The Price of electricity distribution – what does my electrical distribution invoice consist of?

The euro you pay is distributed as follows after VAT and electricity tax:

Of every euro you pay, 70 cents is used to improve the network and to provide the network service to our customers. The amount of energy transmitted only impacts around 20 per cent of the costs.

The electricity network works like a telecommunications connection – you pay for the bandwidth and not for how much data is transferred. Likewise, the road network is available whenever you need it. In the electricity distribution fee, you pay for the existence of the electricity network and the possibility to use electricity. 

The electricity distribution price consists of the basic distribution fee and the part based on electricity consumption, as well as a possible power-based power fee. The costs of electricity distribution arise mainly from the construction, development and maintenance of the network and from the financing of these. The amount of energy used has little effect on these costs. As a result, the share of the basic fee in the distribution fee is high and the variable consumption fee is lower.

Electricity tax is collected on the electricity distribution invoice, which is forwarded to the state.

With the electricity distribution fee, you get all the services related to electricity network operations

Customer service, electricity metering service, 24/7 fault reporting service and fault repair in all situations are included in the electricity distribution price (also known as network service fee). The fees also cover electricity network maintenance, development, construction of the new network, as well as modernisation of the old network to meet the needs of the future.

Then, what about the connection fee?

The connection fee only covers the costs of connecting to the network, i.e. the construction of the actual electricity connection.

What does the price of electricity distribution look like in the future?

At Caruna Oy, the improvement of the electricity network is about halfway. In addition to improving the weather resistance of electricity distribution, investment needs will also be brought about by the growth of renewable energy production, including, in particular, large wind farms, increased flexibility needs and the ageing of the network. Annual investment volumes have levelled off and will continue to do so in the coming years. Due to this, Caruna Oy's needs for price increases are estimated to be small in the coming years.

Caruna Oy's electricity network is about 80,000 km long and extends from Hanko to Kuusamo. The network area is geographically challenging for electricity distribution, as there are many forests with overhead lines in the area. During storms, trees falling on lines or accumulating heavy snow can cause power outages. The company's network also includes the Turku archipelago and the west coast, which are very sensitive to storm winds.

In Espoo, the population is forecast to grow by an average of 1.6 per cent per year by 2028. There is still room for improvement in the reliability of electricity distribution in the outskirts of the city of Espoo and in the archipelago. In the coming years, Caruna Espoo's investments will primarily focus on enabling clean energy solutions in housing, transport and heat production.

Caruna Espoo's electricity network is 8,100 km long. In the network area, investments per customer are clearly lower than in Caruna Oy. Smaller investments, together with a growing number of customers and declining interest rates, will make it possible to reduce distribution prices.

Comparison of Caruna's distribution prices with other companies in the sector

The price differences between electricity distribution companies are usually due to the relationship between the amount of network assets and the number of customers. The greater the number of customers sharing the value of network assets (metres per customer), the lower the prices for customers.

For Caruna Oy's 482,000 customers, the length of the network is considerably longer per customer: 168 metres and investments of EUR 254.4 per customer (a total of EUR 121.9 million in 2020). Depending on the type of housing, the price of electricity distribution for Caruna Oy's customers is in the most expensive quarter among 77 electricity distribution companies.

The price of electricity distribution for Caruna Espoo Oy's 226,000 customers is among the most inexpensive fifth in Finland, as the network has been largely modernised, and the costs of the network are shared by several city residents in a densely populated area. The length of the network per customer is 36 metres and investments EUR 95 per customer (in 2020, a total of EUR 21.4 million).

The prices of Finnish distribution companies are public information

The Energy Authority updates the price information on its website, and anyone can check the prices of all electricity distribution companies. Company-specific prices are updated monthly and can be found on the tabs in the table.

In the comparison, the average prices are displayed by type of user. The type user is a customer group that uses electricity in different ways, such as residents in apartment buildings or residents in electrically heated detached houses.

The price includes the average price according to the cheapest product for each customer group with the presented annual consumption. For example, for a user in an apartment building (2,000 kWh) times the unit price of general distribution cnt/kWh + basic fee €/month times 12 + taxes, and finally, the annual cost obtained is divided by gross consumption, resulting in the average price (cents/kWh).

How can I impact my electricity distribution invoice?

