Could Norway be forced to ration electricity, and what would that mean for you?

Consumers in Norway are already feeling the pinch due to record-high energy prices, and now analysts have warned that energy rationing could be on its way. 

Could Norway be forced to ration electricity, and what would that mean for you?
Could Norway be forced to ration electricity. Photo by James Wainscoat on Unsplash

The average household in southern Norway is currently shelling out three times more than it usually would this time of year on electricity due to record energy prices caused by a combination of dry weather and soaring prices on the continent. 

On Thursday, the price of electricity in the south hit 1.23 kroner per kilowatt-hour, excluding surcharges, grid rent and other fees. In central and northern parts of the country, the current cost of electricity is around half of that. 

READ MORE: EXPLAINED: Why are energy costs soaring in southern Norway? 

Power analyst from Volue Insight, Tor Reier Lilleholt, believes that all of these factors could lead to electricity rationing in the south. 

“With the water reservoir forecasts we have, we must talk about the possibility that here there maybe rationing in the spring,” Lilleholt told financial news site E24

“This means that then consumption will be forcibly switched off. The Norwegian Water Resources and Energy Directorate (NVE) and Ministry of Energy would take over the water that’s left in the reservoir,” Lilleholt warned. 

READ ALSO: Rising energy prices in Norway: How to get the best deal

The power analyst said that the NVE was probably already gearing up for campaigns cautioning people to save electricity. 

The severity of the rationing implemented by the power authorities would depend on the situation, but in any eventuality it would hit consumers hard. Two types of rationing could be introduced. 

Firstly, there’s quota rationing, which is where households are given electricity allowances and any energy used over this amount is charged at excessively high prices as a deterrent.  

If the quota rotation doesn’t work then controlled outages will be used. The outages will rotate between areas at designated times. This is a last resort option for the authorities. This is called zonal rotary disengagement. 

Lilleholt did urge that this scenario was a while off from happening, and the probability of such an event occurring wouldn’t be fully clear until the spring. 

Marius Holm Rennesund, a power analyst from Thema Consulting, said that he said there was a relatively low probability of power being rationed, but he did say that it was almost inevitable that prices would continue to sky-rocket 

“It is clear that we have to go up to higher price levels to import power,” he said. 

The two analysts agreed in concluding that the only way that price hikes throughout the winter could be avoided would be if the region sees a very wet October to replenish hydroelectric stocks. 

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Pensions in the EU: What you need to know if you’re moving country

Have you ever wondered what to do with your private pension plan when moving to another European country?

Pensions in the EU: What you need to know if you're moving country

This question will probably have caused some headaches. Fortunately a new private pension product meant to make things easier should soon become available under a new EU regulation that came into effect this week. 

The new pan-European personal pension product (PEPP) will allow savers to take their private pension with them if they move within the European Union.

EU rules so far allowed the aggregation of state pensions and the possibility to carry across borders occupational pensions, which are paid by employers. But the market of private pensions remained fragmented.

The new product is expected to benefit especially young people, who tend to move more frequently across borders, and the self-employed, who might not be covered by other pension schemes. 

According to a survey conducted in 16 countries by Insurance Europe, the organisation representing insurers in Brussels, 38 percent of Europeans do not save for retirement, with a proportion as high as 60 percent in Finland, 57 percent in Spain, 56 percent in France and 55 percent in Italy. 

The groups least likely to have a pension plan are women (42% versus 34% of men), unemployed people (67%), self-employed and part-time workers in the private sector (38%), divorced and singles (44% and 43% respectively), and 18-35 year olds (40%).

“As a complement to public pensions, PEPP caters for the needs of today’s younger generation and allows people to better plan and make provisions for the future,” EU Commissioner for Financial Services Mairead McGuinness said on March 22nd, when new EU rules came into effect. 

The scheme will also allow savers to sign up to a personal pension plan offered by a provider based in another EU country.

Who can sign up?

Under the EU regulation, anyone can sign up to a pan-European personal pension, regardless of their nationality or employment status. 

The scheme is open to people who are employed part-time or full-time, self-employed, in any form of “modern employment”, unemployed or in education. 

The condition is that they are resident in a country of the European Union, Norway, Iceland or Liechtenstein (the European Economic Area). The PEPP will not be available outside these countries, for instance in Switzerland. 

How does it work?

PEPP providers can offer a maximum of six investment options, including a basic one that is low-risk and safeguards the amount invested. The basic PEPP is the default option. Its fees are capped at 1 percent of the accumulated capital per year.

People who move to another EU country can continue to contribute to the same PEPP. Whenever a consumer changes the country of residence, the provider will open a new sub-account for that country. If the provider cannot offer such option, savers have the right to switch provider free of charge.  

As pension products are taxed differently in each state, the applicable taxation will be that of the country of residence and possible tax incentives will only apply to the relevant sub-account. 

Savers who move residence outside the EU cannot continue saving on their PEPP, but they can resume contributions if they return. They would also need to ask advice about the consequences of the move on the way their savings are taxed. 

Pensions can then be paid out in a different location from where the product was purchased. 

Where to start?

Pan-European personal pension products can be offered by authorised banks, insurance companies, pension funds and wealth management firms. 

They are regulated products that can be sold to consumers only after being approved by supervisory authorities. 

As the legislation came into effect this week, only now eligible providers can submit the application for the authorisation of their products. National authorities have then three months to make a decision. So it will still take some time before PEPPs become available on the market. 

When this will happen, the products and their features will be listed in the public register of the European Insurance and Occupational Pensions Authority (EIOPA). 

For more information: 

This article is published in cooperation with Europe Street News, a news outlet about citizens’ rights in the EU and the UK.