For many Finnish households, the electricity bill is an important expense that is definitely worth monitoring. It is therefore good to know what the final price of electricity consists of, which part of the bill can be put out to tender and how this is done today. In addition, many people talk about tendering for electricity transmission, but is it really possible?
Electricity price formation
First, the price of electricity is affected by many factors beyond the consumer's control. These include, in particular, the cost of electricity production and the prices set on the stock exchange. The price of electricity itself consists of electricity sales, electricity transmission and taxes, i.e. electricity tax and VAT.
The electricity tax is based on how much electricity is consumed. Consumers do not have to pay the electricity tax themselves, as the local distribution network company automatically bills the electricity tax as part of the electricity transmission price. VAT, on the other hand, consists of the joint costs of electricity, electricity transmission, electricity tax and the electricity security of supply levy.
Competitive tendering for electricity transmission - is it possible?
Of all the factors that make up the final price of electricity, only electricity energy, i.e. the share of the electricity sales price, can be subject to competition. In other words, this means that it is not possible to put electricity transmission out to tender.
The reason why it is not possible to put electricity transmission out to tender is that there is only one distribution network company in each region of Finland. These distribution network companies in turn own both the above-ground electricity lines and the underground electricity cables in their territory. These lines and cables are in turn responsible for transmitting electricity to households and other buildings in the area.
This "monopoly" prevents other distribution network companies from transferring their own electricity to the area in question. This is because the area is served by electricity lines installed and maintained by only one company.
If there were more than one electricity transmission company in the same area, there would also need to be more than one electricity connection to the same building, as each transmission requires its own access. Such an arrangement would not be easy, not to mention the huge financial costs involved. For this reason, it is not possible to choose or change one's own distribution network company.
What is electricity transmission and what does it cost?
As already mentioned in the previous paragraph, the transmission of electricity is the responsibility of the local distribution company, which owns the distribution network in the area concerned. Although it is not possible to put the electricity transmission price out to competition, the Energy Office supervises its pricing.
Despite this, electricity transmission prices vary from region to region, as there can be a threefold difference between the cheapest and the most expensive region. In this sense, the only way to influence the electricity transmission price would be to move to a region where the transmission price is cheaper.
The electricity transmission price itself consists not only of the transmission of electricity, but also of the costs of building, maintaining and developing the electricity network and the costs of meter reading and balancing.
The reason why electricity transmission is charged is that it costs money to maintain the service. In addition to the resources required to build the electricity network, it has to be renewed, maintained and serviced on an ongoing basis. Despite their monopoly position, the distribution network companies are closely monitored and all companies must comply with the same laws and regulations, regardless of their pricing.
Although it is not possible to put electricity transmission out to competition, the price of electricity itself - i.e. who electricity contract offers - you can choose it yourself and you can put it out to tender. It is therefore worth remembering that, although tendering for electricity is often used to refer to tendering for electricity only, it is not possible to tender for the entire electricity bill.
In practice, price competition for electricity means that everyone living in Finland can decide for themselves where to buy their electricity. In other words, although the electricity supply is always tied to the consumer's place of residence, the electricity contract itself can be signed with an electricity seller in another part of Finland, for example. It therefore does not matter how far away the electricity comes from, as it is always the local distribution network company that is responsible for distributing the electricity.
Why should electricity be put out to tender?
There are currently several companies selling electricity in Finland, so competitive tendering is an effective way to find out which of these companies offers the cheapest electricity contract.
It should also be borne in mind that changing the electricity seller does not affect the electricity transmission price, and no separate contract is required for the transmission of electricity, as the entity selling the electricity will notify the distribution network company of the new contract. Thus, the distribution network company in your area will continue to be responsible for the transmission of electricity, for reading the meters and for correcting any errors.
Although it is not possible to put your entire electricity bill out to tender, it is worth comparing electricity prices between different suppliers, as in the end, electricity can account for up to half of the final electricity bill. Therefore, tendering for electricity can bring substantial savings to the household.
It is possible to tender for electricity as many times as you want. However, in the case of a fixed-term electricity contract, the contract period must be paid until the end. It should also be noted that if you change electricity supplier more than once a year, the local distribution network company may then start charging you a service fee for the new meter reading according to its own tariff.
Electricity tendering is nowadays easily done through our tendering service. You can compare different electricity offers and sign a new electricity sales contract directly with the best electricity supplier. The easiest way to compete is with your latest electricity bill, but it is also possible to compete without an electricity bill if you know the exact address and can estimate the annual consumption of your property as well as possible.
How can you influence your electricity bill?
Although electricity transmission is part of the electricity bill, it is not directly linked to the household's electricity consumption. Therefore, by reducing its own consumption, the electricity transmission price can hardly be influenced.
However, what can in turn save large amounts of money on the total electricity bill is both competing for electricity to secure a cheaper price and reducing your own electricity consumption.
In addition to the heating itself, the biggest electricity-consuming appliances are, for example, the sauna and underfloor heating in the bathroom and toilet. In addition, many people tend to keep their kitchen appliances and entertainment equipment such as chargers, televisions and speakers constantly connected to a power source. Energy-saving appliances such as air-source heat pumps can also be real energy guzzlers if not used correctly.
Even a one-degree drop in room temperature will save you money on your electricity bill. It is also worth checking that the fuse sizes correspond to the actual consumption, as too large fuse sizes will affect the electricity transmission tariff. It is also a good idea to keep bathroom and toilet doors closed so that the underfloor heating is not running at too high a level all the time. It is also worthwhile using night-time electricity, so it is a good idea to run dishwashers and washing machines at this time of the day, where possible.