Reduce the Impact of Taxes and Levies on Power Bills

The significant and increasing proportion of fixed charges, taxes and levies of the average final household electricity bill reduces the relative savings that households would benefit from decreasing wholesale prices. Retail prices are usually composed of firstly the actual price of energy (some 40–45%); secondly the costs of the networks (distribution and transmission1; some 25 %); and finally taxes and levies (some 30–35 %). The only dynamic part in the retail price is the energy part, while up to 60% of the retail prices are static and unrelated to the actual power price. Therefore, the impact of fixed non-market components that are not cost-reflective (i.e., taxes, levies, and RES charges) on final retail bills must be reduced. Whenever possible, these costs must be transformed into more dynamic market components.

Recommendations

  1. Member States should review their relevant legislation to reduce the price-blunting effect of general taxes, RES charges and levies on the retail energy price
  1. The actual TSO component represents on average 4 % of an end-consumer’s electricity bill (based on preliminary ENTSO-E data from selected countries)