Spring relieves electricity crisis
April 8, 2011
The newly-arrived, mild Norwegian spring looks set to spare the country an electricity crisis, as rain and melting snow relieve the pressure on the country’s reservoirs, and reduce energy prices.
Although reservoirs remain at historically low levels, the status of the energy supply in the country’s most populous region, Southern Norway, has been downgraded from “strained” to “tight.” That makes proposed electricity rationing much less likely, even as the country remains vulnerable. Statnett, the state enterprise that operates the energy grid, originally upgraded the status to “strained” in late March, warning then of an energy crisis and a more than 20 percent chance of electricity rationing in the summer.
Good news on prices – for some
Market prices for electricity have already fallen 2 or 3 percent this week, according to the Norwegian Water Resources and Energy Directorate. Consumers with contracts that are fixed to the market price will therefore receive the biggest cost reductions, while those with standard variable price agreements will pay around 7 percent more than those on market price contracts on average. There are also large regional variations in costs, as those in North Norway do not pay value-added tax on their electricity.
The price news will be comforting for Norwegian consumers, even though it was recently revealed that energy prices had increased around 350 percent since the year 2000 – 17 times more than other consumer products and services. Predictions persist that prices will remain high throughout 2011.
The improved supply situation also means that authorities will not yet have to make use of controversial, previously unused mobile gas facilities in the Midt-Norge region (central Norway), which are available in emergency situations. A number of measures remain in reserve if cold or dry weather returns.