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Winter chill causes home heating headache

The cold winter in Sweden has left every fifth household struggling to pay their electricity bills, according to a new survey published in the Dagens Industri daily.

Published: 19 April 2010 08:37 CEST

Worst hit are those living in houses after spot prices, excluding taxes and utility margins, shot up from 0.37 kronor ($0.05) to 0.93 kronor per kilowatt hour from November to February as a result of the harsh winter and spiralling demand.

With all additions and taxes included, electricity prices peaked at 1.65 kronor per kilowatt hour.

Households with flexible price deals and electric heating have been left to foot bills several thousand kronor higher than normal.

Swedish bank SEB commissioned Demoskop to conduct a survey of households in April to find out if the high electricity prices had caused payment problems. One fifth replied that the high bills were a very significant problem, or quite a significant problem, the newspaper reports.

“It is worrying that so many households are affected. Home owners have benefited from the low mortgage interest rates, so there should be a sufficient margin to meet heating costs,” said Gunilla Nyström at SEB to the newspaper.

Electricity spot prices have now dropped back after the winter highs to around 0.45 kronor per kilowatt hour, which in effect means a total price to the consumer of around 1.18 kronor.

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ELECTRICITY

KEY POINTS: How will Spain tackle rising electricity prices?

On Tuesday, the Spanish government approved a raft of measures to help reduce the ever-increasing electricity bills that those in Spain have been facing in recent months. Here's how they plan to do it and what measures will be in place going forward.

Published: 14 September 2021 18:13 CEST
KEY POINTS: How will Spain tackle rising electricity prices?
How the Spanish government plans on reducing electricity bills. Photo: Michael Schwarzenberger / Pixabay

Electricity prices have been rising to record levels recently, with one of the highest prices yet at €172.78 /MWh, expected on Wednesday, according to electricity market operator OMIE. 

Here’s how the government plan on lowering the price of electricity in Spain. 

Prohibiting companies from cutting off electricity for low-income families

The government has approved a new rule which states that vulnerable consumers (families with low incomes) will be able to benefit from 3.5kW of power – sufficient for an average household for six months – in the event that they are unable to pay. This means that the limit at which companies can now cut off the electricity supply of the most vulnerable has been extended from four to ten months.  

Tax cuts

Special tax on electric power has also been dropped from 5.1 percent to 0.5 percent, as promised by Prime Minister Pedro Sánchez during his interview on TVE on Monday. The suspension of the tax on electricity production has also been extended.  

Electricity auctions

One of the most innovative decisions among these new measures is that the government will call auctions in which the large electricity companies such as Endesa, Iberdrola, Edp, and Naturgy will be obliged to sell a percentage of the energy they generate.  

These auctions, which will have a minimum price to guarantee production costs, will be attended by small trading companies and large industries. These companies will then be able to purchase energy cheaper than in the current wholesale pool. Mainly nuclear and hydroelectric plants will participate in this plan.

The government announced that the first auction will be called before the end of the year. 

Putting a cap on gas prices

During the next two quarters, the price of gas consumed by households will not be updated in accordance with market prices.

Third deputy Prime Minister Teresa Ribera explained that a price hike of more than 28 percent for gas in the wholesale market is expected, while on average the regulated rate will rise below five percent.

In addition, until March 31st 2022, the government will tax the profits of the electricity companies, due to the rise in gas prices. They have established a cap of €20 euros per megawatt hour for gas, and when it rises above that price, the extra profits obtained by the companies will be charged a tax that will be used directly to reduce electricity bills.

Maximum and minimum reservoir levels

After the controversial drainage of reservoirs by the electricity companies coinciding with the maximum prices in the wholesale market, the government has decided to set maximum flow levels that can be discharged each month, and minimum levels that must be maintained in the reservoirs.

This prevents an excessive amount of water from being drained. It will be the hydrographic confederations that will set these amounts.

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