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This article highlights the evolution of electricity and gas prices for both industrial and household users within the European Union (EU). The price of energy in the EU depends on a range of different supply and demand conditions, including the geopolitical situation, import diversification, distribution costs, environmental protection costs, severe weather conditions, or levels of excise and taxation; note that all of the prices presented in this article include taxes and VAT for household consumers but exclude refundable taxes and VAT for industrial/business users.

Main statistical findings

File:Minimum wages, July 2014 (1) (EUR per month) YB15.png
Table 1: Half-yearly electricity and gas prices
(EUR)

Between the first half of 2009 and the first half of 2010, electricity prices for households increased in 16 of the EU Member States (see Table 1) while in nine of the Member States prices went down; Hungary and Malta did not report any price data. During the same period, prices of electricity for industrial/business users decreased in 13 of the Member States, rose in ten others and remained stable in Bulgaria. On average, the price of electricity for households in the EU-27 rose by 2.0 %, while it went down by 2.5 % for industrial users. There were a few notable exceptions to these trends among the EU Member States, as electricity prices fell by in excess of 10 % for household users in Ireland and in the Netherlands. For industrial users, the only countries to report double-digit price increase were Cyprus and Sweden, with increases in excess of 20 % for both of these Member States (while prices in Norway went up by more than 30 % and in Turkey by 14.5 %).

The price of electricity for households was more than three times higher in the most expensive Member State, Denmark (EUR 0.27 per kilowatt hour (kWh)), compared with the cheapest Member State, Bulgaria (EUR 0.08 per kWh). For industrial/business users, the price of electricity in Cyprus (EUR 0.15 per kWh) was slightly more than double the price in Bulgaria (EUR 0.065 per kWh). Some of the price differences between Member States may be attributed to taxes (for household users).

During the period from the first half of 2009 to the first half of 2010, natural gas prices for household consumers went down in 19 of the EU Member States, while they rose in three (Denmark, Poland and Sweden). For industrial/business users of natural gas, prices decreased in 17 of the Member States, but rose in five (Estonia and Lithuania joining the three Member States that also reported rising natural gas prices for household consumers). On average, the EU-27 price of natural gas for households fell by 10.4 % during the period considered, and by 15.5 % for industrial users. There was a significant price increase for industrial users of natural gas in Sweden (up 11.9 %), contrary to the general trend observed, while Swedish natural gas prices for households rose by 15.9 % between the first half of 2009 and the first half of 2010.

Indeed, the highest prices for household consumers of natural gas were registered in Sweden (EUR 28.71 per gigajoule (GJ) and in Denmark (EUR 29.70 per GJ), at nearly four times the lowest price which was recorded in Romania (EUR 7.64 per GJ). Among industrial users, the highest prices for natural gas were recorded in Denmark (EUR 15.81 per GJ), while the lowest prices were registered in the United Kingdom (EUR 5.94 per GJ). Due to the limited penetration of the natural gas markets in Greece, Cyprus, Malta and Finland (household sector only) gas prices for these countries are not presented.

Data sources and availability

Due to a change in methodology from 2007 onwards, there is a break in series and hence a relatively short time series available. Nevertheless, even in this relatively short timeframe, electricity and gas prices have fluctuated considerably - in particular, gas prices.

The transparency of energy prices is guaranteed within the EU through the obligation for EU Member States to send Eurostat information relating to prices for different categories of industrial and business users (prices for the household sector are provided on a voluntary basis), as well as data relating to market shares, conditions of sale, and pricing systems.

Electricity and gas tariffs or price schemes vary from one supplier to another. They may result from negotiated contracts, especially for large industrial users. For smaller consumers, they are generally set according to the amount of electricity or gas consumed along with a number of other characteristics; most tariffs also include some form of fixed charge. There is, therefore, no single price for electricity or gas. In order to compare prices over time and between countries, this article shows information for consumption bands from the household sector and for industrial/business users. There are in total five different types of households for which electricity prices are collected following different annual consumption bands, while for natural gas statistics information is collated for three different types of household. Across industrial/business users, electricity prices are collected for a total of seven different types of users, while for natural gas prices there are six different types of users distinguished.

Statistics on electricity and natural gas prices charged to industrial/business users are collected under the legal basis of a European Commission Decision (2007/394/EC) of 7 June 2007 amending Council Directive (90/377/EEC) with regard to the methodology to be applied for the collection of gas and electricity prices. Directive 2008/92/EC of the European Parliament and Council of 22 October 2008 concerns procedures to improve the transparency of gas and electricity prices charged to industrial end-users. As noted above, gas and electricity prices for households are collected on a voluntary basis.

The prices presented cover average prices over a period of six months (semester) from January to June (semester 1 or S1) and from July to December (semester 2 or S2) of each year. Prices include the basic price of the electricity/gas, transmission and distribution charges, meter rental, and other services. Electricity prices for household consumers are presented in this article including taxes and value added tax (VAT) as this generally reflects the end price paid by consumers in the domestic sector. As industrial/business users are usually able to recover VAT and some other taxes, prices for these enterprises are shown without VAT in this article. The unit for electricity prices in this article is that of euro per kilowatt hour (EUR per kWh); a similar set of criteria are used for gas prices, except the unit changes to euro per gigajoule (EUR per GJ).

Context

The price and reliability of energy supplies, electricity in particular, are key elements in a country’s energy supply strategy. Electricity prices are of particular importance for international competitiveness, as electricity usually represents a significant proportion of total energy costs for industrial and service-providing businesses. In contrast to the price of fossil fuels, which are usually traded on global markets with relatively uniform prices, there is a wider range of prices within the EU Member States for electricity or gas. The price of electricity and gas is, to some degree, influenced by the price of primary fuels and, more recently, by the cost of carbon dioxide (CO2) emission certificates.

These issues were touched upon in a Communication from the European Commission titled, ‘Facing the challenge of higher oil prices’ (COM(2008) 384), which called on the EU to become more efficient in its use of energy, and less dependent on fossil fuels - in particular, by following the approach laid out in the climate change and renewable energy package.

The EU has acted to liberalise electricity and gas markets since the second half of the 1990s. Directives adopted in 2003 established common rules for internal markets for electricity and natural gas. Deadlines were set for opening markets and allowing customers to choose their supplier: as of 1 July 2004 for business customers and as of 1 July 2007 for all consumers (including households). Certain countries anticipated the liberalisation process, while others were much slower in adopting the necessary measures. Indeed, significant barriers to entry remain in many electricity and natural gas markets as seen through the number of markets that are still dominated by (near) monopoly suppliers. In July 2009, the European Parliament and Council adopted a third package of legislative proposals aimed at ensuring a real and effective choice of suppliers, as well as benefits for customers. It is thought that increased transparency for gas and electricity prices should help promote fair competition, by encouraging consumers to choose between different energy sources (oil, coal, natural gas and renewable energy sources) and different suppliers. Energy price transparency can be made more effective by publishing and broadcasting as widely as possible prices and pricing systems.

Data extraction from January 2011