The electricity cost hammer facts: why electricity is cheaper in the neighboring community

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This is somewhat shocking: the price of electricity for Swiss households will increase by an average of 18 percent. The new winter reserve makes the kilowatt hour 1.2 centimeters more expensive. This explains about a quarter of the price increase. However, the purchasing strategy of electricity suppliers is responsible for most of the increase.

This is something to talk about: In some places, the neighbor pays 50 or 100 percent more. In some communities, electricity feels like it’s free. Small jobs are criticized for being unprofessional. Blick answers the most important questions.

Electricity suppliers without a long-term strategy are buying electricity at the current price and have been thoroughly affected by the price boom that followed the outbreak of the Ukraine war last year. Others buy it in slices over a longer period of time or make long-term contracts.

Assuming a supplier buys electricity for a given year spread over three years: then the cheaper old slices are eliminated, and the more expensive ones are added to the current price. There are also suppliers who are afraid of the crisis and buy too much electricity under very inappropriate conditions.

This has grown historically: Municipalities have taken over the supply of electricity themselves in a federalist sense. There are currently around 630 electricity companies. These range from small regional suppliers to international energy companies. Most are publicly owned. About 70 percent are pure distribution companies. Since they do not have their own power plants, they do not produce the electricity themselves, they buy all of it.

And some of these municipal electricity suppliers really gambled last year. The turbulence in the electricity market affected them a lot. “I assume that purchases are not made everywhere with the necessary professionalism,” Elcom President Werner Luginbühl (65) said at a news conference Tuesday. This can have costly consequences for customers.

For Andreas Tresch (33) of energy consulting firm Enerprice at Root LU, the situation is clear: there is no incentive. He says: “Electric companies can profit in a monopoly situation. In addition, electricity companies mostly belong to municipalities; The money that the electricity companies pour into the municipal coffers is very welcome there.” According to the energy expert, utilities are allowed to pass on electricity purchase prices to customers, including a reasonable profit, no matter how expensive they buy electricity.

Large suppliers are in the mid-range in terms of price; they do not have large outliers. A kilowatt hour in BKW has cost between 21 and 27.5 cents in the last ten years. It’s around 30 inches now. That puts BKW about two centimeters below the Swiss average. The relatively small increase is due to the high level of in-house production.

Major providers such as Romande Energie in Vaud or Groupe E in Friborg are slightly above average. In the last decade, households have benefited from tariffs of 14.7 to 17.1 centimeters at power stations in the canton of Zurich, thanks to low purchase prices in the market. The cost of kWh from 2024 will be 31.61 centimeters, which is slightly below the national average.

The canton of Aargau is the most extreme example when it comes to small suppliers: around 100 plants take care of the canton’s energy supply. In terms of cost, the canton ranks first. At 34.82 centimeters per kWh, it is the second most expensive city after Neuchâtel. But are harsh criticisms of minors justified? Markus Wey (57), Managing Director of Elektra Widen Betriebs AG and President of Elektra Hermetschwil, counters: “I don’t understand why Elcom and others are attacking small suppliers now.”

As a mini facility, it received a 21.75 kuruş tariff from Widen Municipality. That’s significantly less than major cantonal provider AEW Energie AG’s 34.82 cents. “Even if the tariffs of some smaller providers have increased sharply, they are often lower than the larger providers on average over the years,” Wey says. He advises many small and medium-sized suppliers in Aargau and sees obvious advantages in the structures: “The right labor and efficiency means that the network costs of smalls are in many cases significantly lower than large ones.”

Another example is Bussnang TG: 2500 residents will pay 21.98 cents per kWh next year. The lowest price in eastern Switzerland and ten centimeters less than the Swiss average. Mayor Ruedi Zbinden (61) explains: “With a long-term strategy, we get our electricity from supplier ECT, not from the electricity exchange. So we have a professional partner.” In the past this strategy was slightly more expensive than the cheapest municipalities. “But now we’re getting paid for sticking with it,” said the President.

This is because of the law: only large electricity consumers who consume more than 100,000 kilowatt-hours of electricity per year are free to choose their electricity provider. An average 4-person household consumes about 5000 kilowatt-hours per year. More than 99 percent of all end customers have no choice of where to buy their electricity. According to Andreas Tresch, there is only one reason utilities stick to low tariffs: “Every year at the end of summer, the Federal Electricity Commission Elcom publishes a map of Switzerland with electricity tariffs in individual communities. Expensive communities are always the focus of the media.”

In the most expensive municipality, Braunau TG, electricity is about five times more expensive at 50.62 centimeters per kWh and at 10.22 centimeters per kWh in the cheapest Zwischbergen VS. While mistakes in the purchasing strategy are at the center in the most expensive municipalities, luck often plays a decisive role in the cheapest municipalities: “We do not need to procure electricity from the open market, we buy it on very favorable terms.” says Sebastian Arnold (37), Mayor of Simplon. Villagers pay only 12.82 cents per kilowatt hour.

On the territory of the municipality of Simplon VS there is a large hydroelectric power station. The concession agreement between the power plant operator and the municipality regulates the municipality’s use of water and the price of electricity. The contract runs until 2037. Some municipalities benefit from such electricity agreements, especially in the cantons of Valais and Graubünden.

Curious: In the municipality of Eggersriet SG, some of the more than 2300 residents pay a cheap 23.58 cents per kWh, while others proudly pay 45.19 cents. The reason is simple. Before the merger, the villages of Eggersriet and Grub had their own power stations and these are still operating separately. The population cannot choose between providers. At practically twice the price, the more expensive supplier will run out of water fairly quickly. Similar situations exist almost everywhere in Switzerland: three different electricity tariffs are applied to households since the municipalities were merged in Rapperswil BE or Grono GR.

Source :Blick