Hidden mark-ups in your electricity contract: how to find them on the invoice
Mark-ups, monthly fees and add-ons rarely show in the quote but add up to thousands of kronor a year. How to read the invoice, what to ask the supplier and what it looks like in your industry.
What is a mark-up?
A variable-price electricity contract has two parts: the spot price from the power exchange and the supplier's mark-up on top. The spot price is the same for everyone in the same bidding zone (elområde, one of Sweden's four electricity price areas). The mark-up is the only part the supplier sets itself, which is why it is where the difference between a good contract and an expensive one lies.
The problem is that the mark-up rarely appears as a single, clear line. It can be split across several items, built into a total price or only show up after a year.
Five places where costs tend to hide
- Mark-up in öre/kWh. The visible part. Always compare in öre per kWh, never as a percentage or a total amount.
- Percentage mark-up. A mark-up charged as a percentage of the spot price grows when the price rises. A winter month with high prices becomes twice as expensive.
- Profile cost. If you have a contract based on the monthly average price, the supplier often charges for the fact that your consumption falls in hours that are more expensive than average. The item may be called a profile mark-up, volume adjustment or balancing cost.
- Fixed fees. A monthly fee per site, invoice fee, paper invoice fee and a fee for an app or portal. With many metering points, these quickly add up to large amounts.
- Add-ons. Electricity with guarantees of origin, climate offsetting or price monitoring can be reasonable purchases, but they should be priced separately so that you can opt out of them.
How to read the invoice
Put three invoices from different seasons side by side and work out what you have actually paid per kWh for the electricity supply, excluding the grid fee (nätavgift, the charge paid to the network operator) and energy tax. Compare that with the month's spot price in your bidding zone. The difference is your real mark-up, whatever the lines are called.
The first time you do this exercise, it is common for the difference to be larger than the mark-up stated in the contract. If so, the rest is in one of the items above.
Red flags in the contract terms
- The price refers to the supplier's price list in force at any given time
- The mark-up is not shown separately but is included in a total price
- The mark-up may be adjusted during the contract period
- The contract renews automatically on the same terms
What to ask the supplier
- What mark-up in öre/kWh do we pay, and what other fees are added per month and per site?
- Is a profile or balancing cost charged separately, and how is it calculated?
- Can the mark-up change during the contract period?
Ask for the answer in writing. A supplier that does not want to itemise its fees usually has a reason not to.
Tip: Convert all quotes to an annual cost based on your own consumption. A low mark-up with high fixed fees can end up more expensive than the reverse.
How it looks in different industries
Mark-ups work the same way everywhere, but where they hide depends on how the business uses electricity. Choose your industry for a worked example and the trap we see most often.
- Energy advice for restaurants
Example: A restaurant using 150,000 kWh a year and paying a 6 öre mark-up spends 9,000 kr a year on the mark-up alone. At 2.5 öre it would be 3,750 kr. The contract was often signed when the premises were taken over and has never been compared, and when electricity and grid charges are on the same invoice the mark-up is hard to spot. Read more: Hidden mark-ups in a restaurant's electricity contract.
- Energy advice for hotels
Example: A hotel using 600,000 kWh a year has peaks in the morning, when breakfast, showers and laundry all run at once, and in the evening. With a monthly average price contract, the supplier often charges a profile cost for exactly those hours. A profile cost of 2 öre equals 12,000 kr a year. Ask about this item and compare it with an hourly-price contract.
- Energy advice for industrial companies
Example: For an industrial company using 3,000,000 kWh a year, every öre is worth 30,000 kr. For larger consumers, the cost rarely hides in the mark-up itself but in trading fees, balancing costs and margins on the volumes that are price-hedged. Ask for an itemised breakdown. Read more: Reviewing industrial electricity contracts.
- Energy advice for property owners
Example: A property company with 40 metering points and a monthly fee of 49 kr per site pays 23,520 kr a year before a single kWh has been used. The fee is not noticeable on individual invoices but becomes clear when the whole portfolio is added up. Read more: How to review a property company's electricity bills.
- Energy advice for housing cooperatives
Example: A housing cooperative (BRF) using 120,000 kWh a year and paying a 6 öre mark-up spends 7,200 kr a year on the mark-up. If the electricity contract was procured through the cooperative's property manager, often only a total price is shown, and the board cannot see how much of it is mark-up. Ask the property manager for the mark-up in öre/kWh. Read more: Electricity contracts for housing cooperatives.
- Energy advice for shops & retail
Example: A shop in a shopping centre using 120,000 kWh a year often has its electricity recharged by the landlord. There may then be an administrative mark-up in the recharge on top of the landlord's own mark-up. 5 öre in total equals 6,000 kr a year. Ask the landlord to show how the electricity cost is calculated.
- Energy advice for grocery stores
Example: A grocery store using 450,000 kWh a year has a steady round-the-clock load from refrigeration and freezers. Electricity with guarantees of origin is often a requirement from the chain, but suppliers price this add-on differently. An extra 1 öre for guarantees of origin equals 4,500 kr a year. Insist that the add-on is shown separately so that it can be compared.
- Energy advice for agriculture & farming
Example: A farm with three sites, the house, the barn and the grain dryer, pays fixed monthly fees for all three. The dryer may run only a few weeks a year, but the fee is charged for twelve months. Also check whether the electricity used in production qualifies for an energy tax refund; that is a separate matter from the mark-up.
- Energy advice for offices & serviced offices
Example: An office using 200,000 kWh a year often has a contract where the price refers to the supplier's price list in force at any given time. This means the mark-up can be raised without the contract being terminated. A mark-up 3 öre higher equals 6,000 kr a year. Switch to a contract where the mark-up is stated in the contract and cannot change during the contract period.
