Slovenia is preparing to introduce a new complex system for the charging of electricity network fees where the cost for consumers will depend much more than now on when and how much power they use. The Energy Agency says the reform is part the green transition and will promote a more efficient use of the grid.

The new system is to come into force in July 2024 after its implementation has been delayed twice. It will be phased in with a two-year transition period applying to some of the new elements. Consumers have already been acquainted with some details on their electricity bills earlier this year.

The billed power and tariff rates, which together represent around one-third of the electricity bill, will vary according to time of day and season.

Five tariff rates

They will be highest when the network is at its busiest and lowest when it is least busy. Each of the planned new time periods will represent different periods within a day and will be set separately for peak season, during winter, and off-season, and for working days and non-working days.

There will be four time categories with different tariff rates during the year and five categories within a day. The cost of using the network in each time category will depend on the load on the network.

The most expensive will be time category 1, which will only be in place during peak season, between November and February, while the cheapest, time category 5, will only apply during off-season. The priciest category will never apply on public holidays.

Each day there will be high-load hours, medium-load hours and low-load hours.

The five different categories will make the new charging system much more complex than now when household consumers who have such a meter pay lower tariff for using electricity at weekends or public holidays or between 10pm and 6am on work days throughout the year.

Charge for excess load

Another new feature of the new system is the distinction between the agreed billed power and excess load, which would mean the consumer has exceeded the agreed load.

The electricity operator will determine the agreed billed power based on the consumer's use of the network in the past, following a complex procedure and according to their connected load.

The end user will be able to make adjustments to their billed power and to impact the cost of using the network by monitoring and changing their habits.

All consumers were informed of the agreed load according to each time categories for 2024 in their June, July and August bills, and they will be able to change their agreed load.

For household and small business consumers, meaning those with a connection load equal to or less than 43 kilowatts, who will not change their agreed load, there will be a transitional period of two years after the new system kicks in.

During this period, these users will not be charged for excess load, but they will be informed on their bills of any overruns and the additional costs they may incur after the period ends if they do not take action.

Average household to pay less, businesses more

The announced changes raised concern in the public that they will be slapped hard, especially if they use several gadgets at the same time. "You won't have to cook at night and toasting your bread will not hit your pocket," Duška Godina, the head of Energy Agency, said on 13 December.

She said the new tariffs would in fact save the average household 5% in annual costs. However, resistance is expected from businesses, which will see their costs rise, she said, adding that the network charge in the manufacturing sector accounts for 3-5% of energy costs.

Higher costs will also affect households with a heat pump, electric car and a solar power plant. These are use the network more than they are currently paying for, Godina said. This would also make the new system fairer. But they will be able to lower their bills if they power their appliances during off-peak rates.

Changes to support green transition

The network charge is the main source of income for power distributors, which use it to maintain and upgrade networks. Investments in the network and grid upgrade will be crucial for the green transition.

Aleksander Mervar, the CEO of the national grid operator ELES, says the charges currently paid by households and businesses in Slovenia some of the lowest in Europe. "There will not and cannot be a green transition for this money," he said.

"The network charging reform is part of the green transition," said Godina, pointing to the projections in the National Energy and Climate Plan that electricity consumption will increase by 52% by 2050 as electricity replaces other fossil fuels in heating, mobility and industry.

Power distributors have calculated that they would have to invest 3.5 billion in the network in a decade and ELES an additional 826 million. "This necessarily translates into a rise in network charges," Godina said.