The government is moving to decouple municipal fees from electricity.

This paves the way for a comprehensive overhaul of utility bills, which for decades have served not only as a means of paying for electricity consumption, but also as a collection mechanism for taxes and fees on behalf of third parties.

The change is in line with the new European directive on “clean” energy bills; however, its implementation has been postponed until 2028, highlighting the technical difficulties of creating a new collection mechanism, as well as local governments’ strong reservations regarding the impact on their revenues.

Interior Minister Theodoros Livaniou announced yesterday (June 26) that, as of January 1, 2028, municipal fees will no longer be collected through electricity bills and will instead be paid through a different mechanism, which will be established by Presidential Decree and, according to the ministry’s plan, will resemble resemble the ENFIA collection model, with annual settlement and the option to pay in twelve installments.

This reform is a long-standing demand of both electricity suppliers and the market, as electricity bills have evolved into a highly complex billing tool, in which the cost of the electricity itself now constitutes only a portion of the final amount paid by the consumer.

However, the government’s decision to postpone implementation until 2028 indicates that this is a reform fraught with significant technical and political challenges. On the one hand, it requires the development of a comprehensive information system that will link municipalities with the relevant government agencies and ensure the accurate assessment of debts. On the other hand, the change directly affects the finances of municipalities, which currently enjoy high collection rates precisely because municipal fees are included in electricity bills.

Market analysts estimate that postponing implementation until after 2027 keeps a particularly sensitive reform out of the next election cycle, which could provoke reactions from local governments and spark a debate on how to secure municipal revenues once the current collection mechanism is phased out.

A bill that is no longer just about electricity

The debate over municipal fees brings to the forefront a long-standing problem in the Greek electricity market: the bill consumers receive does not reflect only the cost of the electricity they consume.

In addition to the supply of electricity, it includes regulated charges for the use of the transmission system and the distribution network, Public Utility Services (PUD), the ETMEAR levy, municipal fees, municipal tax, the fee for the Hellenic Broadcasting Corporation (ERT), VAT, and other charges.

As a result, the cost of the electricity itself often accounts for only a small portion of the final bill.

A typical example is a bill for monthly consumption of just 230 kilowatt-hours. The cost of the electricity amounts to just 30.03 euros, while the total amount due comes to 84.11 euros.

In other words, only 36% of the bill is for the purchase of electricity.

Regulated charges total 21.25 euros, municipal fees and the municipal tax amount to 26.11 euros, while the ERT fee and other taxes add up to nearly another 7 euros. In total, more than 54 euros of the bill consists of charges not directly related to electricity consumption.

This example explains why, even when a household significantly reduces its consumption, the final bill does not decrease accordingly. Suppliers compete only on the supply side, while most of the other charges are set by the government or constitute revenue for third-party entities.

The companies’ response

The issue of “inflated” bills was recently raised in a letter to the relevant ministers by the Association of Electricity Suppliers (ESPEN), arguing that burdening bills with taxes and fees unrelated to electricity consumption makes it difficult for consumers to pay their bills on time and creates a distorted picture of the actual cost of electricity.

In fact, it points out that the draft of the new Local Government Code currently under consultation not only maintained the existing system, but also provided for an increase in the fees collected through electricity bills. In a market where overdue debts have already exceeded 3 billion euros, the Association warns that such a development would place an even greater burden on consumers who pay their bills on time, while also increasing the already high administrative and management costs that suppliers incur to collect fees on behalf of third parties.

The European Approach

The Greek initiative is also in line with European guidelines to remove charges from electricity bills that are not related to the energy product.

In the “Affordable Energy Action Plan” strategic policy document, the European Commission calls for a reduction in the tax burden on electricity bills and the removal of non-energy charges from them. Similarly, the “Citizens Energy Package” sets out guidelines for eliminating non-energy-related taxes and levies so that consumers can more easily compare suppliers’ rates.

The European regulatory agencies ACER and CEER are also moving in the same direction, which have emphasized that electricity bills should include only charges related to the generation, transmission, distribution, and supply of electricity, while taxes and other charges should be collected through separate mechanisms.

The Big Challenge

Despite the announcements, however, implementing the reform is by no means considered easy.

The big question being raised in the electricity market is whether a new collection mechanism can be created that will maintain the high collection rates for municipal fees without creating newof overdue debts or place an even greater burden on citizens and the public administration.

If the reform is implemented as planned, it will mark the most significant change in the structure of electricity bills since the market was liberalized. For the first time, consumers will be able to clearly see which portion of the amount they pay actually covers electricity and which portion corresponds to taxes, fees, and other charges paid to third parties.