– No, we are not getting the income we envisioned. We assumed an electricity price of three kroner per kWh, says mayor of Sauda municipality, Asbjørn Birkeland (Sp). – And what has the price been until now? – 1 krone and 20 øre … that is significantly lower. And this has consequences for the power municipality. In the municipality’s budget for 2023, the sale of licensed power was the largest source of income. In total, the municipality should bring in NOK 240 million in 2023. For 2022, Sauda municipality had budgeted NOK 30 million. The plan was therefore to bring in eight times more in 2023 than what you had thought you would get in 2022. This does not seem to be the case. From “silk wealth” to budget cuts “With the forecasts for the years ahead, it is tempting to talk about silk wealth”, was the introduction to the economic plan presented last autumn. Current municipal director, Vegard Thise, cannot use those words about the current situation. Now the municipality must cut the budget, and at the same time increase income. Vegard Thise is a newly appointed municipal director in Sauda municipality. Photo: Inger Johanne Stenberg / news – Lower electricity prices means that we will have a reduction in expected income of approximately NOK 70 million, says Thise. Reduced income of NOK 70 million if the electricity price remains at the same level as it has been so far this year. The municipal director wonders whether the starting point should be an even lower electricity price. One krone per kWh will result in an income reduction of around NOK 80 million. But the question is whether that is not too optimistic. Power analyst: – Prices will fall Power analyst in Volue Insight, Lene Hagen, believes prices will fall further in 2023. – 2022 was a special year. There was a special resource situation initially in the Nordics, the green shift, and then we had the war which reinforced the price effect, she says. At the end of last year, and into 2023, the situation has changed significantly. Hagen points to a number of factors that will contribute to electricity prices falling. Consumption in both the Nordics and the rest of Europe has decreased as a consequence of high price levels in 2022. This has also led to lower activity in industry, and energy efficiency. Consumption is expected to rise again from the end of 2023. The resource situation with both water and snow reserves is much better, especially in southern Norway. Production capacity generally improves in Europe throughout the year. The winter was mild in several places, which also reduces consumption. – Towards the summer, i.e. in the second quarter, we expect an average price of 65 euros per megawatt hour, says Hagen. If you convert this to øre/kWh, it is approximately 73 øre per kWh. In the third quarter of the year, Volue expects a price of around 66 øre per kWh, and in the fourth quarter around 88 øre. The figures are for the entire country. Hagen believes that the prices in southern Norway will not increase the average, but rather could fall below the mentioned prices. – There are good stores of water and snow. Especially in southern Norway, says Hagen. Electricity analyst Lene Hagen believes electricity prices will fall. Photo: Volue Insight This can also affect the economy in Sauda municipality. However, Hagen does not want to criticize either Sauda or other municipalities, even though Volue was already able to tell FVN in December that the prices would be well below three kroner per kWh in 2023. For example, she points out that there were two weeks of high electricity prices in early December, before they started to fall. – It is important that you look at how the situation looks going forward, and at the overall picture. The situation in August last year was very special, says Hagen. The state also missed Lower electricity prices than expected, in addition, leads to an additional financial blow for Sauda municipality. Last year, the government announced cuts in the framework subsidy to municipalities that benefited from large electricity revenues. For Sauda, this cut was initially NOK 107 million. A sum calculated on the basis that the state assumed an average price of two kroner per kWh. It is far higher than the electricity price has been this year. The amount by which the power municipalities’ framework subsidy is reduced will most likely be adjusted down in the revised state budget that will be presented in May. – There are several municipalities in southern Norway that are hit hard by this with the framework subsidy, says Jon Rolf Næss, who is head of the National Association of Vasskraftkommunar. Jon Rolf Næss is head of the National Association of Vasskraftkommunar. Photo: Siv Kristin Sællmann / news He believes this could apply to several power municipalities in Eastern, Western and Southern Norway. – The municipalities started paying in January. If it is changed in the revised national budget, it still means that you have paid too much to the treasury for five months, says Næss. But none of this necessarily had to have been problematic for Sauda municipality. If they had hit on the prediction. But how did they arrive at three kroner per kWh when both experts and the state believe in lower prices? – Hindsight – Just at the time the budget was presented, people were used to high electricity prices. The then municipal director and the analysts agreed, and none of the politicians questioned it, says Mayor Birkeland. – Do you regret it now? – Hindsight is the best knowledge. In any case, we should have adjusted down to two kroner per kWh in December. The mayor had hoped that the municipality would let go of too many tough priorities in 2023 after several tough financial years for Sauda municipality. – Predicting electricity prices is not easy. It is stupid that you end up having to save and make things cheaper. Power revenues could have swung this the other way. But it also shows that Sauda municipality must make itself more independent of electricity revenues in the future. – Are you hoping for higher electricity prices? – No, I can’t say that. For most people, it is better to have low electricity prices, says Birkeland. Asbjørn Birkeland (Sp) is mayor of Sauda municipality. Photo: Thomas Ystrøm / news
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Sauda municipality badly missed the electricity price prediction – now they have to cut – news Rogaland – Local news, TV and radio
