Electricity prices to rise sharply in 2023

As of August 31, 2022, the approximately 630 Swiss network operators had to announce their electricity tariffs for the coming year both to their customers and to the Electricity Commission ElCom. The tariffs are made up of network usage tariffs, energy tariffs, charges to the public authorities and the network surcharge. According to ElCom's calculations of the median values, the situation for 2023 is as follows:

• A typical household with a consumption of 4500 kWh (consumption profile H4) will pay 27 centimes per kilowatt hour (Rp./kWh) in the coming year, i.e. 5.8 Rp./kWh more than in 2022. Calculated over one year, this corresponds to an electricity bill of 1215 francs (+ 261 Fr.).
• Network costs increase slightly; for a typical household by 7 percent from 9.9 Rp./kWh to 10.5 Rp./kWh. Energy tariffs increase for households from 7.9 Rp./kWh to 13.1 Rp./kWh (+ 64 %). Charges and services to the public authorities increase from 0.9 Rp./kWh to 1.0 Rp./kWh (+ 11 %). The grid surcharge remains at 2.3 Rp./kWh.

The picture is similar for small and medium-sized enterprises in Switzerland: network costs, the network surcharge and energy prices as well as levies are also rising here. This means that the total price increases by a median of 27 %.

However, prices vary considerably in some cases between grid operators within Switzerland, mainly due to large differences in energy procurement (share of own production, procurement strategy).

Reasons for the tariff increases

On the wholesale market, a sharp rise in prices has been observed across Europe since mid-2021. The reasons for this are the high gas prices, which rose extraordinarily sharply in the wake of the war in Ukraine. The sharp rise in coal prices, high CO2 prices and the below-average production capacity of French nuclear power plants also had a price-driving effect.

As the Swiss electricity market is closely linked to the European market, price increases also affect Switzerland: Many electricity utilities purchase a large part of their electricity on the wholesale market. Due to the increased market prices, they now have higher energy procurement costs, which they then pass on to customers in the basic supply, e.g. private households, via higher tariffs.

The four components of the electricity price

1. grid usage tariff: Price for transporting electricity via the grid from the power plant to the home. It is determined by the cost of the grid, i.e. for construction as well as maintenance and operation.

2. energy tariff: Price for the electrical energy supplied. The grid operator either generates this energy with its own power plants or buys it from suppliers.

3. taxes paid to the community: Municipal and cantonal levies and charges. These include, for example, concession fees or local energy levies.

4. network surcharge: Federal levy for the promotion of renewable energies, support of large-scale hydropower and for ecological renovation of hydropower. The amount of the levy is set annually by the Federal Council and in 2023, as in the previous year, will be at the statutory maximum of 2.3 cents per kWh.

The 2023 tariffs of the individual municipalities and distribution system operators are now available on the ElCom electricity price website retrievable and comparable.

Source: Swiss Federal Electricity Commission ElCom