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Wednesday, April 24, 2024

Electricity rates soar as temps sink

Norwegians are being told to brace for shockingly high electricity bills this winter after temperatures sank and a deep freeze took hold this week. Demand is now outstripping supply in a country where hydro-electric power was once plentiful and cheap, and double-digit price hikes are predicted.

As Norway sunk into a deep freeze this week, electricity rates soared to levels higher than in the middle of last winter, like here in Hadeland in February. PHOTO: Views and News

Low water levels in nearly all of Norway’s reservoirs mean that supplies are under pressure, sending prices up. “There is now much less water in the reservoirs than there normally is at this time of year,” said Irene Meldal, spokesperson for Statnett, responsible for Norway’s power grid.

Unusually cold temperatures this fall have boosted consumption to record levels in November and there’s been less precipitation than expected, putting the drain on reservoirs. Deregulated markets have also changed the dynamics that once made electricity one of the few things that was relatively reasonable in Norway.

The supply-demand factors exacerbated by this week’s cold snap meant that average electricity rates were already running around 54 øre (NOK 0.54) per kilowatt hour by Thursday, high for this early in the winter season. By comparison, rates during the bitter cold of January and February were around 53 øre, after three months of drains on reservoirs.

Spot rates in Norway were approaching NOK 1, and with many Norwegian customers’ bills tied to the spot market, they’re in for what some market analysts were calling a prissjokk (price shock).

Statnett reported that reservoirs on average were running 64 percent full, compared to 78.6 percent last November. The current level is “extremely low, if we look at statistics back to 1993,” Meldal told newspaper Aftenposten. “All of us simply must be prepared to pay more in the months ahead.”

Households and businesses were also being urged to conserve, with fears rising once again that the west coast city of Bergen may face severe electricity shortages this winter. That’s been the main argument for construction of controversial overhead power lines around the nearby, scenic Hardanger Fjord.

At the same time, though, insurance companies were warning homeowners to maintain enough warmth to keep water pipes from bursting. Last year the insurance companies were forced to shell out hundreds of millions because of damage caused by an unusual cold spell.

Views and News from Norway/Nina Berglund
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