With your own electricity consumption, you can impact both the variable (network service) fee (c/kWh) and the electricity tax (c/kWh). These account for about 50 per cent of the annual electricity distribution fee in an apartment building and about 75 per cent in an electrically heated detached house.

Finnish electricity invoice in EU comparison - expensive or cheap?

In European comparison, the Finnish electricity user is doing quite well. Finns pay a relatively low price for their electricity, although there are large differences between countries. Electricity prices for household users in the EU are highest in Denmark (€0.29/kWh) and lowest in Bulgaria (€0.10/kWh).

In 2020, the Finnish electricity user paid approximately 0.18 euros/kWh for household electricity (including energy, distribution and taxes).

  • Apartment building, 0.19 euros/kWh
  • Detached house or terraced house (consumption approx. 5,000 kWh/year) 0.16 euros/kWh
  • Heating with electricity 0.12 euros/kWh
    In relation to purchasing power, the consumer price of electricity in Finland is one of the cheapest in Europe. Source: Eurostat, Finnish Energy
     

Priorities for the development of Caruna's electricity network in the near future

We will continue our investments as planned, and we will schedule them over a longer period at Caruna Oy. For Caruna Espoo Oy, the deadline for investments will continue to be 2028.

The importance of cost-efficiency will be further emphasised. The focus of Caruna's investments will shift to the low-voltage network, where, for example, local conditions and demographic trends will influence the choice of various solutions.

We are also actively looking for new ways to improve electricity quality and reliability of supply. For example, we will utilise battery storage.

For more information about electricity network development, see our Annual Report.

Why do I pay for network improvements?

Today's society is highly dependent on electricity, and uninterrupted electricity supply is a basic precondition for both everyday living and business operations. Our electricity network, built mainly in the 1960s and 1970s, requires continuous and long-term development work, such as the renovation and construction of substations.

We want to make sure you get value for your money; a modern electricity network that operates reliably in all weathers and locations. The current electricity network cannot meet future needs. By investing in the development and modernisation of the electricity network, you will get the smoothest possible electricity supply both now and in the future. We are improving and modernising the electricity network so that it operates reliably and enables an increase in electric cars and solar panel production.

A modern electricity network also means fewer power outages and faster repairs.

Read more in the Annual Report.

Up-to-date information on ongoing work sites

We are modernising our electricity network in both urban and sparsely populated areas. You can check the work sites in your neighbourhood on our map service.

Why have electricity distribution prices risen in recent years?

Prices have risen because the network has been increasingly renewed in recent years to make it more weatherproof and to enable renewable energy production and the use of electric cars. The related annual investment is nearly one million euros.

Caruna companies' investments in 2016–2019 have been about 60 per cent of net sales.

Why are the prices of electricity distribution companies so different from each other?

There are 77 electricity distribution companies in Finland. The price differences between them are explained by the type of area in which the company operates and the number of customers the company has paying for the costs of building the electricity network. Building a network in lake areas or the archipelago is more expensive than in urban areas. On the other hand, the greater the number of customers sharing the costs, the lower the price paid by an individual customer. As a result, the electricity distribution fees of city companies are lower than those of companies operating in sparsely populated areas.

I use our summer cottage quite rarely, but I still have to pay an electricity distribution fee. Why is that?

An electricity network must be in working order at all times. Only 20 per cent of the cost of an electricity network depends on the amount of energy transmitted. The majority, i.e. 80 per cent, is due to the existence and maintenance of the network. Thus, the network company incurs costs even if electricity is not used. This applies especially to summer cottages.

What will happen to prices in the future?

The decrease in the permitted return according to the regulation model due to the lower interest rate level and the levelling off of the pace of investment will significantly reduce Caruna's price increase pressures. Naturally, the companies' situations vary.

At Caruna Espoo Oy, smaller investments together with the increasing number of customers and falling interest rates enable a reduction in distribution prices. 

At Caruna Oy, the improvement of the electricity network is about halfway. In addition to improving the weather resistance of electricity distribution, investment needs will also be brought about by the growth of renewable energy production, including, in particular, large wind farms, increased flexibility needs and the ageing of the network. Annual investment volumes have levelled off and will continue to do so in the coming years. Caruna Oy's price increase pressures are estimated to be small in the coming years.

It is worth remembering that energy and electricity distribution prices in Finland are very competitive compared to most European countries.