Your electricity bill isn't just the electricity

Your electricity bill isn't just the electricity you use. It's made up of the spot price for the electricity itself, the retailer's markup, the grid fee to your local network, energy tax and VAT on top of all of it. Only a small part moves with the market. The rest is fixed charges and tax you don't negotiate away.

What confuses people is that the electricity you actually use is often the smallest piece. The bill also tends to arrive in two parts, one from the retailer and one from the grid, and rarely from the same company. Here we go through each part, and which ones you can do something about.

An electricity bill has two sides: the electricity and the grid. The retailer sells you the electricity itself, and that price follows the market. The grid is the wires that carry the electricity home to you, and you pay that charge to your local network company. On top of both sit energy tax and VAT. Often you get two separate invoices, one per side.

That it's split up like this isn't something you chose, it's how the Swedish electricity market is built. The electricity you can buy from any company you like. The grid is a monopoly, where you're stuck with the company that happens to own the wires where you live.

The spot price is what the electricity itself costs on the market, hour by hour, and that's the part that swings. On top of the spot price the retailer adds a markup, their margin per kilowatt-hour, and often a fixed monthly fee for the contract. How the spot price is set is a story of its own. What matters here is that only this piece moves with the market.

If you have a fixed contract you pay a price the retailer has locked instead, but then they charge for carrying the risk for you. Variable or fixed, the markup and the monthly fee stay. It's the part of the bill where retailers actually compete, and the part you can compare.

The grid fee pays for the wires that bring the electricity home to you. It usually has a fixed part, a subscription charge tied to how large a fuse you have, and a variable part per kilowatt-hour transferred. The money goes to your local network company, not to the retailer.

This is the part you can't negotiate. The grid is a regulated monopoly, so you're stuck with the company that owns the wires where the house stands. You can switch retailer as often as you like, but the network company follows the address.

Energy tax is a fixed charge per kilowatt-hour that the state levies on the electricity you use. It shows up on the grid invoice and is the same regardless of which retailer you chose. On top of the whole sum, the electricity, the markup, the grid fee and the tax, VAT is then added.

That means VAT is charged on the tax too, a tax on the tax. Neither energy tax nor VAT is something you can influence. They're the same for everyone and set by the state, not by any electricity company.

Two things: who you buy the electricity from and how much you use. You can switch retailer, and that's where the markup, the monthly fee and the contract type differ. Use less electricity, especially when the spot price is high, and the variable part of both the electricity and the transfer shrinks.

The rest is fixed. The grid fee is decided by where you live, energy tax and VAT by the state, and the spot price by the market. So a large part of a typical bill is charges and tax that don't move with your behaviour at all. That's why a saved kilowatt-hour rarely lowers the bill as much as you'd hope.

Elvy doesn't strip away the grid fee or the tax, they're there for everyone. The difference is that Elvy owns the electricity and handles the trading of it, and you pay a fixed amount a month instead of a bill that shifts with the spot price. The same amount in January as in July.

The price is set individually from an energy analysis of your house, not from a list price, and stays fixed for 15 years with a yearly adjustment by the consumer price index. What the spot price gets up to tonight you never need to know. So you don't escape the charges, you just skip keeping track of them.