natural gas prices this month in Prague as a result of lower levels announced since August by several suppliers.
Similarly, as with electricity, PPS gas prices give a much different picture than the current prices. In the month of October, Budapest, Zagreb and Belgrade are the cheapest cities adjusted to PPS.
VaasaETT’s October survey shows that on average, energy (the contested component) for European capitals accounts for 56% of the end-user price of natural gas, distribution 21%, energy taxes 9% and VAT 15%.
Overall, the results show that market forces account for around 56% of the end-user price for both electricity and gas, while national fiscal and regulatory elements are responsible for the remaining 44% through distribution tariffs, energy taxes and VAT.
The current energy crisis has led to a significant increase in the average energy component in EU capitals. The end-user energy share of the electricity price was 48% in October 2021, then rose to 67% a year later and is currently 56%. Similarly, in the natural gas market, the percentage of the energy component of the end-user price was 51% in October 2021, before reaching 70% in October 2022 and 56% in the month of October. In places where the energy component is lower, so is the incentive for customers to seek more competitive offers.