Both the new Norwegian government and the opposition in Parliament claim they’re ready to help reduce suddenly sky-high electricity bills. As snow started falling over much of Norway this week, proposals include both energy tax cuts and direct financial support to those most in need.
Some crisis measures may be approved as early as Thursday, reported Norwegian Broadcasting (NRK) Wednesday morning. High electricity bills are the hottest topic of the moment, with many of those being delivered to households this week more than double what they normally are.
Marte Mjøs Persen of the Labour Party, Norway’s new government minister in charge of oil and energy issues, said she understands that many Norwegians are worried about their high electricity bills, especially since they’re likely to remain high through the winter.
“We have to find some short-term measures so that those struggling to pay their bills get lower bills or help to pay them,” Mjøs said. Her comments came shortly after a rash of stories in Norwegian media about students and elderly sitting under piles of blankets at home because they’re reluctant to turn on electric heaters.
‘A perfect storm’
Mjøs’ predecessor from the Conservative Party, Tina Bru, blamed the high bills (which also pose some benefits for the Norwegian economy) on “a perfect storm” as the country emerges from the Corona crisis and demand for electricity has risen quickly. It has in the rest of Europe, too, to which Norway exports both electricity and gas and needs to honour such contracts. At the same time, a lack of rain during the summer and early autumn has left reservoirs unusually low. That has reduced supply of the water needed to feed Norway’s vast hydro-electric power plants.
Persen rejected calls to reduce exports, because that would also reduce Norway’s ability to import wind power from Europe. It’s thus more likely that relief will come in the form of financial aid and adjustments to Norway’s high energy taxes, even though important climate measures aimed at reducing emissions have centered on even higher energy and carbon taxes as a means of reducing consumption.
The conservative Progress Party, for example, wants to remove both electricity tax and VAT on electricity bills through the end of the year, and lower them in 2022. Progress also wants to offer financial support to low-income households.
Mix of measures expected
The Conservatives are in favour of rapid measures to provide cost-of-living assistance as are the Socialist Left, Reds, Christian Democrats and Liberal parties. The two government parties, Labour and Center, suggest a mix of such measures. They’re huddling in meetings with debate in Parliament expected soon.
Analysts like Tor Reier Lilleholt, meanwhile, warned that cuts in the energy tax would amount to “minimal” help, and suggest better redistribution of energy tax revenues would help more. Lilleholt stressed that the so-called el-avgift is currently generating lots of money for the state treasury that could be redistributed to low-income households.
There’s also talk of attempts to even out current electricity rates that differ sharply around the country. Bills in southern Norway are currently much higher than in northern areas because of differences in local supplies and demand.