Power fees are becoming more common in electricity distribution – What does it mean?
The Energy Authority is working on a regulation that amends the distribution charges of electricity network companies. For the average consumer, the power fee is probably the most interesting part of the regulation.
The power fee is not added on top of the basic charge and energy charge but reduces them so that on average, the total of the charges remains the same.
Read this article to find out what is currently known about the upcoming, new regulation.
What will happen and when?
The Energy Authority’s regulation is due to enter into force at the end of 2025, with a transitional period until the beginning of 2029.
For Vaasan Sähköverkko, a change of distribution charges is currently planned accordingly. At present, we expect to make changes to the charges starting from the beginning of 2027. We do not yet know which of our customers will be affected by the power fee.
Objectives of the change
The objective of the change is to improve the customers’ ability to influence their own electricity charges and to ensure that the charge for the service is more accurately based on the actual cost of providing it.
Simply put, you may currently be paying for the maintenance costs of electricity transmission that, for example, your neighbor causes. This is something that will be addressed.
By monitoring your own electricity consumption and optimizing it with smart home automation, you can benefit from the new power fee by keeping your distribution charges low. For those whose electrical devices cause high power peaks, the distribution charges may increase.
Frequently asked questions and answers on the topic
What is the power fee and how is it determined?
The power fee is a possible component of the electricity distribution fee. Some electricity network companies already use a power fee for certain electricity transmission products, but not all do.
The power fee is based on a regulation from the Energy Authority. The regulation is expected to come into force at the end of 2025. We do not yet know all the details.
According to preliminary information, the power fee will be based on the customer’s monthly power peak – that is, the highest power measured during a single 15-minute period within a given month. The idea is that a certain sum (€/kW) will be charged for the portion of the monthly power peak that exceeds a threshold of 5 kW.
However, this depends on the main fuse size of the connection. At present, no threshold is planned for main fuses above 3 x 63 A.
Will the new power fee affect all Vaasan Sähköverkko’s customers?
We do not know yet. According to the regulation draft, the electricity network companies should offer a distribution product without a power fee. This will only be confirmed once the regulation is finalized.
What is the purpose of the power fee?
The electricity network is primarily dimensioned based on the highest instantaneous load it must handle. The higher the loads in the network, the more the network company must invest in cables, transformers, and other equipment.
The power fee is intended to guide electricity users to balance their load by avoiding the simultaneous use of high-powered devices. This also more broadly reduces network-wide peak demands and lessens the need for expensive network reinforcements and higher transmission charges.
The aim of the power fee is also to ensure that those causing large power peaks contribute fairly to the costs.
Will the power fee eliminate savings gained from using spot electricity?
A 2024 LUT University study found that optimizing electric car charging for both spot prices and the power fee resulted in only about €1 less in monthly spot price savings but, on the other hand, enabled savings on distribution charges by keeping the power fee low.
With smart home automation, electricity use can be optimized very precisely, helping you to both benefit from low spot prices and minimize power fees.
Will the power fee be added to other charges?
The power fee is not added on top of the basic charge and energy charge but reduces them so that the total of these three charges remains, on average, the same.
For individual customers, the power fee may mean a decrease or an increase in the electricity distribution bill.
How should I plan my electricity use with the power fee in mind?
You will benefit from not using high-power electrical devices simultaneously. Such devices include, for example, electric car chargers, electric heating, and electric sauna stoves.
As a spot electricity consumer, you can with the help of smart home automation charge your electric car and heat your home during affordable times but stagger them, so they don’t run simultaneously.
How should I monitor my electricity consumption?
By monitoring your electricity consumption, you can identify which devices use a lot of power. Once you know which devices are high-powered, you can avoid using them at the same time.
For monitoring, you can use, for example, the Vaasan Sähkö app or online service.