Market update

Electricity prices have increased significantly in Sweden in 2022. As an electricity network company, Ellevio has been hit hard by this development given that we are one of the country’s largest electricity purchasers. Both our fees paid to Svenska kraftnät and our own costs for ‘network losses’ are increasing due to the high electricity prices.

Ellevio neither produces nor sells electricity; we only transmit electricity via our power lines. This means that we do not profit in any way from high electricity prices. On the contrary: we make a loss on them, just like households and companies.

As a result of rising electricity prices in 2021 and 2022 in particular, the Swedish government took initiatives to support packages. The first came in early 2022 and targeted households. Electricity price compensation was paid to anyone whose electricity bills were sufficiently high. The electricity network companies were tasked by the state with paying out this support to their customers.

Several proposals for electricity price support were made during the latter half of 2022, this time targeting companies as well. A final decision on this had not been taken as of 14 September 2022.

Ellevio’s increased costs

The higher costs affecting Ellevio primarily consist of:

1. Network losses on Ellevio’s local and regional networks. For these losses, we have a hedging policy in place whereby around 80 per cent of expected losses are hedged – and where the hedging ratio is gradually built up over a three-year period. This means that higher spot prices will mean higher costs for network losses, but existing hedges will mitigate a lot of these costs.
2. Transmission fees paid to other regional network operators and to the National TSO (Svenska kraftnät, or SVK). These fees consist of a fixed fee and a variable fee that are both impacted by the price of electricity. The costs of transmitting power are subject to tariff decisions taken principally by Svenska kraftnät and may therefore be indirectly impacted by higher electricity spot prices.

This cost is known as a ’non-controllable cost’ under the regulatory framework, and as such we are allowed to pass on this cost in full to our customers.

Ellevio will raise electricity network prices from 1 October 2022. This rise is a direct result of soaring electricity prices. For a customer living in an apartment, this will entail a rise of around SEK 10–25 per month, while for a detached home it will mean a rise of SEK 50–150 per month.

No formal national consumption reduction programme has been presented by the Swedish government, but should the high prices continue – which would of course have an impact on consumption – we may likely see lower distributed volumes and a lower level of network losses.

Ellevio has worked alongside other industry representatives throughout the autumn of 2022 to bring about rapid measures to protect customers from both soaring electricity costs and rising electricity network prices.