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Wednesday, April 24, 2024

Government won’t cap electricity rates

As Norwegians brace for more shockingly high electricity bills this month, they can’t expect much if any help from the government. Oil & Energy Minister Kjell-Børge Freiberg is rejecting calls to set a maximum level and thus cap rates before they go any higher.

Many Norwegians dread opening up the next batch of electricity bills that will be arriving for January. PHOTO:

The calls are coming from thousands of Norwegians over social media, after a man in Bergen vented his frustration over receiving yet another electricity bill this winter that’s more than double what he paid during the same month a year ago. Kurt Pedersen posted a video on Facebook demanding a maximum rate of NOK 0.50 (50 øre, or around USD 0.48) per kilowatt hour, for both electricity and the extra price paid for distribution of the electricity to a certain address (called nettleie).

Rates in December 2017 and January 2018 were around NOK 0.38-39 for strøm, while nettleie was already running around NOK 0.49.  Electricity rates hit NOK 0.65 in December 2018 and now most Norwegians dread opening their monthly bills for  January.

From cheap to expensive
Electricity used to be one of the few products and services in Norway that was less expensive than in many other other countries, thanks to Norway’s abundant waterfalls and hydro-electric power. All that changed when the country went from regulated electricity rates to market rates in the 1990s, when power brokers also won the rights to sell Norwegian electricity abroad.

Authorities and government officials claim electricity rates in Norway have remained lower than in other European countries, but those running the market now have made some mistakes. No one foresaw last year’s summer drought, when it barely rained from May until well into September. Brokers had already sold lots of Norway’s hydro-electric power overseas, expecting reservoirs to be refilled. When they weren’t, rates jumped.

Pedersen of Bergen thus struck a responsive chord with fellow Norwegians, who had shared his video protest 19,000 times and viewed it 1.9 million times by the end of last week, according to news bureau NTB. “I have followed the electricity market since the 1990s and seen what’s happening,” Pedersen told NTB. “We’re selling off our electricity to make money on it, instead of using it to warm up our homes. This is our own hydr0-electricic power, the people’s inherited wealth, we’re talking about.”

‘Enough is enough’
He thinks his video is popular because “folks have had enough. There are incredibly many folks in Norway who actually are struggling to pay their electricity bills. Retirees are sitting in their homes wearing heavy wool sweaters and down jackets in order to try to reduce their heating bills. That’s not the way it’s supposed to be.”

Pedersen sneered at a government response that involves reducing the taxes on electricity by one øre (NOK 0.01) per kilowatt hour, claiming that amounts to very little if any relief.

Oil Minister Freiberg of the Progress Party that prides itself on cutting taxes and fees admits that the reduction can seem like very little. “With the kinds of bills folks are getting now, I can understand that,” Freiberg told NTB.

Oil & Energy Minister Kjell-Børge Freiberg has flatly rejected the idea of setting a maximum level for electricity and power distribution rates. PHOTO: OED/Scanpix

He flatly rejected Pedersen’s proposal, though, for a maximum electricity and distribution rate. “We have tried a system in which rates were set by the authorities,” Freiberg said. “We all chose to abandon it in the 1990s. We have had a market-based power system since, and I think Norway has been well-served by it. We have electricity rates that vary over time, precisely because they’re market-based.”

Freiberg further claims that the currently high rates are “not normal” because of last year’s drought. “What we’re experiencing today is a powerful reminder that we have a system that is very weather-dependent,” he told NTB. “We had an extreme situation last summer, and now it’s cold. The situation in Europe also affects our prices.”

He noted that the current conservative government coalition has doled out around 600 new licenses for generating more water- and wind-based power since it first took power itself in 2013. He believes the additional power that will be generated by the new license will help lower rates, even though many of the windmill parks are meeting strong opposition from local residents and environmental groups because of how they’re changing scenic landscapes.

Not so ‘extreme’ after all
Others also note that last year’s drought may not be so “extreme” after all, as climate change continues to become more and more visibile in Norway. Opposition parties in Parliament, meanwhile, are calling for more direct support for low-income households hit the hardest by much higher electricity bills.

Johan Gahr Støre of the Labour Party was lukewarm at best to the call for capping rates, telling newspaper Aftenposten over the weekend that it could be difficult to put into practice. “We have more faith in boosting (financial) support for those who are struggling,” Støre said.

Trygve Slagsvold Vedum of the Center Party has criticized how Norway’s electricity is sold abroad when it’s needed at home to keep rates lower. Both he and Støre are raising objections to construction of a new cable, called NorthConnect, that can send more electricity from Norway to the UK.

Støre conceded that Norway has been well-served by cables that allow export electricity “when we have a lot” and also can import electricity in times of shortages, “but there should be a limit on it.” He stressed that Norwegians will continue to experience periods with high electricity rates after dry years and lower prices when there’s been a lot of rain and snow. Berglund



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