LNG

Leading European LNG and pipeline natural gas nation Norway plans to subsidize the electricity bills of Norwegian households to alleviate the impact from soaring power prices in new measures announced by Prime Minister Jonas Gahr Støre.

The Government said the cost of the proposal, which is subject to approval by Norway’s Parliament, could amount to some 5 billion Norwegian crowns ($560 million) combined for the four months from December 2021 to March 2022.

The government said the four months of subsidies would be administered by the Transmission System Operators (TSOs).

Norway’s power grid is divided into five different pricing zones. The spot price for electricity in the pricing zone that a household is located in will be used as the basis for calculating any support due.

The average wholesale electricity price in Norway recently stood at the equivalent of around €97.6 per megawatt hour. In natural gas terms this is about $32.35 per million British thermal units.

The Norwegian wholesale sale price is in line with the benchmark European Union Dutch Title Transfer Facility price and the UK National Balancing Point gas price.

Extraordinary situation

“An extraordinary situation like this requires extraordinary measures in response,” said PM Støre, who leads a Left-Centre administration.

“I am happy that we are now in a position to announce positive, targeted action that will help ordinary people to weather this electricity bill crisis,” he added.

 “It is a forceful response to what we are aware many people are finding to be a difficult and serious situation,” stated Støre.

Norway is the leading pipeline natural gas supplier to Western Europe after Gazprom and state-controlled oil and gas company Equinor also owns the region's largest baseload liquefaction and LNG export plant at Hammerfest, set to re-open in 2022 after repairs following a fire.

The Norwegian power subsidy plan will provide support to households for up to 5,000 kilowatt hours of monthly electricity use.

The government said it would present the scheme as a proposition to the Storting (parliament) as quickly as possible. The proposal is in addition to previously announced measures including housing assistance and support for students.

Norwegian Finance Minister Trygve Slagsvold Vedum said the proposal would see the money spent directly on paying the most expensive component of the bills of citizens.

“This will be in addition to reductions in the electrical power tax and increased housing assistance. We have focused on helping as many people as possible - when spending this much money, it is important for everyone to feel the benefit,” explained the Finance Minister.

“We hope that these measures will provide a little more breathing space for many people as we enter the Christmas period, regardless of whether you live in a draughty house, a flat or a farm,” he stated.