Spain most expensive country for electrictiy

Although electricity prices in Spain held steady, the nation escalated from second highest price electricity producer to the number one spot in a recent study by National Utility Service Inc. Germany held the number one expense position in the previous study; but due to price reductions in Germany, Spain topped this year`s study, which ran from April 1995 to April 1996.

Prices in Germany fell by an average of 8.89 percent during the survey year, knocking the country from the top of the table as the most expensive country surveyed for the first time since 1993. Two factors–the ruling by the Supreme Court that the “coal penalty” was unconstitutional and the termination of contracts to subsidize the coal industry, allowing the purchase of cheaper imported coal–have led to a drop in electricity prices in the western part of the country.

Prices in the eastern part of the country were not affected and remained stable. Modernization of outdated infrastructure has kept prices in east Germany higher than in the west.

Italian consumers saw an average increase of 2.47 percent in their electricity price, resulting from an increase in the thermal surcharge. The rise is well below the 4.5 percent inflation rate, but once again positions Italy as one of the top three most expensive countries surveyed.

Production of electricity is being liberalized in Italy, but transmission and distribution are not. It is projected that all municipally owned utilities will be privatized and their scope of operation enlarged. The government has announced a plan to rebalance tariffs, making them equal in all parts of the country.

Electricity prices remained stable in Belgium, where the electricity industry is taking steps to ward off future international competition. Following the introduction of a new tariff structure in April, prices are expected to decline.

Electricity prices in The Netherlands increased during the survey year, although the average 1.58 percent electricity cost jump was marginally lower than the 1.8 percent inflation rate. Dutch electricity supply companies are merging, and as a result, tariffs are becoming more uniform. The mergers are designed to reduce administrative costs and strengthen the electricity supply industry in preparation for future market deregulation within Europe.

The average cost of electricity rose in Ireland for the first time in eight years, and although the increase of 5.2 percent is far above the 2.5 percent inflation rate, one increase in eight years is far below international trends. The Electricity Supply Board is monopolizing electricity production and distribution, so the opening of the market is considered unlikely in the near future.

French electricity prices fell for the third straight year, with an average 1.33 percent price decrease set against an inflation rate of 2 percent. Due to an agreement between Electricité de France and the government, electricity prices cannot increase by more than the inflation rate minus 1 percent. More falling prices are expected in the near future.

A number of market and outside pressures have caused a marginal decrease in the average cost of electricity in the UK, continuing the downward trend of recent years. Despite the decrease, Britain remains in ninth place on the survey table. UK consumers face a rapidly changing market, in which knowing whether they are purchasing electricity at the best available price is becoming increasingly complex. Business users are changing the way they buy electricity and looking for safer options. Large consumers are moving from the pool to fixed-price contracts.

The average electricity cost in Finland increased by 1.25 percent, marginally below the country`s 1.5 percent inflation rate. Market deregulation for supplies above 500 kW was introduced in November 1995, but expected price reductions did not materialize. Although some large consumers were prepared to change to suppliers for better prices, high transfer costs in some areas meant the consumers often stayed with the local supplier. Full deregulation for all consumers is expected by early 1997.

Norway registered a small price increase of 0.96 percent against an inflation rate of 1.2 percent. Although few Norwegian consumers have actually changed suppliers in the competitive market, the threat has been a factor in keeping prices low.

Prices were stable in Australia, where a price freeze is set against an inflation rate of 3.7 percent. Deregulation in Victoria has created an option for customers where those with demands of 1 MW or more can purchase supply under negotiated contract rates. In Sydney, prices have continued to fall, reflecting increasing competition.

Electricity prices in Sweden fell by an average 1.7 percent, but this was a smaller reduction than expected in the newly deregulated market. Contributing to the small price decline are the high transit fees charged by suppliers. The regulator is conducting investigations of five suppliers suspected of charging higher transit fees than the self-cost principle stipulated by law. Another factor is the high pool price, a result of the low water reserve level following a cold, dry winter.

Canada remains near the bottom of the table as the second cheapest country for electricity in the survey. Prices held steady against a 1.3 percent inflation rate. Many of the provincial utility companies are making changes in preparation for the opening of the market. Ontario Hydro foresees the current monopoly giving way to local markets managed by a number of privately owned companies competing to supply provincial customers. Utilities in Alberta began buying all of their power requirements from a provincial power pool on an hourly basis in January 1996. This is similar to the UK market. The pool currently sells only to distributors, but it is anticipated that others will be allowed direct access to the pool in the future.

Although South Africa had the highest average electricity price increase at 7.90 percent against an inflation rate of 6.3 percent, the country remained the cheapest on the survey. The only real change in the South African electricity industry infrastructure noted was the increased influence of the National Electricity Regulator. The regulator has questioned Eskom`s role as a distributor and issued only a temporary license. Changes in the supply side may be immanent. It is anticipated that Eskom will be solely responsible for transmission, with generation and supply open to the free market.