How does electricity contract invoicing work?
Invoicing an electricity contract is a process where the electricity user is charged for the electricity he consumes. This process may vary slightly between different utility companies, but the basic principles are usually the same. In this article, we go through how electricity contract invoicing works in Finland.
Parties of the electricity contract
The invoicing of an electricity contract usually involves two parties: the electricity seller and the electricity network company. The electricity seller sells electricity to the consumer, while the electricity network company is responsible for the transmission of electricity to the consumer’s home. Invoices from these two parties are often combined into one invoice, but they can also come as separate invoices.
Basics of invoicing
Invoicing for an electricity contract is usually based on two main components: electricity consumption and electricity transmission. In addition to these, the bill may also include other charges, such as taxes and service charges.
- Electricity consumption: This part of the bill is based on how much electricity you have used. Consumption is measured in kilowatt hours (kWh), and the price per kWh is determined by your electricity contract.
- Electricity transmission: This part of the bill covers the transmission of electricity through the electricity network to your home. Transfer fees are determined according to the electricity network company’s price list and may vary by region.
Billing period
E-invoices are usually sent monthly, but the billing period can also be longer, for example every three months. The length of the billing period depends on your electricity contract and your electricity company.
Meter readings and estimate billing
Electricity consumption is measured using an electricity meter. Today, most households have a remote-readable electricity meter that automatically sends consumption data to the electricity company. If there is no meter that can be read remotely, the consumer must report the meter readings themselves regularly.
If meter readings are not available, the electricity company can use estimated billing. This means that the bill is based on an estimate of your consumption, and the actual consumption will be adjusted later when the mileage readings are available.
Different electricity contracts
There are different electricity contracts, and they can affect billing. The most common types of contracts are:
- Agreement valid until further notice: This agreement is valid until further notice and can usually be terminated with a notice period of two weeks. Prices may vary depending on the market situation.
- Fixed-term contract: This contract is valid for a certain period of time, usually 1-2 years. The prices are fixed during the contract period.
- Spot price contract: In this contract, the price of electricity follows the spot price of the electricity exchange, which can vary hourly.
More information
You can find more information about electricity contract invoicing and different types of electricity contract on the following websites, for example:
Hopefully, this article helped you understand how electricity contract invoicing works. It is important to be aware of your own electricity consumption and choose the most suitable electricity contract for you.
