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Understanding electricity prices

TO HELP household electricity consumers become more knowledgeable about the factors that go into the final price they pay for electricity, www.energia.sk, an internet portal focusing on energy issues, has prepared a special section on its website that explains the individual parts that add up to a consumer’s final monthly electricity bill.

TO HELP household electricity consumers become more knowledgeable about the factors that go into the final price they pay for electricity, www.energia.sk, an internet portal focusing on energy issues, has prepared a special section on its website that explains the individual parts that add up to a consumer’s final monthly electricity bill.

“The price of electricity as a commodity makes up less than one-half of the final, or integrated price, that electricity consumers pay in their bills,” said Michal Hudec, the creator of the new service and publisher of the energia.sk website, in explaining why he developed the information. “The rest consists of costs linked with transmission and distribution of electricity and various additional fees, for example to support development of renewable energy resources and to exploit the use of brown coal in the economic interests of the state, as well as for decommissioning of nuclear power stations owned by the state, the A1 and V1 units in Jaslovské Bohunice.”

The goal of Hudec’s initiative is to provide electricity consumers with information that shows how these various factors affect the final price.

The final price for household electricity consists of six cost factors, with the price of the electricity itself and fees for its transmission and distribution accounting for the largest portion. But the actual final cost for each individual factor also varies according to the consumption category of a household and there are six of these categories.

The cost of generated electricity acquired via the European Energy Exchange (EEX) accounts for 34 to 53 percent of the total price to consumers and the fees for transmission and distribution range from 16 percent to 45 percent of the total price.

A tariff for operation of the system, which is to cover the costs for the electricity market operator, plus additional fees to support development of renewable energy resources and combined production of electricity and heat, and other state energy policies adds from 8 to 12 percent to the final price for household consumers.

A tariff for system services ranges from 5 to 7 percent and includes the costs for maintenance of voltage and frequency within the electrical grid. Another fee is assessed to cover electricity losses during distribution, and accounts for 6 to 9 percent of the final bill.

The last item is a fee that all consumers pay to the National Nuclear Fund for decommissioning of nuclear facilities; it accounts for 2 percent of the bill for all household categories.

Value added tax of 20 percent is also added to the final price for electricity.

The new website uses data provided by Slovakia’s Regulatory Office for Network Industries (ÚRSO) and Stredoslovenská Energetika, one of Slovakia’s three main electricity distributors – those that were operating in the market before its liberalisation – is a partner with the website.


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