Swedish DSO Tariff Reform — Three Parallel Tracks (2025–2027)

Three distinct regulatory processes are simultaneously reshaping how Swedish DSOs design and set tariffs, all converging on a 2027–2028 implementation window. They address different dimensions of the same underlying problem — DSO tariffs that are structurally misaligned with the demands of the energy transition — and they interact. Understanding them as a system is more useful than reading any one in isolation.

The three tracks

Track 1 — TOTEX and the CAPEX bias

The problem: Under current revenue cap regulation, Ei benchmarks DSO efficiency on operating costs only. Capital expenditure earns a regulated return that is not subject to the same efficiency test. The result is the CAPEX bias: a DSO that builds new grid earns a regulated return on the investment; a DSO that instead procures flexibility services to defer that investment incurs opex that is benchmarked and subject to an efficiency requirement. The regulatory framework systematically favours building over buying.

The reform: Ei’s RP5 methodology introduces TOTEX benchmarking — total expenditure including both capex and opex — and with it lösningsneutralitet (solution neutrality): the efficiency incentive applies equally regardless of whether a DSO addresses a capacity problem by reinforcing the grid (CAPEX) or procuring flexibility (OPEX). The statutory basis is ellagen 5 kap. 12a § (Lag 2022:596), which requires that “when the revenue frame is determined, account shall be taken of the extent to which flexibility services are used and improve the efficiency of grid operations.” This is not a discretionary Ei policy choice — it is a statutory obligation.

In December 2025, Ei confirmed enstegsmetoden as the TOTEX method. In May 2026, three additional design decisions: (1) no general efficiency requirement applied — actual cost outturns already embed productivity improvement; (2) full cost coverage at the third quartile (Q3), with a relative (moving) threshold following UK practice; (3) 8-year realiseringstid retained. (Source - Ei Effektiviseringsincitament Webb (2026-05-12))

Timeline: Full methodology published 2026; calculation föreskrifter in force H1 2027; revenue frame decisions by 31 October 2027; RP5 begins 2028.

What changes for flexibility: Before RP5, DSO procurement of flexibility services earns no regulated return — it competes on unequal terms with grid investment. After RP5, TOTEX benchmarking creates genuine economic symmetry. FlexAbility interviews rate this as the correct structural direction; the risk flag is that a purely cost-efficiency benchmark might penalize proactive grid building that the energy transition requires — Ei is investigating this adjustment. (Source - Ei Inriktning intäktsramar 2028-2031 (2025))

Track 2 — Effektavgift redesign

The problem: Capacity-based network tariffs (effektavgifter) are a key instrument for transmitting price signals that incentivize demand shifting — implicit Demand Response. About 30 Swedish DSOs have introduced effektavgifter, but their designs are heterogeneous: different timing windows, different level-setting methodologies, different customer-size thresholds. Ei has identified potential design deficiencies in some. Ei division head Tommy Johansson explicitly named this fragmentation as the barrier to standardised automatic steering services — the software-layer DR products that require uniform tariff structures to develop at scale. (Source - Ei Effektavgifter Uppdrag (2026))

The regulatory reversal: EIFS 2022:1 required all ~170 Swedish DSOs to implement time-differentiated capacity tariffs by 1 January 2027. In March 2026, the government reversed course: Ei is tasked to repeal EIFS 2022:1 by 30 June 2026 and propose a new effektavgift model by 12 April 2027. The mandatory deadline is cancelled before it arrives.

After repeal: Effektavgifter remain permissible — neither required nor prohibited. The legal basis shifts to the general standards: ellagen (skäliga, objektiva, icke-diskriminerande) and Art. 18 EU Electricity Market Regulation (cost-reflective, transparent, considering customer usage patterns). Existing DSO contracts are unaffected. This is a regulatory vacuum pending the new model.

Parallel tillsyn: In April 2026, Ei opened a formal supervisory investigation of effektavgifter design at five DSOs: Ellevio, Göteborg Energi Nät, Bergs Tingslags, Södra Hallands, and Tekniska verken Linköping. Ei is examining whether existing designs comply with ellagen and Art. 18 EMR — independently of the mandate to develop a new model. (Source - Ei Tillsyn Elnätsavgifter (2026)) The five were selected partly on customer complaints, partly for variation in size and geography. The tillsyn is a stopgap: it can force correction of non-compliant designs after the fact, but it cannot prevent non-compliant designs from being deployed — which is precisely what Track 3 would address.

