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Swedish electricity firms overcharge: study

Swedish electricity firms overcharge: study

Published: 24 Jan 2011 16:03 GMT+01:00
Updated: 24 Jan 2011 16:03 GMT+01:00

Sweden's privately-owned electricity companies behave in a "monopolistic" fashion, according to a homeowners advocacy group, which urges customers to be more proactive in choosing an electricity provider.

Homeowners in Sweden looking to cut back on their winter electricity bill would be well-served to be more proactive in choosing their electricity provider, according to a new study by the Swedish Homeowners Association (Villaägarnas Riksförbund).

The group's national comparison of different pricing options offered by Swedish electricity providers also revealed that fixed-price contracts can vary widely, depending on location and the provider.

Sweden's electricity market was deregulated in 1996 and since then customers have been free to pick the provider of their choice.

However, according to the Homeowners Association, companies which provide customers with access to the electricity grid engage in "monopolistic practices."

The organisation's review shows that the most expensive electricity companies are private, whereas most of the cheaper options are publicly owned.

"The conclusion is clear. Private, monopolistic companies raise prices to make a profit," Jakob Eliasson, an energy policy expert with the Homeowners Association, said in a statement.

According to the association, Swedish consumers can be overcharged by up to 4,000 kronor ($600) per year by their electricity provider for access to the electricity grid.

One in four homeowners in Sweden currently has a floating-price contract with their electricity provider. Last year, a fixed-price contract could have cost households up to 6,000 kronor per year.

In addition, the most expensive floating-price contract in the country cost 13,000 kronor than the cheapest, according to the association's study.

"It's unfortunate that so many don't make an active choice. At this point, we agree with the Homeowners Assocation," Tommy Johansson, head of market supervision at Sweden's Energy Markets Inspectorate (Energimarknadsinspektionen), told the TT news agency.

"My assessment, after talking to customers, is that it is primarily customers living in apartments who have flexible-rate contracts," he added.

At the same time, the percentage of customers with flexible-rate contracts has dropped, from 40 percent in 2008 to 23.8 percent in December 2010.

"The question is now being discussed in connection with efforts to create a unified Nordic market by 2015. But we’re not going to propose any new regulations," said Johansson.

The most dramatic way to encourage people to be more proactive in choosing their electricity providers and contracts would be to implement measures that have worked in other markets: no choice, no electricity.

"But with our climate, it's seen as all more important for someone who moves into a new house or apartment to have access to electricity from day one. As such, we have a system with assigned contracts," said Johansson.

Kjell Jansson, the head of Swedenergy, an association representing the electricity industry, criticised the homeowners association study, claiming it was "too simple."

"To describe the differences in conditions between different electricity network companies based on one key figure -- the length of the line divided by the number of customers -- is untenable," he said in a statement.

He also criticised the homeowners advocacy group for not proposing any alternative solutions for how companies should charge for access to the electricity network.

TT/The Local/dl (news@thelocal.se)

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Your comments about this article

08:36 January 25, 2011 by engagebrain
Privatization pushes up prices.

That is not what was promised.

Remember Enron and how they screwed California.
10:38 January 25, 2011 by Nemesis
In the UK everyone was told that privatisation would significantly cut prices.

In the UK prices have constantly went up above the rate of inflation, every year since privatisation. When a person phones up to complain about problems with the electricity supply, they never get someone physically in the UK on the phone. They always get someone in Pakistan, India, etc. who has not got a clue about anything.

The only people who made money out of privatisaton was a few banking brokers who acted as middle men for the banks and electricity companies when privatisation went ahead.

Water, electric, public transport and health care should never be privatised. They are to important to allow a bunch of greedy malcontents to make a mess of.
12:33 January 25, 2011 by Åskar
And do you think that Swedish governments learned anything from the British experiment?
14:17 January 25, 2011 by johnny1939
I live in Albany, New York and our only electricity company is owned by the Brits National Grid needless to say we have the same problems as mentioned above. right now it is vey cold and I only keep enough heat on for the temp. in the apartment to be tolerable. I so hate giving those bastards an extra penny!!!!!! I think it is the right of all citizens to keep warm w/o going broke.
12:47 February 3, 2011 by Kevin Walker
I have a modern 3 year old house,wth no loft,so no need for insulation and we have 3 glass windows and I am always switching

off lights as if I have some kind of obssesive compulsive behaviour.

And I am getting bills of 7000kr for one month thats 4 weeks.It must be the most rip- off immorally wrong sky high prices in europe.We need to probably go on the streets and protest over this.Thats probably the only way to get the government to listen.Why should we have to pay a double mortgage,this money we should be saving towards a holiday.Shame on you Sweden.
14:06 June 17, 2011 by JerseyTjej
We have seen our electricity bill increase by 50% over the same period last year. We cannot afford another increase and no matter who we rotate to, the price inevitably increases...rock and a hard place..
13:54 March 25, 2012 by stacyparrish
I agree with Kevin! Rise up and group together it's the only way to get anything done. I propose a Facebook GROUP to start the ball rolling. Last month My wife and 1 year old child walked around freezing in the dark using candle lights and setting our brand new 115,000kr air to water "swedish" made heating unit set to 19c while I was in the USA working. We have all new A+ appliances which we hardly use and were raped when delivered an electricity bill of more than 10,000 kr for 4 weeks of very very little use.
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