Electricity contract and network contract – why do you need two contracts?

Two separate contracts for electricity

When you sign an electricity contract, you may wonder why electricity distribution is charged separately. This is because the sale of electricity and the distribution of electricity are the responsibility of two different parties.

Your electricity supplier sells you the electrical energy you need. The local electricity distribution company, in turn, delivers that electricity to your home through the grid.

You are free to choose and compare electricity sales contracts from different suppliers. The network service company, however, is determined by the location of your point of consumption, such as your home, and cannot be changed.

Why is that? Because each area has only one distribution company responsible for electricity distribution. In other words, electricity distribution networks are natural monopolies.

In addition, legislation requires electricity network operations to be kept separate from electricity sales and generation. This prevents network operators from favouring a specific electricity supplier.

The electricity market in a nutshell

The electricity market is both fascinating and multi-layered. In simplified terms, it consists of electricity producers, electricity suppliers, electricity users, and distribution companies.

Electricity producers generate electricity for the market using various technologies, such as wind power. Electricity suppliers purchase electricity either from the electricity market or from their own production facilities to meet the needs of their customers.

Some suppliers also generate electricity themselves. Even this self-generated electricity is fed into the common grid and is not delivered directly only to their own customers.

Electricity users purchase electrical energy from the supplier of their choice. Even if you buy electricity from a particular company, the electricity always reaches your home through the shared grid, into which many different producers feed electricity.

National electricity grid – How does electricity reach my socket?

The Finnish electricity network consists of the national transmission grid maintained by Fingrid and local distribution networks, one of which is Vaasan Sähköverkko. The grid system enables electricity to be transferred to consumption points across the country.

This means you can purchase electricity from any electricity supplier operating in Finland, but the physical delivery of the electricity to the end user is always the responsibility of the local distribution company. In the Vaasa region, electricity distribution is provided by Vaasan Sähköverkko.

Every home, apartment or other site that uses electricity has at some point been connected to the local electricity grid. A one-time connection fee is paid when joining the grid.

Once electricity begins to be used at the site, a network contract is established for the customer.

Each point of consumption also has its own GSRN (Global Service Relation Number), commonly known as a metering point identifier. The GSRN uniquely identifies the consumption point and is used, for example, in electricity consumption metering. The identifier is linked to the address and does not change when the resident changes.

Balancing supply and demand

Did you know that electricity production and consumption must remain balanced at all times? This balance is reflected in the frequency of the electricity grid, which must neither rise too high nor fall too low. In the worst case, a major imbalance can lead to widespread disturbances in the electricity system.

However, electricity supply and demand are not automatically in balance. Fingrid is responsible for maintaining the real-time balance of the Finnish electricity system through reserves and balancing power markets, among other measures.

What comprises an electricity bill?

An electricity bill consists of the cost of electrical energy, electricity distribution charges, fixed basic fees, and taxes.

Vaasan Sähköverkko, which is responsible for electricity distribution in the Vaasa region, is a subsidiary of Vaasan Sähkö. As a result, if you live in the Vaasa region and purchase your electricity from Vaasan Sähkö, you will receive a single electricity bill.

What happens if I change electricity suppliers?

If you live in the Vaasa region and switch from Vaasan Sähkö to another electricity supplier, Vaasan Sähköverkko will continue to invoice you for electricity distribution on a separate bill. Instead of one bill, you will receive two: one from your electricity supplier and another from Vaasan Sähköverkko.

Even if you switch suppliers, your network contract and GSRN identifier remain unchanged. The GSRN is tied to the address where electricity is delivered and only changes if you move to a different address.