For the third year in a row, Vattenfall is raising electricity network prices next year by double-digit percentage amounts. And they are far from alone. The average increase among all companies around the country was just over ten percent this year, according to the Nils Holgersson group, which conducts the measurements.
The authority, the Energy Market Inspectorate (EI), which is trying to slow down the monopoly companies' price increases, calls the companies' markups "overcompensation".
Profits and investments
TT has reviewed the three giants, Vattenfall, Ellevio and Eon, plus a few other electricity network companies' annual reports for recent years. This involves multi-billion-sek profits, much of which goes back to investments. But there is also room for billions to be paid to the owners in the form of high interest rates on share loans, group contributions and dividends.
According to Erik Lundin, a researcher at the Institute for Business Research, there are several parts of the regulations that clearly indicate overcompensation that could not have occurred in a competitive market. He points to, among other things, large purchase prices when companies change owners, which indicates good profitability. For example, Ellevio paid Finland's Fortum approximately SEK 70,000 per customer when it was taken over in 2015, according to Lundin.
Lars Bergman, professor emeritus at the School of Economics, doesn't want to call it overcompensation because the companies are following the rules. But he notes that they have made good money in recent years.
Wrong reason
But they make a lot of money for the wrong reason, he says and continues:
They don't gain much from investing in new ones, but they gain a lot from the appreciation of old facilities. There are certainly reasons to change that.
New rules are in the works that are expected to slow down price increases, but only after 2028. The Energy Market Inspectorate believes that there will also be high price increases in 2027.
Not unreasonable
Ellevio, like most other electricity grid companies, points out that the industry is in an investment hump. To a large extent, profits are being reinvested in the business, according to David Bjurhall, responsible for pricing issues. For several years, the owners received nothing from the surplus, including a few billion.
But over time, not unreasonable, he thinks.
And although Ellevio claims not to have increased its fees to customers more than inflation (the company also has lower prices than the average among electricity network companies), there is a problem in the industry, given the current debate.
We have to rethink, says Bjurhall.
