More subsidies coming for electricity bills

Energy subsidies increasing to 80%, but is it enough?

Photo: Heiko Junge / NTB
With skyrocketing prices, the Norwegian government is increasing its subsidies for electricity bills to 80%.

NTB

The Labor Party (Arbeiderpartiet – Ap) and the Center Party (Senterpartiet – Sp) are increasing the government’s electricity subsidy from 55% to 80% when the electricity prices exceed 70 øre per kilowatt hour. The proposal already has the support of the Storting.

“This gives people a completely different level of security. Then you know that if there are very high electricity prices, then the state will pick up the bill for 80% on anything that exceeds 70 øre per kilowatt hour. It is a powerful move that will help,” said Minister of Finance Trygve Slagsvold Vedum (Sp).

The adjusted program takes effect from January 2022 and continues through March 2022 and will appear for the first time on invoices received in February.

On December bills, the subsidy rate remains at 55%.

“That is what the Storting decided and what we got in place in December. The bill for December will probably be the toughest for people, but 55% help a lot with that as well, said Vedum.

Safety net

Vedum pointed out that the government will cut the electricity tax starting in January. He explained the increase: “We put in place this model for power subsidies before Christmas, in a way that it can be adjusted,” he said.

In total, the electricity package from December and the new one costs about NOK 8.9 billion. The increase from 55% to 80% in subsidies amounts to about NOK 2 billion.

Extreme situation

Prime Minister Jonas Gahr Støre (Ap) pointed out that electricity prices are affected by precipitation, the amount of water in reservoirs, and the overall energy situation in Europe.

“It has created an extreme situation lately, with sky-high prices. The market does not take social considerations into account, but we can do that,” said Støre.

Støre confirmed that they have not acted in respose to pressure put forth by the Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge – LO).

“The government has been working on this for a while now. We listened to people and saw the need to provide more help,” he said.

The government is dependent on support from the Socialist Left Party (Sosialistisk Venstreparti – SV)  to get the increase approved in the Storting, and SV promises to support the increase. 

“SV proposed to increase the electricity subsidy already before Christmas. The government should have listened to us then, but it is good that they are doing it now. The increase to 80% is a solid increase, which SV will ensure is approved in the Storting,” said Audun Lysbakken, SV party leader.

More pushback

The Red Party (Rødt) believes that the government’s proposal to increase electricity subsidies to 80% is still not enough.

Rødt proposed an increase to 90% already in December. In addition, the threshold of 70 øre per kilowatt hour is still abnormally high, said Storting representative Sofie Marhaug from Rødt.

The Progress Party (Fremskrittspartiet – FRP) also does not believe that the subsidy program is good enough.

“With the new subsidies, ordinary people will still have to pay a starting price of more than twice that of the average price of electricity in the last eight years,” said Frank Sve, energy policy spokesperson from FRP.

Conservatives in favor

The conservative parties have worked on a new electricity package that is more redistributive, with stronger measures, because the government’s program was grossly inadequate. 

Christian Democratic Party (Kristelig Folkeparti – Krf) leader Kjell Ingolf Rop-stad has called for more targeted measures for those who struggle the most with the consequences of the high prices. He also reacted to the fact that the November and December bills are not included in the subsidy package.

“KrF proposed this before Christmas, and we still believe that the high bills for November and December must also by covered by the 80% subsidy,” said Ropstad.

This article originally appeared in the Jan. 21, 2022, issue of The Norwegian American. To subscribe, visit SUBSCRIBE or call us at (206) 784-4617.