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ENERGY

Which Swiss cantons will see the biggest hikes in electricity bills?

Consumers in Switzerland already know that electricity prices will increase from January 2023 and new info has revealed where in the country energy costs will rise the most and by how much.

Which Swiss cantons will see the biggest hikes in electricity bills?
The lightbulb moment: putting on light will cost you more in 2023. Photo by Rodion Kutsaev on Unsplash

Due to the ongoing war in Ukraine, a predicted gas shortage, and inflation, electricity prices are expected to leap more or less substantially in Switzerland over the coming months — ranging from 20 percent for some households to over 60 percent for others.

Price disparities among the nearly 600 Swiss electricity suppliers are significant, so the amount of the increase will depend not only on your place of residence and the size of your dwelling, but also on the production capacity of the local electricity provider.

According to a report by RTS public broadcaster, “some own many power stations and produce the electricity they sell themselves. They are therefore much less dependent on the European market. Conversely, those who produce no kilowatt-hours are now bearing the full brunt of the energy crisis”.

READ MORE: Switzerland faces 20 percent increase in electricity costs

These are the expected hikes in various Swiss regions:

Vaud, Lausanne, Geneva

“Amid the surge in electricity prices, Romande Energie has had no choice but to raise its regulated electricity tariffs effective 1 January 2023”, the company, which supplies power to parts of western Switzerland, said in a press release on Wednesday, calling the increases “historical”.

The company goes to say that tariffs for 2023 “will increase by between 49 percent for the vast majority of our household customers, and 61 percent for customers with specific modes of consumption” — meaning those who use a lot of energy.

This appears to be one of the biggest increases in Switzerland.

This link provides more information about the expected hikes based on your residence in Vaud.

Electrical bills will go up in other parts of the French-speaking Switzerland as well, though to a lesser degree — in Geneva, prices will go up by 22 percent on average for customers of Geneva Industrial Services (SIG), and in Lausanne, Lausanne Industrial Services will raise them by 26 percent over the current rates.

Basel, Zug, Zurich

Clients of the Basel-based energy supply company Primeo Energie will have to pay much more for electricity in the coming year — between 42 and 46 percent, making the canton the second, after Vaud, in terms of energy costs, according to Watson news portal.

The Zug energy provider WWZ will charge nearly 39 percent more, while EKZ in Zurich will raise its rates by ‘only’ 26 percent — a relatively low increase, considering that Zurich is Switzerland’s most expensive city.

If you want to know what you can expect for next year, contact your local power company and ask for the 2023 tariffs for your area.

And this link shows you electricity prices throughout Switzerland.

Can you change your electricity supplier?

You can only change supplier if you move to another area serviced by another provider.

If you remain where you are, then you are stuck with the same company.

READ MORE: How energy shortages could hit daily life in Switzerland

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COST OF LIVING

EXPLAINED: What the steep rise in Swiss interest rates could mean for you

The Swiss National Bank (SNB) raised the key interest rate by 0.75 percentage points, putting it back in positive territory at 0.5 percent.

EXPLAINED: What the steep rise in Swiss interest rates could mean for you

As announced by Switzerland’s central bank on Thursday, the rate change applies from Friday, September 23rd.

“The bank’s aim is to counter the renewed rise in inflationary pressure and the spread of inflation to goods and services that have so far been less affected”, according to SNB.

The SNB has not said how long the current rate will be in place, but noted that “it cannot be ruled out that further increases in the SNB policy rate will be necessary to ensure price stability over the medium term”.

READ MORE: Swiss central bank announces big rate hike in inflation fight

Inflation rate in Switzerland currently stands at 3.5 percent. While it is much lower than in the eurozone, where it exceeds 9.1 percent, it is still higher than its usual rate of below 1 percent.

Why has the SNB raised the interest rate for the first time since 2015?

For the same reason that other central banks have done so, including the European Central Bank and the Federal Reserve in the US: price stability

In general, central banks see increasing interest rates as a response to rising inflation: higher rates help reduce the overall level of demand and, subsequently, also the upward pressure on prices.

Whether this strategy will work is another matter.

The SNB rate hikes will “have a fundamentally dampening effect on inflation”, Felix Oeschger, analyst at Moneyland price comparison platform, told The Local.

“However, it is far from clear whether these alone will be enough to curb inflation”, he added.

One for the reasons for this uncertainty, Oeschger said, is that “the energy crisis and the high prices of some agricultural commodities, such as wheat, are a result of the Ukraine war. These prices are more difficult to influence with key interest rate increases”.

In its inflation forecast, the SNB predicted the inflation will drop to 2.4 percent in 2023.

But “considering that the SNB has continuously revised its inflation forecasts upward since December 2021, it is quite conceivable that inflation in Switzerland will continue to rise or at least remain high”, Oeschger pointed out.

READ MORE: EXPLAINED: The groups most affected by inflation in Switzerland

Will the Swiss consumers benefit (or not) from the higher interest rates?

It depends on what you are looking to buy.

If you are planning to buy big-ticket items that are usually purchased with credit — like homes — then you may have to dig deeper into your pockets.

If you already have a fixed-rate mortgage, then you are safe from rate increases for the term of your mortgage.

But for new buyers or those with variable-rate mortagages, things may be more problematic.

“It is not excluded that mortgage interest rates will reach 3 to 4 percent next year”, from the current 2.6 to 3.1 percent, according to Donato Scognamiglio, director of real estate platform Iazi.

What about rents?

Tenants may not be better off than homeowners.

Many have already received notices of higher rents to compensate for increased costs of energy.

Now another charge could be added as well, though probably not immediately.

“Rents will go up, but only when the reference interest rate itself is raised”, Scognamiglio said.

The benchmark interest rate is the average of all mortgage interest rates. If the reference rate increases by 0.25%, tenants will have to pay 3 percent more rent. “I expect this to happen next year”, he said.

But it is not all bad news; higher interest rates will yield some benefits as well.

For instance, if you have certain types of investments, you may see more money coming in.

“I expect yields on fixed-income financial products such as bonds to continue to rise”,  Oeschger said.

“In the case of medium-term notes issued by Swiss banks, we have already seen significant increases since the beginning of the year”, he added.

As for savings accounts, however, “the banks have so far been very hesitant to raise interest rates, but if monetary policy tightens further, we can expect interest rates to rise slightly here as well”.

Generally speaking, what will become cheaper and more expensive for consumers?

The bad news here is that everything that has to do with energy, even indirectly, will become more expensive.

This includes “heating, transport costs, electricity and also food”, another Moneyland expert, Ralf Beyeler told The Local.

READ MORE: Pasta up by 13 percent: How food and energy prices in Switzerland are rising

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