Tillsyn outcome (PM2026:07): Ei’s supervisory review of the five named DSOs (Ei PM2026:07) concluded that all five models comply with current regulations — no orders were issued. The review documented significant variation in design:

Key takeaways from the review:

• Two companies retreating: Ellevio dropped effektavgift from 1 June 2026 (revenue-neutral); SHK will drop from 1 October 2026 (revenue-neutral); both cite the changed regulatory context
• Behavior effects noted but limited: TVL reported reduced peak demand and some load shifting after introduction; revenue from the ≤63 A segment was lower than expected in the first period
• Customer complexity confirmed: predictability challenges especially for single-hour billing; initial customer questions centered on understanding the mechanism; later questions on operational use
• Core Ei conclusion: the current broad interpretive latitude means similar customer groups face different tariffs depending on which DSO they are served by, without clear justification from local grid conditions

Ei states a significant need for clearer framework rules and has begun work on the new model in dialogue with DSOs, customer representatives, and others.

The new model criteria: transparent, non-discriminatory, proportional to customer size and needs, designed to give customers correct incentives for consumption adaptation. The specific design — whether to mandate harmonization of timing windows, set level-setting methodology, or specify measurement approaches — remains open. Ei’s proposal is due April 2027.

State of play at repeal (konsekvensutredning, ärendenummer 2026-101721): As of January 2026, approximately 20 DSOs had already implemented household effektavgifter, with significant variation in design: different timing windows, level-setting methodologies (monthly peak, mean of N highest hours, time-varying, winter högbelastningsavgift), customer-size thresholds, and measurement periods. Several DSOs paused or reversed plans to introduce effektavgifter when the government assignment was announced — a direct short-term consequence of the regulatory reversal. SVK’s transmission tariff reform (four-component model from 2027-01-01) is a separate track unaffected by this repeal. Cost of the repeal process: ~300,000–600,000 SEK for Ei; ~2–3 årsarbetskrafter per DSO for tariff development work (mostly sunk). (Source - Ei Konsekvensutredning EIFS 2022-1 Upphävande (2026))

The consumer-information complement — EIFS 2026:8: Decided 2026-05-21, in force 1 January 2027, EIFS 2026:8 is the information-layer response to the same effektavgift problem this track addresses. Because EIFS 2022:1’s mandatory 4-component split was being repealed mid-drafting, the föreskrift had to redefine effektavgift and energiavgift generically — about the form of the charge, with no link to DSO costs — and make every effektavgift-specific duty conditional (“om nätföretaget tillämpar en effektavgift”). Its second konsekvensutredning (dnr 2025-101516) supplies the sharpest quantification of the backlash driving all of Track 2: as of spring 2025 ~13% of households had an effektavgift; by early 2026 drygt 30 DSOs applied one (säkring ≤25 A); and complaints to Ei about the grid rose from 67% of all complaints (2024) to 80% (2025), of which 64% (837 cases) concerned tariff design/effektavgifter. Ei names the comprehension failure precisely — users cannot reconcile the effektavgift (grid) signal with the spotprice (energy) signal. EIFS 2026:8 forces transparency (purpose/design explained, effektavgiftsgrundande mätvärden shown on mina sidor, weighted-average pricing on invoices) and pushes consumer DR (mandatory links to ei.se/kundflex; duty to inform about automated steering services and any LFM the DSO trades on). Notably, the KU records DSOs exploring dynamic per-quarter network pricing (a day-ahead grid-load forecast setting a price per kvart), enabled by the 30 Sep 2025 move to kvart trading — a concrete future direction for what the new effektavgift model could standardise.

Track 3 — Förhandsprövning

The problem: Sweden applies ex-post oversight only. After a DSO introduces a tariff methodology, Ei can review it via tillsyn and require corrections going forward — but cannot prevent a deficient methodology from entering force, and cannot retroactively remedy its effects. This is the oversight gap that allows the ~30 DSO effektavgift design deficiencies to persist until Ei investigates and orders changes.

This gap is longstanding and an EU compliance failure. Arts. 59.1a and 59.7a of Directive 2019/944 have required NRAs to pre-approve tariff methods since the predecessor directive in 2003. Sweden was taken to the EU Court (C-274/08, Commission v. Sweden, 2009), lost, and addressed the ruling by introducing revenue cap pre-approval (intäktsramar) — but never extended pre-approval to the underlying tariff methodologies. ACER’s 2025 report (Getting the signals right) confirms Sweden and Finland remain the only two EU member states where the NRA neither decides nor pre-approves DSO tariff methods.

The proposal: In February 2026, Ei submitted a hemställan (formal legislative proposal) to the government to amend ellagen 4 kap. 46–47 §§ and add § 36a to Förordning (2022:585). The amended ellagen 4 kap. 46 § would require Ei to pre-approve (or set) DSO methods for connection and transfer charges before they enter into force, covering both the conditions and the methodologies for calculating them. (Source - Ei R2026-04 Förhandsprövning Avgifter (2026))

The NRA independence constraint: Per C-718/18 (Commission v. Germany, 2021), regulation of how a NRA exercises tariff-setting authority must live in the NRA’s own föreskrifter — not in statute. The current ellagen 4 kap. 46 § contains a material criterion (“objective and non-discriminatory”) that Ei argues is an impermissible statutory constraint on its discretion. The proposed new text removes this substantive content and delegates the detail to Ei’s föreskrifter — satisfying the Germany judgment while enabling pre-approval.

