The Luxembourg Regulatory Institute (Institut luxembourgeois de Régulation – ILR) and the network operators have introduced a new tariff structure on the electricity market from 1 January 2025. The objective? To respond to changes in network use within the context of the energy transition. How? By offering a fairer tariff structure that will ultimately encourage consumers to be more flexible in their network use and to make better use of existing networks.
The electrification of our society has been accompanied by an increase in energy flows on our networks. That’s why network operators closely monitor the state of the networks and their expansion, so that they can meet current and future electricity needs. The increase in flows is perfectly manageable at the moment, due to the excellent quality of the country’s networks. In the future, however, it is likely that there will need to be an increase in network capacity. This is due, in particular, to the increase in simultaneous use.
As well as expanding the networks, operators wanted to find an immediate, fair and complementary solution to this change in network use. In practical terms, they are now focusing on cost reflectivity, applicable to the portion of the final electricity price that relates to network use. On 1 January 2025, the Luxembourg Regulatory Institute (Institut luxembourgeois de Régulation – ILR) and network operators introduced a new tariff structure to the low-voltage electricity market (households, shops, etc.). For the time being, this change will have little impact on the vast majority of consumers, especially as the main variable is always the price of electricity itself, not the network use tariff.
In the medium term, however, this change will call for more efficient network use, better use of existing networks as a whole and, lastly, the maintenance of tariff stability.
Firstly, it is important to distinguish between the price of electricity and the electricity network use tariff which, together with taxes, make up the final price paid by the consumer. The change in tariff structure affected the network use tariff. The price of electricity itself, which remains the main variable in the final price paid by consumers, was not affected by this tariff change and remains independent of it.
Firstly, network power flows have been increasing and will continue to rise, as will simultaneous usage (oven, washing machine, electric vehicle charging, heat pump, etc.), increasing the risk of peak loads or even network congestion. Secondly, the previous system was unfair because it did not reflect actual network use costs. Some users should have been paying less, and others more, depending on their consumption behaviour. That’s why network operators took proactive measures to find a fair and complementary solution to this evolution in network use, in addition to the ongoing expansion of the network.
Since 1 January 2025, the new network use tariff has placed greater emphasis on the concept of power. Please note that power is expressed in watts (W) or, more commonly, in kilowatts (kW). It is an instantaneous value representing the intensity of the action, comparable to the speed of a vehicle or the flow of a river (more info at www.myilr.lu). Now, the impact of each user and each use is reflected in the tariffs applied and, therefore, in the costs billed for network use. A limited number of reference power levels, calibrated in line with the most common uses and profiles, were automatically allocated to users based on their consumption history, and billing is now based on this allocation.
The transition takes place smoothly, and the change has little impact on the average consumer or on the vast majority of consumers. Only the billing arrangements have changed, with greater emphasis placed on the concept of power. For the vast majority of people, no action was required, either before or after the change. Now, all consumers pay a fair price for their network use, including those whose consumption and network use patterns generate peak loads that the network must absorb. The previous tariff did not yet reflect the actual costs of these users. Finally, it should be pointed out that the price of electricity (not the network use tariff) remains the main variable in the final price billed to the consumer.
Since January 2025, each consumer’s power level has been shown on their bill. Before this system was applied, these power levels were initially allocated based on consumption history, with the aim of identifying the optimal category from a financial perspective. Now that the new system is in place, categorisation is checked on a monthly basis by an automated mechanism. A request from a customer to change categories may only be justified in exceptional cases, particularly when there are significant changes in consumption behaviour, such as installing an electric vehicle charging point or a heat pump.
All network users, regardless of their reference power level, can contribute to more efficient network use, make better use of the existing networks as a whole, and help maintain tariff stability. Here are two good tips: be flexible in your consumption by spreading it out over time and by limiting simultaneous usage.
The Luxembourg Regulatory Institute (Institut luxembourgeois de Régulation – ILR) and network operators have introduced a new tariff structure onto the electricity market from 1 January 2025. The objective? To respond to changes in network use within the context of the energy transition. How? By offering a fairer tariff structure that will ultimately encourage consumers to be more flexible in their network use and to make better use of existing networks.
The context: the electrification of our society and the increase in flows
It is clear that the electrification of our society is resulting in increased energy flows. While this is still quite manageable due, in particular, to the excellent quality of the country’s networks, it could rise even higher in the future. In order to stem this rise, and before having to possibly increase network capacity, we need to find a complementary solution to limit the peak loads that can be caused by simultaneous use.
Infrastructure: the importance of the networks and their operators
At the core of the electricity market, network operators are responsible for transporting electricity, while at the same time ensuring that there is a balance between production and consumption. On this basis, it is important to differentiate between the price of electricity itself and the electricity network use tariff which, together with taxes, make up the final price paid by the consumer.
The issue: the future risks posed by simultaneous use
In the future, simultaneous use could become more common, for example, when an electric car is charging or when a sauna is switched on while the washing machine, oven and hob are running in the same household, or in a number of households in the same street. This simultaneous use could lead to peak loads or even congestion if anticipatory measures are not taken. In addition to expanding the networks, the structure of future network use tariffs must, therefore, be adapted today to meet the current and future constraints of networks whose capacity is a shared resource.
The solution: act today to avoid paying more tomorrow
As a result, the new network use tariff now places greater emphasis on the concept of power. Please note, power is expressed in watts (W) or, more commonly, in kilowatts (kW). It is an instantaneous value representing the intensity of the action, comparable to the speed of a vehicle or the flow of a river. Users are offered a limited number of reference power levels, calibrated for the most common uses and profiles. The power assigned is not used as a maximum value, but rather as a reference value for its level of use. In other words, regularly exceeding the assigned subscription level is not an issue. The additional volume of energy is simply billed at a higher rate, as it is up to the network to absorb this difference.
The outcome: paying the right price for network use
Ahead of its application on 1 January 2025, consumers were allocated power levels based on their consumption history. This process identified an optimal category for each customer from a financial perspective. Previously, consumers who generated peak loads through their consumption behaviour and network use had an advantage. Now, all consumers pay the right price due to a fairer tariff structure that takes account of consumption patterns.
Please note, however, that the price of electricity is the main variable in the final price, with an impact that may be much greater than the change brought about by the new tariff structure. As a result, the vast majority of consumers who are already adopting energy transition behaviours will not feel the impact.
Our simulator allows you to analyze different electricity consumption scenarios by incorporating your real data or simulating changes, such as adding an electric vehicle, a heat pump, or a power generation system. It assesses the impact of these changes on your electricity bill, helping you optimize your reference power level, adjust your consumption habits, and anticipate future needs.
