Fuel prices raise in Q1 as coal price slides

Prices of fuels rose in nearly all energy products in the first quarter of 2019, according to Statistics Finland's data.

The exchange price of electricity was in March considerably lower than last year.

The price of motor gasoline was three per cent higher and that of diesel oil nine per cent higher than one year earlier. The corresponding price change in light fuel oil was a ten per cent rise that was affected by the tax increases at the beginning of the year. The taxes remained unchanged for motor gasoline and diesel fuel.

The tax-free price of hard coal remained, on average, on level with the previous year in 2018. In the last quarter of the year, the tax-free price of hard coal was five per cent higher than in the previous year. The tax-free price of natural gas continued growing in 2018. In December, the tax-free price of natural gas was 12 per cent higher than the previous year. The price of natural gas has been rising evenly since 2016.

The taxable price of coal was one per cent lower in March compared to one year earlier. The corresponding price change for natural gas was a nine per cent rise. In Finland, the fuels for electricity production are tax-free while excise duty is paid on fuels used in heat production. The taxation for combined heat and power production was changed from the beginning of the year. The changes tightened the taxation of coal and lightened the taxation of natural gas in combined production.

The prices of forest chippings and milled peat used in electricity and heat production increased by one and eight per cent respectively in the first quarter compared with the corresponding period of the year before. The price increase of milled peat was affected by tax increases.

Customer prices for district heat for detached houses were two per cent higher in January than one year earlier. The corresponding price rise was four per cent for terraced houses and five per cent for blocks of flats. The consumer price of wood pellets was four per cent higher in February than in the corresponding period in 2018.

The system price of the Nordic electricity exchange derived from the sell and buy bids on the exchange made a clear downturn in the first quarter. In January, the average system price was still 63 per cent higher than one year earlier but in March, the price was already six per cent lower compared to 2018. The corresponding average Finnish area price was 12 per cent lower in March than in the corresponding period last year.

The decrease in the exchange price of electricity was not yet visible in customer prices. In March, the electricity prices for households rose by 10 to 12 per cent depending on the consumption category compared to March 2018.

For enterprise and corporate customers, the prices of electricity rose by one to eight per cent except for one consumption category, where the price fell by two per cent. Household customers’ electricity prices are based on the obligation to deliver prices published by the Energy Authority, while the prices of enterprise and corporate customers are based on Statistics Finland's price inquiry on electrical energy. The obligation to deliver price reacts slowly to changes in electricity prices on the Nordic electricity exchange.