In the first half of 2024, average electricity prices for European households saw a slight increase compared to the second half of 2023, despite lower energy costs. The main factors driving up bills were, in fact, taxes and levies
New Eurostat 2024 Data on Energy Prices
Wholesale electricity and gas prices continue to decline, but EU households are not seeing a drop in their bills. Why? Because energy taxes have a significant impact on overall expenses.
It’s no surprise that energy taxation plays a substantial role in the billed amounts. Most governments intervened with relief measures on charges and taxes to alleviate the burden on households and industries during the 2022 energy crisis. Now that the worst appears to be over, it is common policy to remove the benefits and subsidies that had reduced energy taxes. The results are quite evident.
According to Eurostat, the statistical office of the European Commission, in the first six months of 2024, tax increases have offset or negated the drop in gas prices, causing electricity bills to rise.
How Energy Taxes Affect Electricity Bills
Every country is unique, but let’s examine the Italian situation, which is particularly emblematic in this regard.
Italian electricity bills include the following cost components:
- Energy Supply Costs: This covers all services provided by the supplier, including dispatching and marketing. Typically, this accounts for 51% to 68% of the total bill.
- Transport and Meter Management Costs: Network services generally represent 12% to 19% of the total.
- System Charges: This includes components like Asos (general charges for supporting renewable energy and cogeneration) and ARIM (remaining general charges), amounting to about 20% of the total.
- Taxes: This is the smallest portion, accounting for 7% to 13% of the total.
Energy taxes can be further divided into:
- Excise Tax: Applied to the amount of energy consumed; residential customers with a power capacity of up to 3 kW currently benefit from reduced rates.
- Value Added Tax (VAT): Applied to the total amount of the electricity bill, currently set at 10% for domestic users.
Increase in Electricity Prices in 2024
Understanding the impact of taxes on electricity bills in Italy allows for a broader view of the community situation. According to Eurostat, average electricity prices for households in the EU slightly increased from the second half of 2023, rising from €28.3 per 100 kWh to €28.9 per 100 kWh.
“Despite reductions in energy supply and network service costs (-2% compared to the second half of 2023), total prices have slightly increased (+2%) as governments have reduced subsidies, allowances, and tax cuts for consumers (total taxes have risen by 16% compared to the second half of 2023),” writes the statistical office.
Specifically, the highest electricity costs, taxes included, were observed in Germany (€39.5 per 100 kWh), followed by Ireland (€37.4) and Denmark (€37.1). Italy ranks sixth with a semiannual average exceeding €32 per 100 kWh. On the other end of the scale, Hungarian households pay only €10.9 per 100 kWh, followed by Bulgaria (€11.9) and Malta (€12.6).
Gas Prices and Energy Taxes
In the first half of 2024, average gas prices fell by 2% compared to the second half of 2023, dropping from €11.3 per 100 kWh to €11 per 100 kWh. However, when looking at the same prices without taxes, the decrease is more pronounced, at 10%.
Gas prices (in national currencies) have significantly dropped in Lithuania (-60%), Greece (-39%), and Estonia (-37%). Conversely, Italy (+16%), France (+13%), and Romania (+7%) experienced price increases, while Slovenia saw no change.
also read The EU gas and electricity markets are returning to an apparent stability
