The official Price Monitor for Switzerland has argued that residents are paying millions of francs too much for energy. Stephan Meierhans told reporters that the government has allowed electricity providers to earn too much from the network, to the detriment of entrepreneurs and households.
Swiss households and businesses being overcharged for power
Speaking to NZZ am Sonntag Meierhans estimated that customers in Switzerland collectively pay 400 million francs too much a year for electricity. "That is simply an incredible amount of money that has been taken out of the pockets of electricity customers for years," he noted, adding the Swiss energy sector is now “gilded.”
The source of his ire can be traced to how much Swiss energy providers can earn in profit each year. Currently, the sector is monopolised: companies (often backed by Swiss cantons) are assigned regions to cater to, and companies are not allowed to compete with each other over the same customers or areas.
Because of the lack of competition, the Swiss government sets a “reasonable profit” limit on how much electricity firms can earn in a year - it is currently set at 4,13 percent of the total capital invested in the network. With 22 billion francs currently invested in the network, this amounts to over 900 million francs a year, which is earned by charging customers more.
High energy prices "border on greed" says businesses
"In my view, this borders on greed and is strange," noted Roger Ambort from the Group of Large Electricity Customers. The association, backed by Swiss supermarkets Coop and Migros and heavy industries like steel, argued that "the electricity barons can make significantly higher profits from the grid…It is a completely risk-free monopoly business with a state-guaranteed profit." Indeed, the declining financial viability of heavy industries in Switzerland has been attributed to high electricity prices.
The financial security afforded to energy firms is demonstrated by Swiss pension providers, who have invested more and more into them as they are considered safe and profitable investments. “The electricity grid is the new El Dorado,” Ambort argued.
This attitude has also been adopted by the Federal Council, which submitted a new formula for electricity company profits in July 2024. Under the new system, for example, the rate for 2025 would fall from 3,98 to 3,41 percent, saving companies and households 127 million francs a year or 0,22 rappen (cents) per kilowatt hour. This proposal is expected to be put into force by 2026.
Swiss consumers prefer high quality over low price, say energy firms
However, the plans still face major opposition, with the Association of Electricity Companies (VSE) confirming they would oppose the change at all costs. VSE director Michael Frank told NZZ am Sonntag that amid Switzerland’s transition to net-zero, "It is extremely dangerous to push through short-term political changes that affect long-term investments in critical infrastructure."
Frank argued that Switzerland has “one of the most stable electricity grids in the world, and security of supply costs something." He concluded that faced with a choice between lower costs and lower quality and higher costs and higher quality, Swiss citizens would only vote one way at a referendum.