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Thursday, July 18, 2024

Energy crisis plan fails to spark support

There was “no reason to smile” after the government presented its plan to ease the shock of record-high electricity rates for businesses just before the weekend. Then the Parliament met for an extraordinary session on Monday, where 92 more relief proposals were put forth, ensuring crackling debate this autumn.

LO leader Peggy Hessen Følsvik is clearly skeptical over the government’s electricity bill relief proposals. At right, Trade Minister Jan Christian Vestre of the Labour Party that LO traditionally supports. PHOTO: NFD

“The most important thing now is to secure thorough and responsible evaluation of all the proposals,” MP Marianne Sivertsen Næss of the ruling Labour Party told news bureau NTB when the special session ended Monday afternoon. She leads the Parliament’s energy and environment committee.

There are so many proposals on the table that Næss thinks they’ll be spread among other committees including those for business and finance. The goal, according to Oil & Energy Minister Terje Aasland, is to provide at least short-term relief for businesses and organizations, and protect households from monthly bills that have quadrupled or more over the past few months.

Aasland, like most of his government colleagues, blames the high rates on Russia’s war on Ukraine. “Russia’s war has at least two dimensions,” Aasland told Parliament on Monday, calling the war both “a brutal attack on the Ukrainian people and an attack on Europe, where gas is used as a weapon.” He summarized steps taken by the government since energy prices started rising, from cuts in fees on electricity and extra stipends for students to compensation for households and better monitoring of water levels in the reservoirs that generate Norway’s hydro-electric power.

Aasland failed to generate much enthusiasm on Monday, though, for the proposals for businesses that his government colleague, Trade Minister Jan Christian Vestre, unveiled on Friday. Even though Vestre rolled out an extra NOK 3 billion worth of relief, neither workers- nor business leaders are happy. Norway’s national employers’ organization NHO was dissatisfied and trade union federation LO worries the proposals could easily be misused.

“There’s no reason to stand here and smile,” NHO leader Ole Erik Almlid told newspaper Dagsavisen. “The situation is very, very serious for very many companies.” Several small business owners traveled to Oslo on Monday to demonstrate outside Parliament, and stress that their monthly electricity bills have risen so high that they may have to go out of business.

NHO boss Ole Erik Almlid (far right) was also less than impressed by the government’s relief plans. Neither he nor LO’s Følsvik were smiling after Vestre’s presentation of relief measures. PHOTO: NFD

The government is already compensating households for some of their higher monthly costs and is now willing to help cut bills for companies that use lots of electricity. The government’s NOK 3 billion (USD 290 million) in energy aid is also meant to help invest in energy-savings improvements and guarantee loans to businesses that need cash, as long as the business drop any dividends next year and commit to measures that will cut consumption.

“This will help some businesses, but not all,” Almlid of NHO said. “There are many who will think this is not good enough and should have included them.” The government has earlier been reluctant to offer any form of electricity bill relief to businesses, though, so Almlid also seemed to think the government’s plan was better than nothing.

Exploitation concerns
LO leader Peggy Hessen Følsvik, meanwhile, immediately worried that some businesses may “exploit” the proposed funding, while others that should receive support won’t get any. LO had been reluctant to offer pure cash incentives to businesses, but decided to compromise on NOK 3 billion. She told Dagsavisen, though, that it won’t be possible to ensure that businesses wouldn’t misuse the funding.

Trade Minister Vestre and his government colleagues had also been reluctant to offer any financial aid to businesses. He stressed that the Norwegian economy remains strong with record-low unemployment, but conceded that some businesses need financial incentives to invest in bette energy efficiency and cut consumption. They’ll only be in place through the end of the year, though, catching more criticism that the relief will need to be extended.

Oil & Energy Minister Terje Aasland didn’t win much support for the government’s energy crisis plans at an extraordinary session of Parliament on Monday either. PHOTO: Stortinget/Peter Mydske

Energy Minister Aasland had nothing new to add to Vestre’s package and warned against any “simple solutions.” He promotes the use of fixed-rate electricity contracts that could lock in lower rates for three, five or seven years and give both households and businesses more predictable bills. Consumer groups warn against them, though, noting that rates may fall or that contracts may need to be broken before they expire, resulting in extra costs.

Opposition parties have their own proposals that include everything from full coverage of all rates over 50 øre per kilowatt hour for all consumers, removal of all taxes and fees on electricity, higher compensation for those with lower consumption and stricter regulation of electricity exports.

There are clear signs meanwhile, that Norwegians are cutting their traditionally high consumption of electricity. Newspaper Dagens Næringsliv (DN) reported that despite  much higher use of electric cars and other forms of electrification as an alternative to fossil fuel use, consumption has fallen by more than 6 percent compared to last year at this time. The total savings was the equivalent of 280,000 households. Berglund



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