- Energy advice for logistics companies
Example: A logistics company electrifying its forklifts and lorries can go from 400,000 to 800,000 kWh in a few years. The mark-up was negotiated when the volume was half the size. 3 öre on 800,000 kWh equals 24,000 kr a year, and the new volume leaves room for a lower mark-up.
- Energy advice for property managers
Example: A property manager procuring electricity for 20 properties with a total of 2,000,000 kWh a year is handling a mark-up where every öre is worth 20,000 kr. Clients expect to see what they are paying for. Show the mark-up, fixed fees and any management fees separately for each property.
- Energy advice for health centres
Example: A health centre using 150,000 kWh a year with a mark-up of 8 per cent of the spot price pays 8,000 kr in mark-up in a year when the spot price averages 67 öre. If the average price rises to 130 öre, the mark-up becomes 15,600 kr, even though the supplier's costs have not changed. Switch to a fixed mark-up in öre/kWh.
- Energy advice for hospitals
Example: For a hospital using 10,000,000 kWh a year, 0.5 öre equals 50,000 kr a year. At that volume, the supplier often charges balancing and imbalance costs as a separate item. Ask for this item to be itemised and compared between bids; otherwise it is impossible to tell which offer is actually cheapest.
- Energy advice for dental clinics
Example: A dental clinic using 40,000 kWh a year pays a monthly fee of 59 kr, or 708 kr a year. That sounds small, but it equals almost 2 öre per kWh. For small consumers, fixed fees often weigh more than the mark-up itself, so compare the total annual cost.
- Energy advice for care homes for the elderly
Example: A care home using 350,000 kWh a year that has been extended or changed owner may have a site that was never added to the contract. It then ends up on a default (assigned) contract (anvisat avtal, the supplier's fallback contract when no other agreement is in place), which is often considerably more expensive. A building using 40,000 kWh at a price 20 öre higher costs an extra 8,000 kr a year. Check that every site ID is included in the contract.
- Energy advice for haulage companies
Example: A haulage company installing charging for electric lorries often gets a new site at the depot. If it is not added to the existing contract, it ends up on the supplier's standard price or a default (assigned) contract. With 150,000 kWh of charging a year, a price difference of 10 öre amounts to 15,000 kr.
- Energy advice for car dealerships
Example: A car dealer with three sites often has three different electricity contracts with different mark-ups, signed at different times. With a total of 300,000 kWh a year and an average difference of 2 öre compared with the best contract, that comes to 6,000 kr a year. Combine the sites under one contract with a common mark-up.
- Energy advice for car repair shops
Example: A car repair workshop using 100,000 kWh a year with a contract signed through telephone sales often has both a higher mark-up and several fixed fees. 7 öre instead of 2.5 öre equals 4,500 kr a year. Ask for the full price list in writing and check what the contract actually says.
- Energy advice for bakeries
Example: A bakery using 300,000 kWh a year uses a lot of electricity early in the morning, when the spot price is often lower than later in the morning. With a monthly average price, the bakery still pays the average and does not benefit from the cheaper hours. With hourly pricing, the profile can become an advantage instead of a cost.
- Energy advice for gyms & fitness centres
Example: A gym using 200,000 kWh a year often has several small fees alongside the mark-up: a monthly fee, an invoice fee and a fee for the supplier's app. Together they can come to 1,500–2,000 kr a year per site. For a chain with ten sites, that quickly becomes 20,000 kr.
- Energy advice for spas & swimming centres
Example: A swimming centre using 1,500,000 kWh a year on a fixed-price contract sees no mark-up on the invoice, because it is included in the fixed price. Compare the contract price with the futures price for the same period at the time the contract was signed. The difference is the supplier's mark-up and risk premium. 3 öre equals 45,000 kr a year.
- Energy advice for camping & campsites
Example: A campsite using 150,000 kWh a year uses most of its electricity in May–September, when the spot price is generally lower. A fixed-price contract, however, is calculated from a full-year price in which the winter months are factored in. The campsite then pays for a winter risk it barely has. Compare the fixed price with what the summer months would have cost on a variable price.
- Energy advice for warehouses
Example: A warehouse using 300,000 kWh a year is often taken over with the electricity contract the previous tenant had. Nobody has negotiated it for the current business. An unnecessary 4 öre mark-up equals 12,000 kr a year. Check the contract when you move in and terminate it in time if it does not suit you.
- Energy advice for schools & preschools
Example: An independent school using 400,000 kWh a year with a managed price product from the supplier often pays a management fee on top of the mark-up. A management fee of 2 öre equals 8,000 kr a year. Ask what the management actually involves and compare with a contract without the fee.
- Energy advice for server halls & data centres
Example: A data centre using 10,000,000 kWh a year has an almost completely flat load, which is cheap for the supplier to handle. Even so, many are charged the same mark-up and profile cost as businesses with an uneven load. 0.3 öre equals 30,000 kr a year. Insist that the flat profile is reflected in the price.
- Energy advice for refrigeration plants
Example: A cold storage facility using 1,000,000 kWh a year often has a multi-year contract where the mark-up is indexed every year. After three years, the mark-up may be several öre higher than when the contract was signed. 2 öre equals 20,000 kr a year. Read the indexation clause and ask for a mark-up that stays fixed for the entire contract period.
- Energy advice for churches & parishes
Example: A parish using 300,000 kWh a year uses a large share of its electricity in October–March, when prices are at their highest. A percentage mark-up therefore hits hardest at exactly that time. The parish also often has several rarely used buildings, each with its own monthly fee. Read more: Electricity contracts for churches and parishes.