Archive:Energy price statistics - background

This Statistics Explained article has been archived on 28 October 2021.

Eurostat has collected electricity and natural gas prices for over two decades. With the progress of energy market liberalisation, fully completed by mid-2007, the methodology for the collection of energy prices had to be adapted. So a new methodology for energy prices collection was agreed by European Union Member States in 2006.

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Introduction

The first directive for the collection of energy prices was approved in 1990. It covered prices charged to industrial consumers only; household energy prices were only provided on a voluntary basis. Back then, the process of liberalisation of the European energy market was just starting, basically in the United Kingdom. The price statistics at the time were collected on the basis of tariffs for standard consumers. Consumers paid a fixed tariff based on their key consumption characteristics: annual consumption, voltage and the so-called ‘load factor’ (number of hours consumed per days).

As the liberalisation process progressed, the notion of tariffs, especially for industries, did not make much sense. The methodology for the prices data collection in a liberalised market and what energy prices should cover had to reflect the fact that real prices are set by market forces and are not the fixed tariffs used in the past.

New prices for the European single market

A new methodology for the collection of prices paid by industry customers was agreed by Member States in December 2006. The following changes were introduced:

collection of national prices instead of regional prices;
prices for electricity and natural gas provided by the companies based on the real prices paid by industrial customers averaged over a given period of six months;
the definition of standard consumers replaced by consumption bands, including one for big industrial users;
collection of disaggregated electricity prices (separate component price data for production, network and taxes).

As with all important methodological changes, there has been a transition phase. The first complete dataset by using the new methodology became available for January 2008.

New time series

The drawback is a break in series in 2007 as the methodology that is used before and after 2007 differs significantly. Nevertheless, the advantage is that the real average prices that customers pay for their consumption are provided and a comparaison of prices at national level as well as comparaison of the energy component of the prices is enabled thanks to the fact that the new methodology requests disaggregated data — that is, split into the energy part, network prices and tax and levies.

Concerning the trend of energy prices in the last decade, there are a number of factors affecting the evolution of energy prices, such as oil prices, an important element in the generation of electricity through natural gas, and global market evolution. So it is difficult to see what the impact has been of market liberalisation on prices. <sesection>

The future

The completion of the European energy market for all customers by 1 July 2007 was an important goal of European energy policy. Eurostat collects data and produces indicators to measure progress towards market liberalisation, such as the number and size of electricity and natural gas companies, market shares, etc. Eurostat was also in charge of a customer switching survey assessing how many companies and citizens change energy supplier, and for what reasons. The survey is now done by the European Commission’s Directorate-General for Energy as it receives data directly from the energy regulators.

The aim is to further improve timeliness. Some 90 % of the price data comes in four months after the reference period. In practice, that means that EU aggregates can only be published five to six months after the reference period. There is certain room for improvement, but sometimes countries cannot do much better because of the systems in place at home. The household prices could also be brought into a legal framework.