Your electricity bill, decomposed

Why a falling wholesale price takes so long to reach you

A household bill is built from three parts, and only one of them follows the market. Energy and supply covers the electricity itself plus the supplier's margin and costs. Network charges pay for the poles, wires, substations and metering that deliver it, and a regulator sets them, usually once a year. Taxes and levies are whatever the state adds, including value-added tax, an electricity duty and whichever surcharges fund policy in that country. The first part moves with the wholesale market; the other two move when a regulator or a parliament decides they should.

That explains the delay people notice. A supplier buys much of its electricity months or years ahead, so a cheap quarter on the wholesale market reaches a standard tariff only when those hedges expire and the contract is repriced. Meanwhile the network charge for the coming year was fixed before that quarter began. A bill can therefore rise in a year when the wholesale price falls, with nothing improper happening at any step.

These figures are cents per kilowatt-hour, the unit on a household bill. Wholesale prices are quoted in euros per megawatt-hour; divide one by ten to get the other in cents per kilowatt-hour. Eurostat reports each country for a standard household consumption band, so five countries compare on equal terms. A particular household's own tariff can sit well away from that national figure.

What the split will not tell you is who is at fault for the total. A country with high network charges may be paying for a grid it is rebuilding; a country with high levies may be funding a renewables programme that lowered its wholesale price. The chart shows where the money goes, and the argument about whether that is the right place for it belongs to the reader.