80% OF THE ELECTRICITY BILL IS NOT CONTROLLED BY THE STATE - Filenews 4/9 by Vassos Vassiliou
Electricity prices showed a slight de-escalation in August, with Nicosia being among the only three European capitals where a decrease was recorded. However, from the price of the kilowatt hour itself, the data highlight a particularly important feature of the Cypriot market, which leaves the country and consumers particularly exposed to external developments.
In particular, the electricity bill in Cyprus depends to a much greater extent on the energy costs themselves than in other European countries. An element that makes it more exposed to international changes in the price of energy and in particular to fluctuations in international fuel prices. It should be noted that this cost also includes the purchase of pollutants.
The highest percentage
According to the data of the Household Energy Price Index (HEPI) for August, Nicosia is in first place among the 33 European capitals recorded in the survey in terms of the percentage occupied by energy costs in the final price of electricity.
In particular, according to the HEPI analysis, the final price of electricity for a typical household in Nicosia consists approximately of:
Electricity prices showed a slight de-escalation in August, with Nicosia being among the only three European capitals where a decrease was recorded. However, from the price of the kilowatt hour itself, the data highlight a particularly important feature of the Cypriot market, which leaves the country and consumers particularly exposed to external developments.
In particular, the electricity bill in Cyprus depends to a much greater extent on the energy costs themselves than in other European countries. An element that makes it more exposed to international changes in the price of energy and in particular to fluctuations in international fuel prices. It should be noted that this cost also includes the purchase of pollutants.
The highest percentage
According to the data of the Household Energy Price Index (HEPI) for August, Nicosia is in first place among the 33 European capitals recorded in the survey in terms of the percentage occupied by energy costs in the final price of electricity.
In particular, according to the HEPI analysis, the final price of electricity for a typical household in Nicosia consists approximately of:
80% energy cost
13% network and distribution
2% energy taxes and other related charges
5% VAT
In other words, energy costs (including pollutants) account for 80% of the final price, which is the highest among all the capitals examined by the HEPI.
In the average of EU capitals, the corresponding percentage drops to 53%, while it reaches 73% in Valletta, 70% in Athens, 65% in London and Rome and just 14% in Budapest.
The data show that in Cyprus the final price of electricity is affected to a much greater extent by the cost of the energy itself and less by taxes and regulated charges. This means that changes in production or supply costs can have a proportionately greater impact on the consumer's bill and leaves the country and consumers exposed to geopolitical developments that the state cannot control.
The above finding is also justified by the change in August. Nicosia recorded a 2% decrease compared to July, with the HEPI attributing the retreat to the downward trend in international oil prices since July, which reduced the cost of fuel incorporated into the price of electricity. Nicosia, Prague and Luxembourg were the only three markets among the 33 capitals where a decrease was recorded in August.
Tax reductions
The large participation of energy costs also has a different and worrying reading. Based on the composition of the electricity bill in Cyprus, energy taxes and VAT together account for around 7% of the final price in Nicosia, compared to around 20% on average in EU capitals.
Thus, even if the state intervened to reduce taxes, it would affect a smaller part of the bill. As shown, in the case of Cyprus, compared to other European countries, tax reductions alone have limited scope and little influence to change the final price of the electricity bill.
It should be noted that at the moment, VAT on residential electricity in Cyprus is reduced to 5% and is in force from May 1, 2026 to March 31, 2027. It is recalled that before May 1, 2026, the rate was at 9%. Earlier, at least 2 years ago, it was at 19%.
Essentially, with these decisions, the state, in the last three years, has already reduced VAT from 19% to 5%, but, because energy costs occupy 80% of the current price, the state's intervention in taxation alone can no longer greatly affect the cost of the final bill.
8th - Nicosia is the most expensive
In terms of purchasing power (PPS), the picture is even more difficult for Cypriot households.
In August, the final price of electricity in Nicosia stood at 33.38 PPS per kWh, ranking our capital as the 8th most expensive among the 33 European capitals and well above the EU average, which was 28.79 PPS/kWh.
Higher prices were recorded in Bucharest with 54.37 PPS/kWh, Prague with 43.76, Warsaw with 40.25, Vilnius with 37.37, Rome with 36.35, Brussels with 35.00 and Berlin with 34.52.
Athens was lower, at 30.67 PPS/kWh, while Valletta was significantly lower with 13.54, Budapest with 13.19 and Oslo with 11.70 PPS/kWh.
It should be recalled that the PPS index takes into account the differences in the general price level between countries and thus allows to better reflect how much the real weight of electricity costs is in relation to the purchasing power of households in each country.
At 30.49 cents per kilowatt hour
At nominal prices, i.e. without the adjustment for purchasing power, the final electricity price for households in Nicosia stood at 30.49 cents per kWh in August, compared to 26.40 cents/kWh of the EU average. Nicosia is ranked with this comparison as the 10th most expensive among the 33 European capitals.
Higher prices were recorded in Brussels (39.29 cents/kWh), Bern (38.95), Dublin (38.72), Berlin (38.55), London (36.90), Prague (36.63), Rome (34.77), Vienna (32.60) and Bucharest (30.81). In contrast, in Athens the price was 24.92 cents/kWh and in Valletta 12.32 cents/kWh.
