How will the Norwegian government's plan for a fixed energy price work?
The Norwegian government submitted its plans for a fixed energy price of 40 øre per kilowatt hour for households for consultation on Monday.
The scheme has been dubbed 'Norgespris' by the government, and it could be introduced later this year.
'Introducing the Norgespris is about providing security and creating predictability for people's electricity costs,' energy minister Terje Aasland said.
What is the Norgespris scheme?
The aim of Norgespris is to provide an alternative to the current energy subsidy scheme that the government introduced in 2021.
Instead of subsiding 90 percent of the spot price (the raw energy cost) over 75 øre per kWh, consumers can opt for a fixed price of 40 øre per kWh.
How will it work?
More details were unveiled on Monday, and the cap of 40 øre per kWh will be the price without VAT and charges for being connected to the energy network.
The fixed price will apply to residential and holiday homes in Norway.
However, the government still has some key points to iron out. It wants to introduce a cap on the amount of energy covered by the fixed price – to ensure energy isn't wasted by households – but isn't sure of the exact figure.
One of the aims of the consultation phase, where experts and the public can weigh in on the proposal, is to try and determine a suitable figure for the energy consumption cap.
Once a cap is established, any consumption over this figure will not be covered by the fixed-price deal.
Currently the government is unsure whether a cap of 5,000 kWh per month would be suitable and whether it should be lower, according to government figures only four percent of homes have higher consumption than this.
While a limit hasn't been established, it looks like the government intends to give cabins and leisure homes a lower cap than residential properties.
Those who opt to sign up for the fixed energy price should also expect it to be a binding agreement until the end of the year you signed up or the end of the year after you signed up if you opt in after October.
This means that if the average energy price is below 40 øre per kilowatt hour, you may be better off without the energy deal, this will mostly apply to homes in central and northern Norway which enjoy the country's cheapest energy prices.
The price of fixed price deals could change in the future. However, the price of 40 øre per kWh will not be changed before January 1st 2027.
What happens next?
The proposal has been sent out for consultation and will last until April 21st. Once the consultation is done, it will have to pass through a committee and then through parliament before coming into effect.
The government hopes to have the scheme ready for households from October 1st and intends to have it last until December 31st, 2029.
If the scheme comes into action, it will not replace the current energy subsidy scheme, and the two will coexist.
One thing to note is that there is a general election in September, and a right-wing majority looks like a more likely outcome. This means the scheme may be scrapped or changed before it comes into effect.
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