At the beginning of December, the first fixed-price contracts for business were launched. The aim of the scheme is to give companies the opportunity to secure predictable prices for an agreed amount of electricity from 1 January onwards. It is the same date as the energy subsidy scheme expires. – I expect that the fixed price market will be well under way before Christmas, said Minister of Industry Jan Christian Vestre (Ap) at the presentation. Since then, the fixed-price contracts have largely been shut down, and earlier this month Nettavisen reported that only two companies had agreed to the Minister of Industry’s “power fiasco”. In summary, the fixed-price contracts have been criticized for being: Too few Too expensive Not adapted to businesses with seasonal variations and uneven electricity use Geographically limited (to South-West Norway) Not flexible enough Not “fixed” enough. Offers from electricity suppliers apply to 70 percent of the total. For the remaining 30 percent, the companies must come up with a spot price. These are the fixed-price agreements The fixed-price agreements are a response to the contract exception in the ground rent tax that the government opened earlier this autumn. By tying the basic interest tax to the contract price (and not the spot price), long-term electricity contracts have historically been reserved for power-intensive industry, which does not dare to live at the mercy of the spot price. From the new year – at the same time as the energy subsidy scheme expires – the changes in basic interest tax mean that similar long-term contracts will also be available to the rest of the business world. The lowest price provided that the companies commit to a fixed volume of electricity consumption throughout the period, a so-called flat profile. The so-called seasonal profiles, which take account of fluctuations in consumption, are more expensive. There are a total of 355 member companies in Energi Norge. So far, only four players have entered the field. In a debate article in Finansavisen, Minister of Business and Industry Jan Christian Vestre (Ap) writes that the new fixed-price market for business “is a reality, not an illusion” and that “competition is starting to work”. Photo: Stian Lysberg Solum / NTB – The fixed-price offer has been popular A round of calls to suppliers in the corporate market paints a more nuanced picture. According to Fjordkraft, 40 business customers have signed a fixed price agreement with them. Lyse offers fixed price contracts for the price area NO2, which covers south-west Norway. – The fixed price offer has been popular and we have had great interest, says Atle Simonsen in Lyse. He does not want to reveal how many contracts are involved: – We do not want to give out figures, but we can say that there are significantly more than Fjordkraft, he says. – The need for predictability should be decisive Jon Eikeland, Fjordkraft – The vast majority of our business customers already have contracts with some form of price protection. We have been clear that the fixed prices that have now been set are primarily an alternative for companies that have a spot price, and that it is the companies’ need for predictability that should be decisive for whether they decide to enter into these agreements. We have not quantified enough expectations. Kristian Myrseth, Fortum – We have so far had dialogue with several tens of business customers, but so far fewer than ten have signed fixed price agreements. The greatest interest is naturally from customers with the largest consumption, the energy cost for them usually makes up a larger part of the total cost picture than for other companies and there is therefore also a greater need for foresight. Kolbjørn Hembre, Entelios – For those of our customers who wish to enter into fixed price agreements that ensure business predictability, we can now offer this in collaboration with two power producers (Å energi and Eco Hafslund). It is also important to remind that customers must assess whether a fixed price agreement is suitable given that the contract will last for a minimum of three years. In the last two companies that deliver fixed price agreements – Entelios and Fortum – the response has been more measured. – We are in dialogue with several tens of business customers, but for now there are fewer than ten who have signed fixed price agreements, says Kristian Myrseth in Fortum. Hotels would like to have a fixed price agreement On Tuesday this week, Prime Minister Jonas Gahr Støre (Ap) said that he expects that an ordinary household (with consumption of 20,000 kWh) will receive around NOK 33,000 in electricity subsidies next year. Converted, this means that the government will base a current price of NOK 3.25 per kilowatt-hour in NO2 next year (including taxes and grid rent). Earlier this year, Kvikne’s hotel in Balestrand was forced to increase its prices to finance electricity costs. – If it is possible, and if the price is liveable, then I would like to commit to a fixed price agreement, says hotel director Sigurd Kvikne. The problem is that the power company where he is a customer does not have such an agreement to tempt with. – So far I have not received a single offer, says Kvikne. – If the price is to live with, then I would like to commit to a fixed price agreement, says hotel director Sigurd Kvikne. Photo: Sondre Dalaker / news Uncertain what will happen after New Year Business policy manager at NHO Reiseliv, Ole Michael Bjørndal, says “large parts of the tourism industry are uncertain about the time after New Year”. – We have been in contact with many members who have not found it beneficial to apply for a fixed price agreement, because these are not good enough. In the meantime, he asks that the energy subsidy scheme be continued until March. The same appeal came from Nikolai Astrup (H) in Dagsnytt Atten on Wednesday afternoon. – We see that the market is not mature and that it is demanding for companies to enter into these agreements. Vestre doesn’t need to listen to me, but he should listen to business, said the Høgre representative. In response, the Minister of Business acknowledged that the first agreements have been “a little stiff”, but that Astrup should have greater confidence in market forces. He added that he was surprised that it was necessary to tell a Høgre representative about the market’s ability to sort itself out. – Barriers for the vast majority in the business world KrF representative Kjell Ingolf Ropstad says that the agreements that are available are better adapted to typical coverall companies “which have production at all times of the day”. – They are certainly suitable for large aluminum plants, but for the vast majority in the business world they miss the mark. He points out that the power that is not used (at night and at weekends) is sold to the grid at a spot price. If the spot price is lower than the agreed fixed price, it is in practice up to the companies to make up for the difference. – In this sense, there is a great risk that this will be a loss-making project for companies that only operate during the day on weekdays. So most companies, he says. To the accusation that the agreements are too rigid, the Minister of Industry replies: – If you have production Monday to Friday, eight to four, then it is possible to enter into a fixed price agreement Monday to Friday. The government has not set limits on that, he says. – So what is clear: It is the power company’s fault that companies today do not get offers for contracts that are adapted when they actually use power? – The power companies have mostly got what they want for this fixed price market to work. Now they have the opportunity to offer more flexible agreements. 7 . In December, Statkraft, which is wholly owned by the state, announced that they were offering fixed prices for power for resale to the business community, and that they were aiming to enter into agreements with several end-user companies (so far only Fjordkraft and Fortum). Press spokesman Lars Magnus Günther tells news that they are “looking at the possibility of offering more flexible agreements”. But then the price becomes stiff, he clarifies: – If you request more power at times when prices are normally high, then you will have to pay a little more for such an agreement.
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Several companies want a fixed price for electricity – news Vestland
