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Fixed fees in network tariffs are impeding a just energy transition – report

The use of fixed fees in network tariffs disincentivises energy efficiency and puts a greater cost burden on low-income consumers, says not-for-profit the Regulatory Assistance Project.

The use of fixed fees in energy network tariffs is impeding a just energy transition in Europe by promoting higher electricity consumption and disproportionately disadvantaging low-income households, says the not-for-profit Regulatory Assistance Project (RAP).

Electric power lines in Latvia, June 2020. (Photo by Gints Ivuskans/AFP via Getty Images)

Consumers pay for energy distribution infrastructure through network tariffs made up of fixed and use-based fees. When fixed fees dominate a tariff, low-use consumers – used in the report as a proxy for low-income households – pay proportionately more for their network use than high-use consumers, the report states.

Conversely, a use-based network fee (€/kWh) distributes network costs based on energy use, which the report considers more equitable.

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In Germany, under a uniform fixed-fee tariff, low-use consumers can pay up to 2.5 times more for network costs per unit of energy delivered than high-use consumers.

Worryingly, given this conclusion, there is an increasing trend towards fixed fees for residential consumers. Germany, Spain and Italy have all implemented such payment structures.

The inequitable distribution of costs could lead to disenfranchisement and social unrest, ultimately slowing the energy transition, the report warns.