Slovenia has rolled out a new system of electricity network charges for both businesses and households, dropping the current scheme of peak and off-peak charges in favour of multiple time bands under which the charge fluctuates depending on time of day and season.

The new system, in effect from 1 October, is necessary to prepare the network for higher loads due to the accelerating electrification of transport and heating, says Duška Godina, the director of the Energy Agency.

Slovenia currently has peak and off-peak prices, whereby peak pricing applies on weekdays from 6am to 10pm. Users may also opt for a single price applicable throughout the day.

The new system is much more fine-grained and introduces five time bands in which the rate changes every several hours based on demand.

The highest rates will apply in periods of highest demand, from 7am to 1pm and from 4pm to 7pm. The lowest rates will apply between 10pm and 5am.

The exact rate also depends on season and whether it is a weekday or weekend.

Minor change for households, major change for business

The network charge accounts for about a quarter of the monthly electricity bill for households and calculations by the National Energy Agency indicate that for the majority of households, the bill will not change much. This is because the change does not affect the price of electricity, which remains in the purview of electricity retailers.

Moreover, a part of the network charge is fixed and depends on the user's connected load - the theoretical energy consumed when all connected systems, circuits, components, devices or equipment are operating and drawing power at the same time.

Only the second part is variable and is charged per kilowatt hour of electricity consumed. In the new system, this ranges from 18.5 to 19.5 cents per kilowatt hour. For business users the rates are much lower.

The Energy Agency says the total amount of network charges it collects is projected to remain the same, about €373 million, until 2026.

But in order to secure enough money for investments in the network, it would have to rise by 76% in 2027-2032, according to Godina.

The new system was supposed to be introduced on 1 January but was postponed several times to give utilities and businesses more time to adapt.

Despite the postponement, businesses fear their competitiveness will be eroded since few industrial processes can adapt electricity consumption to match the dynamic network charge pricing, the Chamber of Commerce and Industry has warned.

While small businesses should see their costs drop, some larger businesses will pay 7-25% more, according to Energy Agency calculations. For these consumers, the network charge represents 7-14% of the total bill.

For large industrial users, meanwhile, the network charge will more than double. However, the network charge represents only 4-5% of their total electricity cost.

Potential political fallout

The transition is also potentially fraught politically. Inflation is currently very low, under 1%, but any increase in electricity bills risks fanning discontent.

For some users bills are likely to rise, in particularly for those who have rooftop solar and receive power from the network when the sun is down. Others may see their bills drop.

The new system also comes just three months before price regulation for household consumers is due to end at the end of the year; at present 90% of the electricity a user consumes is subject to price regulation, and 10% is freely set by utilities.

The Ministry of the Environment, Climate and Energy says it does not plan to extend price regulation, which was put in place at the peak of the energy crisis.

And while wholesale electricity prices are much lower now than they were at the peak of the crisis, it remains unclear what will happen to prices when regulation is discontinued since some utilities may have purchased power wholesale on long-term contracts when it was still expensive.

"The price will depend on the prices at which utilities have purchased electricity for the next two years," Aleksander Mervar, the boss of grid operator Eles, said in a recent TV interview.

On the other hand, the ministry is considering postponing the reintroduction of a special charge for the promotion of renewables, which was likewise waived during the energy crisis.

The original plan was to return the charge on 1 January, but the ministry has said it is considering postponing it by three months "so that the reintroduction does not coincide with the end of price regulation."