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Thursday, May 23, 2024

High electricity rates spark much debate

As if a new Corona chill and suddenly freezing temperatures weren’t enough, Norwegians are already reeling from record-high electricity rates as much as four times their normal level. It’s all set off huge political debate, with the government finally hinting at some relief before Christmas.

A sudden cold snap all over Norway is adding to the demand for electricity, just when supplies are low and rates are record-high.  PHOTO:

Electricity has always been one of the few things that’s cheaper in Norway than most other places, thanks to all the country’s waterfalls, dams and hydroelectric power. This autumn and winter have been decidedly different, because of an unusual mix of low precipitation, even lower water levels in reservoirs, little wind and record high gas prices internationally. That’s affected electricity prices all over Europe.

Even though revenues from Norwegian gas exported abroad is filling the state treasury, Norwegians themselves use little gas for power or heat. They’ve traditionally relied on formerly reasonable and bountiful electricity but all that has changed in the past few months.

Monthly electricity bills have more than doubled, even tripled or quadrupled in some areas, also in cases where consumption has been cut. Officials have called it all “a perfect storm,” and warned that the high “kwt” (kilowatt per hour) rates will continue all winter.

Alarms are ringing even higher this week as a cold snap sets in all over the country. Temperatures are expected to drop down to as low as minus-40C in Northern Norway and minus-20C in Southern Norway, with a high of minus-10C predicted for Oslo on Tuesday. A new rate record was expected on Monday.

“It’s simply going to be very cold all week long,” said state meteorologist Martin Granerød. As much as 80 centimeters of snow was also predicted along Norway’s southern coast from Kristiansand up to Grimstad and Arendal, while Finnmark in the far north was being hit by a cold front moving in from Siberia.

That’s left hundreds of thousands of Norwegian homeowners facing bills that may add as much as NOK 30,000 (USD 3,300) to household expenses over the next few months. Rates hit a record high NOK 2.5/kwt last Monday plus all the taxes and fees on electrity in Norway, driving total costs up to nearly NOK 6/kwt.

Debate crackles over relief measures
With much of the money heading into the state treasury, the government is under huge pressure to “do something” and send at least part of it back to the people. Finance Minister Trygve Slagsvold Vedum of the Center Party has vowed to cut one of the fees, called the el-avgift, from January, but critics are clamouring for more relief now. They also complain Vedum’s proposed fee cut amounts to “small change” compared to the estimated NOK 33 billion likely to flow into the treasury through March. Norwegian consumers are also hit with a consumer tax, a tax to a state energy fund, fees from power providers and, on top of it all, Norway’s standard 25 percent VAT on all goods and services unless they live in Northern Norway, where residents are excused from VAT on electricity.

Prime Minister Jonas Gahr Støre, faced with all the dissatisfaction over Vedum’s proposed relief, told Norwegian Broadcasting (NRK) on Sunday that his government had been “working hard” all weekend on other possible electricity bill relief measures before Christmas. “There are many (Norwegians) with moderate incomes who are being hit very hard by this, who we need to help now,” Støre told NRK. “We will deliver on that.” The relief may come in the form of cash payments to those in need, or increased welfare support.

Some local communities that produce their own power, meanwhile, are sharing their earnings from their power plants and windmills. The 1,830 residents of Sirdal, a small community in Southern Norway, are all due to receive NOK 3,000 from their politial leaders, for example. It’s costing local coffers NOK 5 million but the local mayor thinks it’s worth it. If local residents don’t feel they need the money, they’ll be able to decline the offer. Berglund



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