Two-step implementation:

• Step 1: amend ellagen/Förordning (target: 1 January 2027, pending government adoption)
• Step 2: Ei develops föreskrifter for the actual pre-approval process — estimated 2–4 FTE + consultants, 1–2 additional years after Step 1

Actual pre-approval of DSO tariff methods therefore will not begin until 2028 at earliest — and only if the government adopts the proposal in time for Step 1 in 2027.

As of May 2026, government adoption is pending. There is no published timeline.

How the three tracks interact

Track 3 constrains Track 2: Once förhandsprövning is operational, Ei can block non-compliant effektavgift designs before they enter force — making the Track 2 tillsyn enforcement mechanism redundant for future designs. The tillsyn of the five DSOs (April 2026) is a direct consequence of lacking the Track 3 tool: without pre-approval, Ei must identify deficiencies post-hoc.

Track 1 affects the economic incentive to use effektavgifter: TOTEX benchmarking rewards DSOs that efficiently use grid capacity. A well-designed effektavgift that shifts peaks and improves the utnyttjningsgrads-incitament is a TOTEX efficiency lever. If Track 2 produces a harmonised, well-designed effektavgift standard, and Track 1 creates the incentive to use it, the two reforms compound each other’s effect.

Track 2’s fragmentation problem is the concrete driver for Track 3: Tommy Johansson’s statement linking heterogeneous effektavgifter to the demand response automation barrier articulates exactly why ex-post correction is insufficient — by the time Ei identifies and corrects a design deficiency, the automated services that would have standardised on that DSO’s tariff structure have already been forced to adapt or exclude it.

All three share the 2027 target date, but none deliver in 2027:

• Track 1 (TOTEX) enters force H1 2027 as föreskrifter; revenue frame decisions October 2027; actual impact from RP5 start 2028
• Track 2 (effektavgift) delivers a model proposal April 2027; implementation timing undefined thereafter
• Track 3 (förhandsprövning) could become law in 2027 if the government acts; Ei’s föreskrifter for the actual process add 1–2 years; pre-approval operational ~2028–2029

The window of regulatory vacuum: Between EIFS 2022:1 repeal (June 2026) and the new effektavgift model (post April 2027) and operational förhandsprövning (~2028+), Swedish DSOs face a period with only general legal standards governing tariff design. DSOs that already have effektavgifter live under ongoing tillsyn risk; new entrants can design freely within the ellagen/Art. 18 EMR standards, with no standardisation requirement and no ex-ante check.

Implications for flexibility market participants

For DSOs: The TOTEX reform is the most structurally important change — it aligns the revenue cap with flexibility procurement in a way that no product approval or tariff design mandate does. DSOs should begin modelling RP5 TOTEX impacts now; the flexibility service costs already classified as opåverkbar opex (1:1 recovery) under §9.5.8 will interact with the TOTEX benchmark.

For aggregators and demand response providers: The effektavgift redesign (Track 2) is the short-term critical development. Tommy Johansson’s automation barrier statement is an official validation of what AFRY (2023) and FlexAbility (2025) had documented qualitatively: tariff heterogeneity is a structural barrier to standardised automated DR. The new model design process (April 2026–April 2027) is the window for market participants to shape what standardisation looks like in practice. EC C(2025) 4010 final reinforces the same direction from Brussels: tariff methodologies must be transparent, predictable, and set or approved by the NRA.

For energy service companies: The period 2026–2028 is a regulatory transition period for tariff-dependent products. Any product whose automated control logic assumes specific effektavgift timing windows or measurement periods carries revision risk as Track 2 plays out.

Relationship to other wiki pages

• Ei — institutional actor for all three tracks; TOTEX, effektavgifter, förhandsprövning roles
• Distribution System Operator — DSOs are the regulated entities in all three tracks
• Demand Response — effektavgifter as the implicit DR price signal; Tommy Johansson’s automation barrier statement
• Flexibility Market — TOTEX lösningsneutralitet is the economic underpinning for DSO market participation
• Natural Monopoly — förhandsprövning strengthens the oversight rationale for monopoly grid operators
• Source - Ei R2026-04 Förhandsprövning Avgifter (2026) — primary source for Track 3
• ACER — ACER 2025 report confirms Sweden/Finland as EU outliers on tariff pre-approval