What does the price of electricity consist of?
In Finland, the electricity invoice consists of three main parts: electricity, distribution and taxes.
Electricity
In addition to the market price, the electricity sales prices include sales costs. Electricity sales companies can get the electricity they sell from their own power plants, based on long-term contracts with energy producers or from the Nordic electricity exchange. Electricity sales costs refer to normal sales and marketing costs, such as invoicing and other customer service and administrative costs.
The price of electricity is determined by the contract you have signed with the electricity sales company of your choice and can be:
- Fixed (same price throughout the contract period),
- Variable (tied to the SPOT price, for example), tai
- Hybrid (part of consumption is tied to a fixed price, part to a variable).
An electricity sales contract can be signed for a fixed term or be open ended, depending on the chosen electricity product. In addition, the electricity sales contract usually has a fixed basic fee. The electricity sales contract can be put out to tender.
Electricity sales companies mainly buy electricity from the Nord Pool electricity exchange, where the price of electricity is determined by supply and demand. On the exchange, different forms of production – such as hydropower, wind power and nuclear power – compete, and the price of electricity varies according to weather conditions, consumption peaks, and the prices of emission allowances and fuels, for example.
Distribution
The electricity distribution is paid to the electricity network company, which takes care of the distribution of electricity from the power plant to your home. Electricity distribution is not subject to tendering but is determined by where you live and which network company operates in your residential area.
The costs of electricity distribution are affected by, among other things, the investments needed in the electricity network (such as underground cabling and the construction of new network) and maintenance (e.g. the servicing and maintenance of transformers). The price also includes the monitoring of the electricity network, disruption services and repairs. In sparsely populated areas, electricity distribution may be more expensive than in urban areas. In addition, the distribution price is affected by the amount of electricity consumed, the metering method and the power required by the site. Electricity network companies offer a variety of contract options to their customers.
The network service fee also covers part of the customers’ telephone and internet network services as well as electricity consumption metering services. The fee also includes part of the costs of building and maintaining the national main grid.
Taxes and official fees
The electricity invoice also includes taxes and official fees.
- Electricity tax
- Value added tax
- Strategic stockpile fee
The electricity tax is determined according to two tax categories:
- Tax category I (general): households and service sector, and
- Tax category II(reduced): industry, data centres, certain heating plants.
The strategic stockpile fee is a tax-like fee charged for the consumption of electricity and oil products. Its purpose is to secure the availability of energy in crisis situations.
The amount of electricity tax, value added tax and strategic stockpile fee is determined based on the amount of energy consumed in accordance with the regulations in force at the time.
| Cost | Who is paid | Can be tendered | Share of the total price |
| Electricity | Electricity sales company | Yes | approx. 40 % |
| Distribution | Electricity network company | No | approx. 30 % |
| Taxes and fees | To the state | No | approx. 30 % |
Read more on Energiavirasto’s homepage: Components of an electricity bill