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ENERGY

Why consumers in Norway will see their energy bills increase

Consumers in Norway are charged for being connected to the grid. Energy customers in Norway can expect to see this cost increase significantly in the coming years.

Published: 12 September 2024 10:58 CEST
Pictured is a power pylon in Norway.
Upgrades to Norway's energy infrastructure will result in higher network fees for energy customers in Norway. Pictured is a power pylon in Norway. Photo by Olav Tvedt on Unsplash

The average household in Norway can expect grid fees to increase by between 20-30 percent, Norwegian newspaper VG reports.

Costs will be increased as energy firms will invest in improving energy infrastructure. 

“It is expensive to build networks, and there is likely to be a significant increase in the network fees in the future,” Kjetil Lund, a director at the Norwegian Water Resources and Energy Directorate (NVE), told VG.

The NVE has published a projection on grid fees between 2024 and 2030.

Norwegian newswire NTB has estimated that households could see an annual increase of 1,700 kroner in grid rent.

The increases will vary across the country and will depend on the provider. Those in Trøndelag are expected to see the most significant increases. There, grid fees will increase in price by around 30 percent.

Residents in eastern Norway can expect an increaser of 25 percent, while northern Norway will get a slightly lower increase just below the 25 percent mark. Those in southern Norway and the west will receive the smallest increases or just under 20 percent.

The increases don’t take into account additional costs like VAT.

“It will probably vary a little. Higher bills are no fun, but the reality is that it costs money to expand the network and upgrade what we already have. There is a need to build more networks to facilitate business, climate change and electrification. But it’s not free,” Lund said of the increased charges.

In the coming years, energy firms are set to invest 170 billion kroner in upgrading Norway’s energy infrastructure.

Elvia, Norway’s largest provider, has already announced two grid rent increases, a 14 percent increase in October and a second increase in the winter.

The current energy subsidy scheme implemented by the government where the state covers 90 per cent of the electricity price above 73 øre per kWh – or 91.25 øre including VAT will not apply to the increased grid fees.

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COST OF LIVING

Will huge fines for Norway’s supermarkets lead to a fairer deal for customers?

Norway's competition watchdog has fined the country's three largest supermarket groups 4.9 billion kroner, but will the punishment lead to any meaningful change for shoppers?

Published: 22 August 2024 13:50 CEST
Will huge fines for Norway's supermarkets lead to a fairer deal for customers?

Fines totalling 4.9 billion kroner were handed to supermarket groups Norgesgruppen (2.3 billion kroner), Coop (1.3 billion kroner), and Rema (1.3 billion kroner) for what the Norwegian Competition Authority described as “price collusion”.

“This is a serious breach of the law, something that reflects the size of the fine,” competition director from the Norwegian Competition Authority Tina Søreide said at a press conference.

The fines were issued after a six-year-long investigation found that the three groups used “price hunters” to constantly check one another’s prices.

READ MORE: Norway’s largest supermarket groups slapped with fines for ‘price collusion’

This practice allegedly disincentivised competition and allowed supermarket chains to set the same prices for products rather than compete for customers through offers.

All three supermarket groups have denied any wrongdoing and said that the fines will also be appealed.

Additionally, the supermarkets argued that the use of the “price hunters” was normal business practice and contributed to healthy competition.

Why do customers in Norway feel ripped off? 

Three large groups have long dominated Norway’s grocery industry, and customers have been frustrated by the lack of competition between chains, poor selection on shelves, and high prices.

Trade minister Cecilie Myrseth acknowledged the lack of competition in the supermarket industry following the news the groups would be fined.

“The grocery industry is characterised by the fact that there are a few large players, and it is difficult for small and new players to establish themselves. It is good that we have a competition authority that actively enforces the Competition Act,” she told the Norwegian newswire NTB.

Meanwhile, another watchdog, the Norwegian Consumer Council, said that shoppers in Norway have possibly been overcharged for a long time.

“As we understand it, Coop, Norgesgruppen and Rema will appeal the decision. Of course, they have the right to do so, but if the competition authority’s decision stands, competition has been weakened over several years,” Inger Lise Blyverket, director of the Norwegian Consumer Council, told NTB.

“This means that we consumers have probably paid more for groceries than we would have done with healthy competition,” she said.

Will there finally be a fairer deal for shoppers in Norway?

Given the size of the fines issued and the supermarket chains’ adamance about no wrongdoing, the appeal process could result in a years-long court battle between the watchdog and the grocery industry.

“It is a sad decision, and it is clear that it will lead to this case going forward in the legal system,” Odd Gisholt, economist and grocery industry expert, told broadcaster TV 2.

In the meantime, Norgesgruppen has said it had no plans to stop using price hunters despite the fine.

Therefore, the fines may not have an immediate effect, especially if chains continue to use the price hunters.

Still, Søreide said that the fines should deter any behaviour that discourages competition or unfairly squeezes customers.

Can anything else be done to bring down prices and make things fairer for consumers?

Norway’s government previously introduced a ten-point plan to make the country’s supermarket sector more consumer-friendly.

Since the plan’s unveiling in early 2023, the way the industry operates has changed in a few major ways.

Firstly, the much-criticised practice of supermarkets announcing price rises ahead of time through the media has, for the most part, stopped.

The government had previously called this practice “illegal price collusion,” as all supermarkets announced similar increases despite having different costs and overheads.

Supermarkets in Norway no longer have “price windows.” Previously, supermarkets changed their wholesale prices twice a year, which the Norwegian Competition Authority said led to weaker competition.

Despite changes in the grocery industry, the intervention of competition watchdogs and the government’s plan, food prices continue to be a key driver of inflation in Norway.

In July, food prices reversed the country’s slowing inflation trend, figures from the national data agency Statistics Norway show. Food prices also increased by 4.9 percent between July 2023 and July 2024.

Food prices increased significantly between June 2024 and July 2024 despite the industry apparently moving on from the traditional price changes introduced in July and February of each year.

“Despite signals from the industry that they want to move away from the arrangement with a fixed time for price negotiations, this year we also see a strong and broad price increase for food and drink in July, where the vast majority of product groups rose in price,” Espen Kristiansen from Statistics Norway said of the figures.

Strategy advisor and expert on grocery policy Erik Fagerlid told the business news site E24 that various measures from different business ministers over the past 10–15 years have led to more expensive food prices in Norway due to the extra work the policies create for businesses.

“Who pays for this work? Of course, us consumers, in the form of higher prices for groceries,” he told E24 at the turn of the year.

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