class=”sc-29f61514-0 icZBHN”>
Electricity prices for basic supply customers are rising rapidly. Not only are many paying more this year than in 2022, prices will continue to rise next year. Average (median) prices are rising by 18.2 percent, as the supervisory authority Elcom announced today. From January 2024, a medium-sized household will pay 32 cents per kilowatt-hour of electricity.
This has to do with rising purchasing costs in the electricity markets. But that’s not all, as Elcom boss Urs Meister explains. Some regional suppliers are also using the new option in the law to increase their profits depending on the price situation. And this is at the expense of the captive customer. This provision was originally intended to be a financing tool for Swiss hydropower. How does it work?
Until just a few years ago, there were concerns that Swiss hydropower plants would become unprofitable as market prices were permanently below their generation costs. Anyone who had to sell this electricity on the free market was having trouble.
Once a mixed tariff
The solution was a gimmick that was soon written into the law: Electricity suppliers with their own hydroelectric power plants must be able to sell water energy first at full cost to customers who can’t switch providers. On the other hand, suppliers need to be able to sell imported electricity cheaper to large market customers. Only you can freely choose the provider in the Swiss electricity market.
Previously, a mixed tariff was applied: Average purchase costs across all sources were applicable to small customers. But as soon as it was implemented, small customers suddenly started to benefit from the new provision. Because water power in production cost is now cheaper than energy imported from Germany and France. So what do providers do? As Elcom observes with some displeasure, they are reverting to the old system.
System change to the detriment of customers
Or to put it another way: Thanks to the regulation, electricity suppliers can annually recalculate which of two methods captive customers will pay for higher electricity prices. Then adjust the tariffs accordingly.
As director Meister explains, Elcom’s hands are tied. The law does not regulate or prevent such opportunistic behavior. That doesn’t stop Meister from publicly criticizing the provision: “Optimizing at the expense of customers stuck here doesn’t make sense,” he says. “The systematic disadvantage of basic needs is not the purpose of this provision.”
This article was originally published on the paid service of handelszeitung.ch. Blick+ users have exclusive access as part of their subscription. You can find more exciting articles at www.handelszeitung.ch.
This article was originally published on the paid service of handelszeitung.ch. Blick+ users have exclusive access as part of their subscription. You can find more exciting articles at www.handelszeitung.ch.
Providers should transfer their apps
Meister cannot say how many regional monopolists are taking advantage of this freedom in the law. Have some. Someone wrote to those who made such a system change for the 2023 tariff. Elcom states that suppliers should communicate the system change to their customers. Meister says this is also prescribed by law. Elcom’s account: Regional suppliers who have to make their behavior transparent may avoid the controversial practice. It seems that most people did not announce the change in the application.
Meister cannot say how much money is at stake. It is also unknown whether there are other similar cases for tariffs currently registered in 2024. This is something that should always be accepted.
Elcom assumes relaxation
Elcom now assumes that prices will ease again in the coming years. Price increases in electricity exchanges in recent years still have an impact on assumed supplier prices, as many regional suppliers have gradually increased their purchases over a number of years. However, Elcom President Werner Luginbühl said it can be assumed that prices will fall again from 2025 if the market continues to evolve as it has been recently.
Electricity is now traded on the stock exchange at significantly lower prices than a year ago. Elcom is also confident for the coming winter. European gas storage facilities and Swiss reservoirs are well stocked, Luginbühl says. “Switzerland is well prepared.”
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
