The government finally connected over the weekend with Norwegians shocked by their suddenly sky-high electricity bills. Starting next month, the state will provide rebates that will automatically be deducted from bills, in addition to lowering a power tax and offering extra cash payments to low-income households and students.
The relief program announced by Prime Minister Jonas Gahr Støre is targeted at helping the vast majority of Norwegian households while still encouraging them to reduce consumption. The state will basically subsidize parts of fairly complicated monthly bills that cover both the cost of electricity (strøm) and its distribution (nettleie).
The subsidy will cover half the average electricity price over NOK 0.70 (70 øre) per kilowatt hour (kwt/kWh), up to a maximum of 5,000 kilowatt hours per month. Consumers won’t have to do anything to secure the subsidy for their homes. Instead it will show up as an automatic deduction on monthly bills through the rest of the winter, starting with the bill for December (that will arrive in January) and continuing through March (with that bill and subsidy arriving in April).
It means Norwegians are still likely to get another shockingly high bill this month for consumption in November, but those with low incomes will get the extra cash payments by Christmas to help pay for it. Everyone else including those with low incomes will receive their first automatic subsidies (for where they actually live, not holiday homes or hytter) next month.
The subsidies will be important, though, since electricity rates have been record high in December and consumption high, too, because of unusually cold temperatures over the past two weeks. December is also the darkest month of the year, with only around five-six hours of daylight in the southern part of the country and hardly any up north. Many homes need to have their lights on all day.
The government’s new program is expected to cost around NOK 5 billion, to be financed through Norway’s Oil Fund but also through higher tax revenues pegged to the high rates and which are already flowing into the treasury. Some household electricity subsidies may amount to as much as NOK 1,000 a month, while those living in apartments can receive around NOK 500 depending on total consumption.
“When there are extraordinary challenges for the country, we can use more of our oil wealth,” Støre said in justifying the still-large state expenditure. “We’re basically helping one another.” The program was expected to receive broad support in Parliament and already was winning editorial support in the media. Newspaper Dagsavisen, for example, called it a “good, highly targeted and welcome helping hand.”