What does my electrical distribution invoice consist of?

The electricity network works like a telecommunications connection – you pay for the bandwidth and not for how much data is transferred. Likewise, the road network is available whenever you need it. In the electricity distribution fee, you pay for the existence of the electricity network, for electricity to be available when and as much as you need it.

What does my electricity distribution invoice consist of?
The figures are based on costs for 2019–2022. The share of loss of electricity has increased due to rising electricity prices and is projected to reach 16% of the total in 2023. The image does not include electricity tax or VAT.

Of every euro you pay, nearly 70 cents are used to improve the network and to provide the network service to our customers. The amount of energy transmitted only impacts around 20 per cent of the costs.

The electricity distribution price consists of the basic fee and the part based on electricity consumption, as well as a possible power-based power fee. The costs of electricity distribution arise mainly from the construction, development and maintenance of the network and from the financing of these. The amount of energy used has little effect on these costs. As a result, the share of the basic fee in the distribution fee is high and the variable consumption fee is lower.

In addition, electricity tax is collected on the electricity distribution invoice, which is forwarded to the state.

How will Fingrid's announcement that it will not charge transmission grid fees affect prices for Caruna's customers? – Read more in the Q&A section at the bottom of the page.

Read more: Electricity tax and value added tax

With the distribution fee, you get all the services related to electricity network operations

The electricity distribution fee (network service fee) includes customer service, electricity metering service, 24/7 fault reporting service, fault repair in all situations, as well as staff wages and ICT costs. The fee also covers electricity network maintenance, development, construction of the new network, as well as modernisation of the old network to meet the needs of the future.

What is the connection fee? 

The connection fee only covers the costs of connecting to the network, i.e. the construction of the actual electricity connection.

What does the price of electricity distribution look like in the future?

The war in Ukraine and the consequences of the war have also increased the costs of electricity distribution companies. For example, prices of loss of electricity have risen and are rising due to the current crisis in the electricity market. In 2022, the costs of loss of electricity have increased by 50 per cent and by 2023, the share of loss of electricity costs is expected to double compared to 2022. 

General inflation and the impact of the crisis on global raw material and component prices will increase the costs of developing and maintaining the network. In addition, market interest rates have risen, increasing capital costs. The general outlook is highly unpredictable. These reasons, together with the ongoing development of regulatory methods, make pricing forecasting very difficult.

At Caruna Oy, in addition to improving the weather resistance of electricity distribution, electricity network investment needs are also increased by the growth of renewable energy production, including, in particular, large wind farms, the electrification and increased flexibility needs of heating and transport, and the aging of the network. 

Caruna Oy's electricity network is about 80,000 km long and extends from Hanko to Kuusamo. The network area is geographically challenging for electricity distribution, as there are extremely different operating conditions in the area. The amount of network per customer is large. 

In Caruna Espoo Oy's area, the electrification of society progresses fast. In Espoo, electricity consumption is projected to grow by 50% by 2040, compared to 5% over the previous 20 years. In the coming years, Caruna Espoo's investments will primarily focus on enabling clean energy solutions in housing, transport and heat production.

Caruna Espoo's electricity network is 8,100 km long. In the network area, investments per customer are clearly lower than in Caruna Oy.

Comparison of Caruna's prices with other companies in the sector

The price differences between electricity distribution companies are usually due to the relationship between the amount of network assets and the number of customers. The greater the number of customers sharing the value of network assets (metres per customer), the lower the prices for customers. Network assets refer to the total value of the components of the electricity network of a network company.

For Caruna Oy's 484,000 customers, the length of the network is considerably longer per customer: 165 metres and investments of EUR 216 per customer (a total of EUR 104.6 million in 2021). Depending on the type of housing, the price of electricity distribution for Caruna Oy's customers is in the most expensive quarter among 77 electricity distribution companies.

The price of electricity distribution for Caruna Espoo Oy's 230,000 customers is among the most inexpensive fifth in Finland, as the network has been largely modernised, and the costs of the network are shared by several city residents in a densely populated area. The length of the network per customer is 35 metres and investments EUR 154 per customer (in 2021, a total of EUR 35.5 million).

Comparison of Caruna's electricity distribution prices
Source: Finnish Energy Authority, April 2022

The prices of Finnish distribution companies are public information

The Energy Authority updates the price information on its website, and anyone can check the prices of all electricity distribution companies. Company-specific prices are updated monthly and can be found on the tabs in the table.

In the comparison, the average prices are displayed by type of user. The typical user is a customer group that uses electricity in different ways, such as residents in apartment buildings or residents in electrically heated detached houses.

The price includes the average price according to the cheapest product for each customer group with the presented annual consumption. For example, for a user in an apartment building (2,000 kWh) times the unit price of general distribution cnt/kWh + basic fee €/month times 12 + taxes, and finally, the annual cost obtained is divided by gross consumption, resulting in the average price (cents/kWh).

Energy Authority price information table

How can I impact my distribution invoice?

