Electricity prices set to fall sharply in 2025

The after-effects of the energy crisis are easing, and a reduction in tariffs by 2025 is likely for the vast majority of energy suppliers. This is according to electricity providers in Central Switzerland.

The more than 600 Swiss electricity suppliers have to communicate their tariffs for the coming year by the end of August at the latest. Following the significant increases in energy prices over the last two years, however, it’s already clear that prices will fall again. This is shown by a survey conducted by the Association of Swiss Electricity Companies (VSE: Verband Schweizerischer Elektrizitätsunternehmen). 83 electricity suppliers have responded to the survey, with 75 of them stating that they would definitely or probably lower their electricity prices in 2025. 52 made comments on the absolute tariffs for 2025.

The energy and grid utilisation tariffs are the decisive factors determining the level of the electricity price. According to the survey, the prices for both components are likely to fall in 2025 - both for typical household customers and for typical corporate customers.

For example, the median price is expected to fall by around 8% for a five-room flat with an electric cooker and tumble dryer (without an electric boiler). This is referred to as a ‘four-person household’, and is the standard H4 tariff that is usually used for comparisons. According to the survey, prices for corporate customers are also expected to fall by 8 or 9%.

CKW to reduce prices by an above-averageamount
The reasons for the favourable outlook are, on the one hand, lower market prices on the European electricity markets for electricity procurement, compared to previous years. On the other hand, the costs of domestic electricity reserves, which are priced into the grid utilisation tariff, are now lower.

The Central Swiss energy supplier CKW already pointed this out when it announced its half-year figures at the end of May. At the time, it said that tariffs in CKW's supply area were likely to become "noticeably more favourable" in 2025. CKW will be able to reduce its own energy and grid tariffs, while, on the other hand, the national grid company Swissgrid has also announced a reduction in costs. The federal government (Bund) is also lowering its levy for the winter reserve, which is used to finance measures to ensure a secure power supply in winter. A few weeks later, a CKW spokesperson stated: "We will be able to reduce our tariffs by an above-average amount - the price reduction for a four-person household will be more than 8%.”

Electricity meters in an apartment block       Stock photo

Tariffs fall with low in-house production
A reduction is also expected in other areas of Central Switzerland. When asked, the city of Lucerne's energy supplier EWL wrote: "We will be able to reduce the electricity tariffs for our customers. This is mainly because the situation on the energy markets has eased." WWZ (Wasserwerke Zug) in Zug is also confident that it will be able to reduce electricity prices.

In particular, energy suppliers who do not have a great deal of in-house production, and who thereby have to buy more electricity on the open market, will be able to reduce tariffs more sharply - after all, it was these suppliers who had to increase prices, sometimes sharply, due to the turmoil on the market in recent years. This includes EWS from Schwyz, for example, who said: "We procure electricity on the market up to three years in advance. As prices on the European market have now eased, we can procure electricity at lower prices. Our customers in the basic supply chain can therefore expect lower tariffs next year." EWS is assuming a reduction of at least 8% on the standard H4 tariff for four-person households.

The fact that CKW is also reducing its tariffs at an above-average rate, even though CKW has a high proportion of its own production, is due to the ‘average price method’: CKW has to calculate an average price from the production costs of its own power plants and all the procurement costs from purchases on the open market. In times of low market prices, this means that the electricity tariff will not be as expensive as it has been in recent years. This method will become obsolete in future anyway with the new Electricity Act (Stromgesetz).

As things stand today, EWA Energie Uri is also expecting a reduction in electricity prices. The two electricity suppliers in Obwalden and Nidwalden, EWO and EWN, are not yet showing their hands: they refer to the tariff announcement at the end of August.

Decisions are often made at the last minute
The VSE survey has caused irritation here and there in the industry, as, theoretically, a lot can still change before the new tariffs are definitively announced. This is, in fact, the first time that the VSE has surveyed the absolute tariffs at such an early stage, from mid-May to mid-June. The price calculations in the regions are still ongoing, however, and the procurements are far from being finalised – the management and boards of directors usually only decide on the 2025 tariffs in August.

In particular, those energy suppliers who purchase a large proportion of their electricity and do not produce it themselves are continuously monitoring the market, and often wait until the last minute, according to industry experts. A survey of tariffs as early as May is therefore somewhat risky, as some things could still change, although it must also be recognised that there are currently no signs of a sudden price increase on the markets.