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ENERGY

What are the knock-on effects of rising energy prices in Norway? 

Southern Norway has seen record electricity prices throughout the autumn, which are set to continue surging throughout the winter, but what are the knock-on effects of the sky-rocketing energy prices? 

What are the knock-on effects of rising energy prices in Norway? 
Here are some of the different ways rising energy prices will affect you. Photo by Andrey Metelev on Unsplash

Energy prices have soared due to increased demand, short supply and dwindling water reservoirs in southern Norway. 

This, naturally, will have some knock-on effects that will, directly and indirectly, impact consumers. Below we’ll take a look at some of the ways rising energy prices will affect you. 

Higher bills 

This is the most direct and noticeable knock-on effect of electricity prices going up and also the thing that will have the biggest impact on consumers. 

The majority of households in Norway are on a spot-trade agreement whereby they pay the exact cost for electricity as the supplier does with added taxes and surcharges. 

EXPLAINED: Why are energy costs soaring in southern Norway?

When prices are low or falling, this is the best deal, but when prices are on the up, people on this arrangement will really feel the pinch.

Those on fixed price agreements are more shielded from the steep price rises. 

You can read more on how to shave some kroner off your electricity bill here

Firewood shortages 

Record high electricity prices in southern Norway have led to people beginning to hoard firewood. Wood producers have also said they have been met with overwhelming demand. 

“Demand is very high. Customers are calling all the time,” Arlid Ajer, from firewood company Avigo Birkeland, explained to public broadcaster NRK.

“When it starts to get cold, people panic. And then they have to find the nearest place where they can get firewood,” Arne Dønnestad, a wood salesman in Kristiansand, also told the broadcaster. 

High prices have led to a massive surge in demand for firewood because most people in Norway have a fireplace or furnace, so instead will use that to heat their homes to try and save a few kroner. 

The issue is that when firewood supply can’t meet demand, it means that consumers are left with no choice but to use energy to heat their homes over the cold winter months. 

Potential electricity rationing

Southern Norway’s electricity supplies are dwindling, and unless the country sees a wet autumn to replenish reservoirs, the government could be forced to ration electricity. 

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

If wood is still scarce and quota rationing is introduced, then consumers may be left with no alternative but to bite the bullet and pay the massive surcharge prices, which could be ruinous for those on lower incomes. 

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

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.

People learn to become more frugal and save energy

Perhaps the only positive to come out of the ever-increasing cost of energy is that it may make people think twice about needlessly wasting electricity or make them consider ways they can make their homes more energy-efficient. 

The benefits of this are two-fold. Firstly being a bit more thrifty when it comes to your energy consumption can help shave a few kroner off your electricity bills. Secondly, it can help to reduce your carbon footprint overall. 

If you want a few pointers on how you can make your home more energy-efficient, then check out our guide

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For members

EUROPEAN UNION

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:

https://www.eiopa.europa.eu/browse/regulation-and-policy/pan-european-personal-pension-product-pepp/consumer-oriented-faqs-pan_en 

https://www.eiopa.europa.eu/browse/regulation-and-policy/pan-european-personal-pension-product-pepp_en 

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

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