With your own electricity consumption, you can impact both the variable network service fee (c/kWh) and the electricity tax (c/kWh). These account for about 50 per cent of the annual electricity distribution fee (network service fee) in an apartment building and about 75 per cent in an electrically heated detached house.

Electricity distribution prices in European comparison

At the end of 2021, the highest average prices for network service in the EU were in Belgium and the lowest in North Macedonia. In Finland, the price of network service is in line with the European average.

Eurostat: Kotitalouksien veroton siirtohinta 2021

When comparing the price of Finnish network service, taking into consideration the length of network per customer, Finland is among the cheapest countries in Europe, despite the challenging conditions. As a country with long connections and low population density, we have managed to build and develop our network very cost-effectively. The reliability of electricity distribution in Finland is also at an excellent level relative to price when compared with other European countries. 

Eurostat: Price per network length 2021

Up-to-date price statistics for Finnish network companies can be found on the Energy Authority's website.

The priorities for the development of Caruna's electricity network are in securing energy reliability

We will continue to invest as planned to improve security of supply and enable the energy transition. We will spread the investments in reliability of supply over a longer period at Caruna Oy; for Caruna Espoo Oy, the deadline for investments in weather resistance will continue to be 2028. The investments required to complete the energy transition will continue for both companies. Moving away from Russian and fossil energy, growing electricity consumption, and electrification of heating, transport and housing will increase the power needs of the network.

The importance of cost-efficiency will be further emphasised. The focus of Caruna's investments will shift to the low-voltage network, where, for example, local conditions and demographic trends will influence the choice of various solutions. We are also actively looking for new ways to improve electricity quality and reliability of supply. We are, for example, utilising battery-based storage facilities and studying and developing other demand-side response possibilities.

Why do I pay for network improvements?

Today's society is highly dependent on electricity, and uninterrupted electricity supply is a basic precondition for both everyday living and business operations. Our electricity network, built mainly in the 1960s and 1970s, requires continuous and long-term development work, such as the renovation and construction of substations.

We want to make sure you get value for your money; a modern electricity network that operates reliably in all weathers and locations. The current electricity network cannot meet future needs. By investing in the development and modernisation of the electricity network, you will get the smoothest possible electricity supply both now and in the future. We are improving and modernising the electricity network so that it operates reliably and enables an increase in electric cars and solar panel production. 

Up-to-date information on ongoing work sites

We are modernising our electricity network in both urban and sparsely populated areas. You can check the work sites in your neighbourhood on our map service.

Caruna's map service

QA

How does the energy crisis affect the pricing of electricity distribution?

The war in Ukraine and the consequences of the war have also increased the costs of electricity distribution companies. For example, prices of loss of electricity have risen and are rising due to the current crisis in the electricity market. In 2022, the costs of loss of electricity have increased by 50 per cent and by 2023, the share of loss of electricity costs is expected to quadruple compared to 2022. 

General inflation and the impact of the crisis on global raw material and component prices will increase the costs of developing and maintaining the network. In addition, market interest rates have risen, increasing capital costs. Taken together, these reasons increase the operating costs of electricity network companies.

How will Fingrid's announcement that it will not charge transmission grid fees affect prices for Caruna's customers?

In autumn 2022, Fingrid announced that it would not charge transmission grid fees for six months due to a significant increase in bottleneck revenues. The transmission grid fee paid to Fingrid represents about 10% of Caruna's costs. Transmission grid charges are "pass-through" items for distribution network companies, i.e. costs paid to the transmission system operator are always passed through to the distribution price.

The planned reductions in transmission grid fees will mean cost reductions of around EUR 35 million in 2023 for the two Caruna companies. At the same time, loss costs have already risen by around EUR 15 million in 2022 due to high electricity prices and are expected to rise by a further EUR 35 million in 2023. In addition, network construction costs have also risen by around 13% and operational costs by around 5%. Capital costs (interest rates) have also risen.

As a conclusion, the other cost items in electricity distribution business have increased much more than Fingrid's rebates, and therefore the rebate does not allow for a price reduction, even if it is directly passed through to the price, but only reduces the upward pressure.

Why are the prices of electricity distribution companies so different from each other?

The price differences are explained by the type of area in which the company operates and the number of customers the company has paying for the costs of building the electricity network. 

Building an electricity network in lake areas or the archipelago is more expensive than in urban areas. On the other hand, the greater the number of customers sharing the costs, the lower the price paid by an individual customer. As a result, the electricity distribution prices of city companies are lower than those of companies operating in sparsely populated areas. There are 77 electricity distribution companies in Finland.

I use our summer cottage quite rarely, why do I still have to pay an electricity distribution fee?

An electricity network must be in working order at all times. Only 20 per cent of the cost of an electricity network depends on the amount of energy transmitted. The majority, i.e. 80 per cent, is due to the existence and maintenance of the network. Thus, the network company incurs costs even if electricity is not used. This applies especially to summer cottages.