With the decision published in the Official Gazette, 30 million citizens will be able to change their electricity supplier just as they would a mobile phone operator. This week, when important decisions regarding electricity were taken, first the share of TRT in electricity bills was abolished, and then the law proposal that will enable the transition to the gradual tariff system in electricity consumption was accepted in the Parliament.
Describing the latest developments in the electricity market as a revolution, Çağada Kırmızı, the founder of electricity tariff comparison and supplier switching site encazip.com, said, “The gradual tariff application in our country is a very clever application. 2022 will be an important year for the electricity market.” This week has been a week where important decisions were taken for electricity consumers. First of all, the law proposal that would remove the share of TRT in electricity bills, and in addition to this, would enable the transition to a gradual tariff system in household electricity consumption was accepted in the Grand National Assembly of Turkey (TBMM). With the decision published in the Official Gazette on the same day, approximately 82 million citizens who paid electricity bills of 30 TL or more were given the right to change their electricity supplier as if they were changing mobile phone operators. Encazip.com, the electricity suppliers comparison and supplier switching site, conveyed the impact of the decisions taken this week on consumers.
Energy Market Regulatory Authority (EMRA), with its decision published in the Official Gazette the other day, determined the minimum electricity consumption limit of consumers who can change their electricity supplier for 2022, which is the free consumer limit, as 1100 kWh per year. According to the decision, consumers who pay electricity bills of 2022 TL or more per month in 82 will be able to change their electricity supplier. Considering that the annual electricity consumption of an average house is 1800kWh, almost all living spaces consume within this limit. With the decision, around 30 million citizens will be able to use electricity at more attractive prices and conditions by changing their electricity supplier.
Free on paper, in reality the consumer does not get enough
The free consumer application in the electricity market has been applied to large masses since 2013. By 2018, around 5 million consumers were using the free consumer application, which attracted much more attention at the beginning. However, due to the sudden exchange rate increases in 2018, the market dynamics deteriorated and the number of consumers who changed their suppliers decreased to the level of 100 thousand. Due to the relatively stable macroeconomic conditions until October 2021, there was a recovery in the electricity market and the number of eligible consumers rose to 1,5 million. However, the currency crisis in the recent days has also hit the electricity market deeply, and the number of eligible consumers has dropped by 80 percent in two months. The same situation is experienced in different countries. For example, in England, where an average of over 7 million consumers change suppliers a year, record decreases were seen in supplier changes, and the market for switching suppliers in this country came to a standstill as of November.
Why did consumers not change electricity suppliers in 2021?
In 2021, contrary to the custom, home electricity prices were kept lower than they should be, and workplace electricity prices were kept much higher than they should be. Although this situation means low electricity prices in homes at first glance, the electricity costs reflected to the workplace in reality caused exorbitant increases in the prices of all products and services. As electricity costs remained above the national tariff for home electricity prices, there was no opportunity for household consumers to save by switching suppliers. On the other hand, the fact that workplace electricity prices were much higher than the need increased the number of suppliers in this subscriber group, and business owners had the chance to use electricity cheaper by 30-35% by changing their electricity suppliers.
With the transition to the gradual electricity tariff, 10 million citizens will change suppliers.
The law that will implement the gradual tariff application, which is a revolutionary change in the electricity market, was passed in the Parliament the other day. After that, with the work to be done by EMRA, the conditions of the gradual electricity tariff will be clarified. Determining two separate levels at first; It is considered certain that citizens who pay electricity bills of 136 TL or less per month will remain in the lower tier, and those who consume more than this amount will be taken to the upper tier. In this way, approximately 7 million consumers in the lower segment will consume electricity at a cheaper unit price than the current one, while the electricity prices to be applied to 30 million citizens in the upper segment will be determined according to the cost of the electricity they consume. Due to the fact that the current electricity price applied to houses is approximately 150 percent lower than the real electricity costs, it is expected that the upper segment prices in the gradual tariff will be determined in parallel with this cost difference and a very serious increase in consumer electricity prices will be experienced on January 1st. Although it may seem like it, this practice will actually put an end to the cross-subsidy practice in electricity, that is, the situation where businesses take on the cost difference of home electricity prices. Reflecting the real cost to the houses with the highest electricity cost and taking the load off the back of the producers and tradesmen; it will both cause the price of all goods and products to decrease and the pricing in the electricity market will have a more equitable structure. This practice will also enable the free market dynamics in the electricity market to work again, resulting in a decrease in prices in the medium term. Accordingly, the number of eligible consumers is expected to reach 2022 million in 10.
“Lessons have been learned from mistakes, the electricity market will recover in 2022.”
Describing the latest developments in the electricity market as a revolution, Çağada Kırmızı, the founder of encazip.com, evaluated the effects of the developments on consumers as follows: “The practice of cross-subsidy, which has been a wrong practice for a long time in the electricity market, that is, the practice of subsidizing home subscriber groups of businesses is being abandoned gradually. The abolition of this practice, which has serious negative effects on consumer inflation, will result in cheaper prices of all products and services. It should not be forgotten that the electricity price of producers and tradesmen in European countries is kept two times lower than that of houses, and the situation of European economies is obvious. In addition, I think that the gradual tariff application in our country is a very smart application. As a result, with the logic of the social state, low-income consumers must be protected in some way, but other consumers should also bear the cost of the electricity they use and be encouraged to save. In addition to all these, although the abolition of the TRT share has a very small effect on electricity bills, the debates and objections about the TRT share will be put to an end. The year 2022 will be an important year for the electricity market.