Energy prices continued to rise in Q1

The rise in energy prices starting at the end of last year continued in the first quarter of 2017 in the wake of energy tax hike from the beginning of this year, according to Statistics Finland.

The oil-producing countries’ cuts in oil production also resulted in price hike of petroleum products imported by Finland. This and the tax hike at the beginning of this year have contributed to the clear rise in the consumer prices of fuels.

In March, the prices had risen 12 per cent year on year for motor gasoline, 16 per cent for diesel oil, and 20 per cent for light fuel oil.

The price of coal on the global market has made a distinct upturn in the latter half of last year.

The tax-free price of coal used in electricity production was as much as 93 per cent higher in March than that of one year back, standing now close to the tax-free price of energy peat.

The present coal price hike was preceded by a gradual fall in the price of hard coal for several years, but now the price has climbed up roughly to the level of 2011. Similarly, the price of natural gas has been on the rise, its tax-free price being 36 per cent higher in March. In Finland, the fuels used for electricity production are tax-free, while an excise duty is paid on fuels used in heat production.

The tax-free prices of coal and natural gas used in heat production were raised in the first quarter by higher excise duties and tax-free prices. There has been increasingly less influence of changes in tax-free fuel prices on taxable prices due to the growing share of taxes in the past few years. Compared to the situation one year earlier, the price of hard coal was 24 per cent higher in March and the price of natural gas 22 per cent higher.

The poor water situation in the Nordic countries has also brought about a rise in the system price of the Nordic electricity exchange derived from the sell and buy bids on the exchange. This has also been visible in the difference between the system price and the Finnish area price, which has narrowed down to almost nothing in the first quarter.

The prices of electricity for household customers went up for all consumer groups and were, on average, five per cent higher in March than one year earlier. There was much dispersion in the electricity prices for enterprise and corporate customers. For the smallest consumers, the rise amounted to a few per cent in March, for medium-size consumers, the prices fell by a few per cent, and for the biggest consumers, the prices rose by 11 per cent.