Electricity price formation

The total price of electricity is comprised of three components: the share of electricity sales and transmission and electricity taxes.

1. The share of electricity sales

The company that sells the electricity determines the price of electric energy, i.e., the share of electricity sales. Many factors, such as the competitive situation, production costs, and the wholesale prices of electricity affect the price of electricity sales. You can put the share of electricity sales out to tender between different electricity providers. The electricity provider you have chosen will charge you for the electricity you use.

2. The share of electricity transmission

Finland has been divided into areas with only one distribution network operator, i.e., owner of the electricity network, in each. In Tampere, it is Tampereen Sähköverkko Oy. The distribution network operator will charge you for the electricity transmission fee. The customer-specific transmission price depends on the transmission product you use.  The capital, use, and maintenance costs of the electricity transmission network, such as costs due to ground cabling, affect the transmission price. The customer cannot put the transmission price out to tender, but the Finnish Energy Authority does, however, monitor its fairness. You will pay for the use of our electricity network partially on the basis of your own consumption as well. If you consume a large amount of electricity, you are using our network more and thus pay a higher transmission fee.

3. Electricity taxes

Naturally, taxes have to be paid for all this. In the electricity price, the value added tax (VAT) is added on top of the basic fees and energy fees subject to electricity taxes. The amount of the excise tax of electricity depends on which tax category you belong to. The stockpile fee is the same for all electricity users. The security of supply is based on the Security of Supply Act on securing supply in exceptional circumstances and major fault situations.

Typically, electricity sales constitute approximately 40% of the amount on the consumer’s electricity invoice and electricity transmission fees and taxes constitute the rest.

Read more on the Finnish Energy website.