What does your electricity bill consist of?
The total price of electricity consists of three parts: the price of electrical energy, an electricity distribution charge and taxes. Electrical energy accounts for about 40% of your electricity bill, while electricity distribution and taxes both make up about 30% of it. These shares may vary depending on the metering point, contract type and consumption volume.
Electrical energy
Electrical energy is the electricity you consume after buying it from your selected electricity provider. The electrical energy charge consists of a fixed monthly basic charge and a consumption charge that depends on how much electricity you have used.
Your electricity contract type affects the price of electrical energy and its fluctuations. Based on the price, contracts can be divided into three types:
- In a fixed-price contract, the price is agreed in advance, and it will not change during the contract period. The price is always the same, no matter what time of the day you use electricity.
- In a spot-priced contract, the price may vary hourly and from day to day. The price of electricity under the contract is based on such variables as its price in the power exchange.
- Hybrid contracts are a combination of fixed-price and spot-priced contracts. The price of a hybrid contract consists of a pre-agreed fixed portion and a part that varies according to consumption.
Consumers should regularly shop around for cheaper electricity contracts. Consumers and other small end-users also have the right to purchase electricity from a provider obliged to supply electricity in its area.
Electricity transmission
The distribution charge includes the supply of electricity to the consumer’s home and the costs of maintaining and developing the electricity network. In addition to a charge based on your consumption, your electricity bill includes a fixed monthly charge. A single network operator is responsible for the transmission network in your area, as building competing networks is not economically viable. This means that you cannot swap network operators.
The consumption-based charge (cents/kWh) is priced according to the electricity metering method:
- The price of general electricity is always the same regardless of the time of the day at which you use it. Small apartments and terraced houses typically use general electricity.
- In time-based pricing, there is a different rate for day and night-time use. The time after which electricity is charged for at night rates depends on the network operator. Time-based electricity pricing is often used in terraced and single-family houses with electric heating.
- Seasonal electricity contracts have different rates for electricity consumed on winter days and during other periods. The periods during which different seasonal rates are charged also vary between network operators. Seasonal electricity is particularly suitable for metering points where a high volume of electricity is consumed in summer or at night-time.
- Large consumer rate: in metering based on a large consumer rate, the maximum simultaneous power consumption affects the total amount.
You select the metering method when you order your electricity connection, and if necessary, you can change it by contacting your network operator. You can change the metering method free of charge once a year.
As electricity transmission is a natural monopoly, the Energy Authority monitors transfer pricing to ensure that it is reasonable.
Taxes
In addition to the price of electrical energy and the electricity distribution charge, your electricity bill will also include value added tax, electricity tax, and a strategic stockpile fee.
All components of the electricity bill are subject to VAT (at 25.5%): charges for electricity consumption and transmission as well as the fixed monthly charges for both. You also pay VAT on the electricity tax part of the bill.
The electricity tax and the strategic stockpile fee included in it are billed in connection with the network service charge. Your tax will be based on the amount of energy you consume (cents/kWh).
How many electricity bills?
Usually, you receive one electricity bill from the electricity provider and another from the network operator. If you have a contract with a local electricity provider, both charges may be billed in a single invoice.
Track your electricity consumption
You can track your electricity consumption by accessing the national Datahub service or the online service of your electricity company.
In the Datahub of the national grid operator Fingrid, you can find information on your metering point and electricity contracts and view your electricity consumption during a selected period.
Each electricity company also offers its customers the possibility of monitoring their electricity consumption. These services vary between companies, many of which provide mobile applications that make it easy for you to track your consumption regularly. Your electricity bill also shows an estimate of your annual consumption based on the previous year.