The ABC of Electricity Tariffs

Electricity bill in Greece is a very tricky and confusing document, which, thanks to the small print in contracts, tricks on the part of government officials and lawyers of electric companies, magically adds 12 different fees, surcharges and taxes to the cost of electricity, often increasing the total amount by several times relative to the real cost of electricity.

This publication is an attempt to understand the situation.

Note: Most of the electricity bill corresponds to payments to third parties (municipalities, ERT, etc.) and these amounts have nothing to do with electricity. in fact, for now and in the near future, we will continue to pay government and local government salaries through electricity bills, social tariffs for vulnerable customers, subsidies for islanders, and like the icing on the cake – collection for theft and loss of electricity.

The ABC of Electricity Tariffs

1. Payment for electricity. This is a base fee that varies from supplier to supplier depending on the contract signed by the consumer. It is usually low because it is used as bait by suppliers to persuade consumers to choose them over competitors. The fee is proportional to electricity consumption and fixed costs, which are attached to the invoice. Energy consumption is based on clock readings and is measured in kilowatt hours. The amount charged for electricity each month is calculated by multiplying the kilowatt-hours consumed by the unit price of each bill. In many cases, suppliers accompany these costs with a persistence discount.

2. Regulation on the adjustment of the delivery fee. This is the amount that has sharply increased the final amount that consumers pay for electricity since August. Often this is not even referred to as an adjustment clause, but refers to an article in a contract signed with a supplier by a consumer who is surprised to discover in retrospect how important the fine print is. Last year, when the wholesale price was 40 euros per megawatt hour, no one paid attention to this critical tariff limit. This year, when the wholesale price jumped to 228.9 euros in November and to 416 euros last week, it was the largest amount on the bill, continuing to rise. It is used by all private providers, not always transparently, and since August last year – DEN (with the exception of fixed tariffs). With its activation, suppliers move to the consumption of an increase in the cost of electricity supply and a corresponding decrease. This second version is mostly theoretical, as it happens that providers set activation thresholds that do not match the fluctuations of the wholesale market. But also when this happens, for example, during the blocking period last year with a fall in gas prices and instead of a decline. On the consumer side, the situation has increased the profit margins of suppliers. On the contrary, in times of high commission costs, such as the current one, the item is activated immediately, transferring all surcharges to consumers. This is why regulatory provisions have become widely known in recent months, which has unpleasantly surprised consumers.

3. Fee for using the transmission system. Covers the costs of operation, maintenance and development of the transmission system from manufacturing plants to substations in urban areas. Through this commission, consumers pay ΑΔΜΗΕ (the independent transmission operator SA is the transmission system operator for the Hellenic transmission system) the relevant costs, which are approved by the PAE (Energy Regulatory Authority). For 2021, we will pay ΑΔΜΗΕ 211.6 million, which is 6% more than in 2020.

4. Fee for using the distribution system. It covers the costs of operation, maintenance and development of the medium and low voltage distribution network, and the calculation is similar to the corresponding cost of using the transmission system. The charge depends on the clock frequency (single-phase or three-phase) of the power supply and the power consumption. In 2021, consumers will pay ΔΕΔΔΗΕ (Greek distribution grid operator) through this PAE-approved 771 million levy, following a € 1.5 million cut in executive bonuses and employee boarding costs included by ΔΕΔΔΗΕ, based on that they have no reward for consumers, which means they don’t have to pay for them. The PAE directly challenged the issue of reimbursement of the two managers and established a new basis for calculating the annual allowable income based on incentives to improve the services offered. “The outdated logic of guaranteed profitability (cost plus) will gradually recede, pushing managers to improve the performance of their services for the benefit of consumers,” said RAE President Athanasios Dagoumas, who is promoting the idea. It happens that consumers finance high-yield investments in a distribution system that, under normal circumstances, has the highest failure rate in Europe and is extremely vulnerable to extreme weather events. What we don’t know is that while we pay dearly for the infrastructure that supplies electricity to homes, offices and businesses, we incur more than € 300 million in annual costs, and this amount increases as the price per kWh rises. due to energy losses.

5. Utilities. Fees ΥΚΩ (Utilities) cover the increased cost of generating electricity on unconnected islands to ensure a uniform tariff across the entire territory. They also cover the cost of the subsidized tariff for large families and the cost of the social housing tariff, which includes vulnerable groups of the population, long-term unemployed, people with low incomes, etc. The cost for the population of the country is estimated at 500 million euros. Even higher, about 800 million –1 billion euros, is the cost paid on electricity bills as payment ΥΚΩ for the power supply of the unconnected islands. Although ΑΔΜΗΕ has completed a significant portion of the island’s connections to the country’s mainland system, the savings amount to about $ 500 million. The received euros (Cyclades and Crete-Peloponnese) are currently not returned to consumers. In fact, it is most likely that there will be no relief for households in 2022, as the competent ministry is focused on managing the related account surplus in the industry in order to mitigate the huge burden of the price race. On a four-month basis, the ΥΚΩ charge starts at € 6.90 per megawatt-hour for consumption of up to 1600 kilowatt-hours, from € 50 for consumption up to 2000 kilowatt-hours, and reaches € 85 for consumption over 2000 kilowatt-hours, since the competent ministry is focused on then to channel the corresponding account surplus in the industry to reduce the burden of the growth race.

6. Special duty for emission reduction. The fee covers guaranteed prices for producers ΑΠΕ (renewable energy sources) and has been reduced in 2019 for domestic consumers to € 17 per megawatt hour from € 23 per megawatt hour. Monthly for ΕΤΜΕΑΡ we pay about 46 million euros.

7. City fees, council tax, property tax. By law, they are collected for the benefit of third parties through electricity bills from suppliers and under threat of power outages. The fee is calculated based on the footage of the house and its location.

8. Collection in favor of ERT. The levy in favor of the ERT (state-owned Greek television and radio company) has been established by law and is 3 euros per month (i.e. 36 euros per year) per site.

9. Special Commission DETE. It was also imposed by a law (2093/92) called “Special Customs Duty (DETE)” and is attributed to the state in favor of customs officials. It is calculated based on the cost of electricity consumed plus the fee Ειδικοί Φόροι Κατανάλωσης (excise duty).

10. Excise duty. Introduced by law in 2010. It is calculated for consumption at a rate of 13 per kilowatt, is debited only to clearing accounts, and is also subject to VAT (value added tax). * The imposition of VAT on government taxes and fees is an original Greek invention.

11. VAT (ΦΠΑ, value added tax). This is a value added tax, which is included in the volume of electricity consumption and is 6%. It is included in the bill for the transportation of electricity, excise taxes and some other taxes).

12. Loss to theft

Payment for electricity losses. This is an invisible fee, which is included in the price of electricity bills with the LP 1 code and can be accurately described as losses due to theft and “mess”, since it mostly covers the consumed electricity that consumers do not pay. In other words, it is payment for stolen electricity. Energy that enters the system, but does not reach the consumer due to technical losses or is not recorded on the meters due to theft, is calculated at the corresponding purchase price, and this cost is included as an increase in the supply price by suppliers.

At today’s wholesale prices, the home consumer pays € 35 per megawatt-hour for energy losses, which is less than the government subsidy to avoid the increase. Based on the guaranteed profitability and safety of monopoly activities, ΔΕΔΔΗΕ obliges regular consumers to pay for the electricity consumed by those who steal from the grid. It is characteristic that in the crisis decade of 2010-2018, electricity losses “walked” within 8% per year, while the current growth of these losses ΔΕΔΔΗΕ is mainly explained by thefts from consumers, which currently account for 14% of the consumption of household users.

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