From Wholesale Fuel Shock to Network-and-Tax Wedge: Industrial Electricity Tariff Component Dispersion and Manufacturing Output in Europe

When wholesale natural gas and power markets retreat from an acute supply shock, cross-country industrial electricity cost divergence persists as dispersion rotates from traded generation prices toward regulated grid charges and national fiscal wedges. Applying an exact variance–covariance decomposition across all 27 European Union Member States from 2017 to 2025, with semi-annual tax-wedge tracking through the first half of 2026, we document a structural reconfiguration of non-household tariff dispersion across three audited price definitions. In the benchmark medium-scale industrial consumption band (500 to 1,999 MWh annually), the share of cross-country tariff variance attributable to energy and supply costs fell from 57.26% in 2023 to 33.85% in 2025, whereas the regulated network variance share doubled from 6.54% to 13.03% and the net non-recoverable tax variance share reached 22.55%. Across 25 paired Member States in 2025, medium-consumption facilities faced unit network charges 21.85 EUR/MWh above large electro-intensive users alongside an additional 10.98 EUR/MWh net fiscal differential. Combining predetermined 2017–2019 sectoral electricity and gas intensities with a mutually exclusive panel of eight manufacturing divisions across 20 Member States (N = 1,182, 2017–2025) under country-by-sector, country-by-year, and sector-by-year fixed effects, we find a negative conditional association between electricity intensity interacted with regulated network charges and real manufacturing output (-0.00191; wild cluster bootstrap p = 0.0130; Holm family-wise p = 0.0390 across three electricity components), which strengthens on the strictly post-base-period 2020–2025 panel (-0.00283, bootstrap p = 0.0177, N = 783), under a five-country technological benchmark (-0.00259, bootstrap p = 0.0298), and with sector linear trends (-0.00213, bootstrap p = 0.0348), while attenuated first-difference horizons and a negative extended pre-crisis lead (-0.00588, bootstrap p = 0.0290) highlight bidirectional revenue-cap denominator feedback.