Tax Burden for Electricity Consumers

When analysing and summarising the results in terms of electricity, it is interesting to see how the third component (taxes, levies and certificate schemes) compares between the different consumer profiles. In Figure 34, the orange bars represent the total cost per MWh of component 3: taxes, levies and certificate schemes.

The full yellow bars represent the minimum- maximum ranges where different options are possible, while the transparent yellow bars represent the maximum range for nonelectro-intensive consumers in Germany, France and the Netherlands. The red lines represent the weighted average tax burden of the four consumer profiles for a certain country (in EUR/MWh) (for electro-intensive ranges in UK, FR and NL).

Each of the Belgian regions allocate the total burden of extra costs (simplified: tax burden) differently, but one common trend is clearly visible: the more one consumes, the lower the tax burden. In contrast, the UK grants no reductions based on volume and allocates the tax burden completely evenly over the four profiles.

Nevertheless, we also observe that the majority of the other countries under review (Germany, the Netherlands and France) have shifted towards electro-intensity criteria regarding the allocation of the tax burden, while Belgium still defines exemptions strictly based on consumption (same for the three regions). Indeed, in Germany, France and the Netherlands, we observe large possible differences within one single consumer profile depending on the economic profile and the electrointensity of the consumer. In Belgium, on the other hand, we observe important differences only between different consumer profiles, which are mainly caused by differences in consumption level and grid connection level (apart from some general sector conditions).

In other words, from a fiscal point of view, Belgian federal and regional authorities mainly grant reductions and/or exemptions to taxes, levies and certificate schemes based on the level of electricity offtake, and not on the level of electro-intensity of an industrial consumer. This could possibly mean that tax revenues are directed toward protecting consumers that are not particularly affected by a lack of competitiveness of electricity prices, while more vulnerable consumers keep suffering from an important disadvantage compared to their electro-intensive competitors in neighbouring countries.

As is the case for profile G1, the commodity cost is by far the largest part of the total gas price. Price differences are fairly limited. Commodity cost is cheapest in Belgium, followed by the Netherlands, Northern France, Germany and the UK. The South and South West of France have to deal with a higher gas market price, which constitutes a competitive disadvantage compared to the Northern part of the country.

Network costs only make up a limited amount of the total cost. We observe the lowest values in Belgium, and slightly higher values in the Netherlands and France (for both TSO’s). Tariffs in the UK are markedly higher than in the other countries under review.

As to taxes and levies, all countries under review give exemptions for large baseload industrial consumers. All volume based exemptions have already been taken into account in the maximum option in Figure 32. For these results, that only apply to consumers that do not use gas as raw material, we observe the highest tax levels in Germany, and the lowest in the Flemish and Walloon regions.

For consumers that use natural gas as a raw material (feedstock), all countries under review apply important tax exemptions on top of some existing volume reductions. This is the case for Belgium (energy contribution), Germany (Energiesteuer), France (TICGN), Netherlands (Energiebelasting) and the UK (Climate Change Levy). The general level of taxes and levies for these feedstock consumers, reflected by the minimum option in Figure 32, is hence very low for all regions under review. Nevertheless, due to the federal contribution on which no exemptions apply, Belgium offers the highest level of taxes for these feedstock consumers.

Impact of reductions on network costs

As briefly stated above, the impact of reductions on network costs for large baseload consumers such as profiles E3 and E4 are important. Germany introduced these reductions in 2012 and the Netherlands in January 2014. Belgium, France and the UK do not grant reductions.

In Germany and the Netherlands, large baseload consumers such as E4 in this study can benefit from a transport tariff reduction up to 90%. As shown in Figure 37 below, these reductions profoundly alter the situation in terms of transmission tariffs, and by doing so the general picture in terms of competitiveness.

In both cases, the cost is transferred to the other consumers. In the Netherlands these reductions are compensated by the transport tariff itself (through regulatory accounts, for instance). In Germany, a separate levy (the “StromNEV §19-Umlage”) was created to pay for the reduction. It is due by all consumers, but yet again reductions for large consumer profiles are granted on this levy. We can therefore say that high transmission tariffs in Germany are not the consequence of the reductions, but rather the cause.

In terms of natural gas for very large industrial consumers (profile G2), Belgium generally offers very competitive prices. For very large industrial feedstock consumers using natural gas as a raw material (bottom range), cost differences between the countries under review are relatively small, except for the UK that offers a substantially higher cost. For these consumers, the Netherlands and Belgium are the most competitive countries under review, followed very closely by Northern France. The three Belgian regions are more competitive than all other regions, except for the Netherlands that offers a slightly lower total cost.

For very large industrial consumers that do not use natural gas as a raw material, but rather for heating and other purposes (top range), cost differences between the countries under review are much more important. Belgium is generally very well positioned, with comparable consumers in the Netherlands paying up to 5% more. Consumers in the UK, Germany and France can pay up to 20 – 30% more than comparable consumers in Belgium.

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