Researchers Highlight Overcompensation and Price Hikes in Swedish Electricity Networks

Swedish electricity network companies are facing growing criticism for steadily increasing prices and generating significant overprofits due to regulatory shortcomings. Vattenfall, one of the largest providers, has announced third consecutive years of double-digit percentage increases to its network prices, reflecting a broader trend across the sector. According to data collected by the Nils Holgersson group, the average price rise among Swedish electricity network firms exceeds 10% this year alone.

The regulatory authority Energimarknadsinspektionen (EI), which oversees the sector's pricing practices, has voiced concerns by labeling these price hikes as "overcompensation," implying that companies are charging consumers excessively beyond justified costs.

Supporting this critique, new research led by Erik Lundin, an expert in electricity network regulation, confirms that the current regulatory framework effectively guarantees these companies large profits by allowing overcompensation systematically. Lundin emphasizes that the system's design inadvertently motivates companies to seek maximum allowable returns rather than efficiency or consumer price fairness.

Efforts to address this issue are underway, with new regulations intended to curb overcompensation and better balance company profits with consumer interests. However, these reforms are scheduled to only come into effect after 2028, meaning substantial price corrections or regulatory changes are unlikely in the short term.

This situation places Swedish electricity consumers at risk of prolonged and unjustified cost increases while network companies continue to report sizable earnings, underscoring challenges faced in regulating natural monopolies efficiently under current frameworks.