Norway’s largest electricity supplier raises the price of “variable” electricity agreements to more than double the spot price. – Totally unreasonable, says the power expert.
– Totally spin in the wild. Here, customers should get out as quickly as possible, says energy analyst Sigbjørn Seland at Storm Geo to E24.
While the spot price of electricity has fallen from record levels in recent weeks, customers with purported variable electricity agreements still have to prepare for sharp price hikes.
With a variable electricity agreement, the price is decided by the supplier, and it can be changed at any time with 14 days’ notice. The Consumer Council has repeatedly warned of the type of agreement, describing it as «hostile to customers».
In the past two weeks, electric giants Fjordkraft, Norgesenergi and Hafslund Strøm have sent warnings about price increases to their variable customers.
On average, the new rate is NOK 3.39 per kilowatt-hour for customers in southern Norway, which is more than double the current spot rate of NOK 1.60 per kilowatt-hour.
Sealand believes that the price level seems completely unreasonable, and notes that the future market is almost “in free fall.”
On the Nord Pool energy exchange, energy contracts for delivery in January have fallen from a level of around 1.90 NOK per kilowatt-hour before Christmas, to roughly one NOK now.
For customers in southern Norway, the latter corresponds to a price of about 2 kroner per kilowatt-hour when VAT is included, according to Sealand.
In light of this, it seems odd for suppliers to set prices. These agreements, Sealand says, look very bad.
It is normal to consider cancellation
The most expensive of the aforementioned trio is Hafslund Strøm, which has raised the price of the “Stable” product in southern Norway from 2.79 kroner to 3.74 kroner per kilowatt-hour as of January 7.
Tobias Gausemel Backe, director of public relations at Hafslund Strøm, notes that the new price level was announced before Christmas, when on some days the daily price of electricity was as low as 5 kroner in eastern Norway.
“The market is very uncertain and changing now, and over a long period of time it has been difficult to determine the price forward in time,” Buck wrote in an email to E24.
He notes that Stabil clients had a lower price than the spot rate in December.
“Since the development of prices has already been in recent days, we will lower the price again if the situation continues – as it appears today,” Buck wrote.
Norgesenergi has announced an increase in prices for its variable product “seasonal price” in southern Norway from NOK 2.89 per kilowatt-hour to NOK 3.69, effective from January 7.
Norgesenergi and Hafslund Strøm are both owned by the Finnish Fortum Group.
“Rising electricity prices is horrific for electricity customers, and this is by no means a desirable situation. The volatility in the electricity market and the extremely high prices we have seen in recent months have come as a surprise to analysts. It is clear that current price forecasting models have not been able to take into account The state of new energy we’ve seen so far in the fall and winter,” Gundersen wrote in an email to E24.
Gundersen and Backe point out that Seland said late on Christmas Eve stock trading That “it is not certain we have seen the price peak yet” and that “there is no ceiling. We have hourly rates in Germany, the Netherlands and the UK that are much higher than what we’ve seen in southern Norway so far. We can probably avoid it, but nothing can be ruled out.
“The statement clearly demonstrates how difficult it is to predict price developments in the energy market today. In our dialogue with customers, we are fully open to the fact that this is an extreme situation, and that it is difficult to determine the price of a variable agreement,” writes Gundersen.
“Sand may of course have her opinions, but that seems to be a comment from today’s shot, and it doesn’t take into account that prices will follow the market in the future as well,” Buck wrote.
According to Gundersen, Norgesenergi customers with changeable products in the fall and winter have “very favorable prices” compared to the spot price of the southern price regions.
“When we now see that the outlook is going in a different and more positive direction than it was before the new year, it is natural to consider canceling the price increase. We have done that before, most recently in December of last year,” Gundersen wrote.
Gas prices fall
Sealand explains that it is lower gas prices that lead first and foremost to lower future energy prices.
Prices in the European natural gas market are down 60 percent from their highs just before Christmas. This has several reasons, but mild weather and wind are the most important. Seeland says this will lead to lower energy prices across Europe and the Nordic region.
Norgesenergi’s Gundersen notes that although the price picture for January is now lower than what was expected a short time ago, there are still uncertain fundamentals.
“Gas prices are still high, the filling level is lower than normal, and in addition, three nuclear power plants in Germany have now been shut down, which contributes to more uncertainty. A period of cold weather and little wind quickly could lead to a different snapshot than indicated. to Sealand today,” Gundersen wrote.
Fjordkraft raised the price of its variable product ‘expected electricity’ from NOK 1.55 per kilowatt-hour to NOK 1.95 from January 4 for customers in southern Norway, and up to NOK 2.75 as of January 10.
– Variable agreements track market price step-by-step and are priced based on an overall picture that includes both price history and price forecasts, says communications consultant Jon V. Eikeland at Fjordkraft to E24.
He states that the price increase was set before Christmas, when there were chances of lower prices on Christmas followed by a cold January, something E24 also mentioned at the time.
– Prices are affected by wind and temperature, and there is a dearth of resource situation in Europe. As long as it’s windy in Europe, this will help put resources. During Christmas in Space and in the early days of January, it’s windy in Germany, but change is expected during the week, says Ekeland.
NVE: Thousands of Switch Agreements Provided
Eckland also confirmed that customers benefited from the agreement compared to the spot rate in December. However, the company did not want to reveal how the agreement would shift compared to the spot rate over time.
The increase in the percentage of customers with variable electricity agreements explains much of Fjordkraft’s strong earnings growth in recent years, according to Sparebank 1 Markets.
NVE price stats from 2020 Show that with an annual consumption of 20,000 kWh, you can save more than 4,000 kr by switching from a regular variable agreement to a spot rate agreement.
“If you switch from the most expensive variable agreement to the best spot rate, the savings will be much greater. The figures also reveal that variable agreements have been coming in worse than the spot rate every year for the past 10 years,” he wrote. Consumer Council In April last year.
Eikeland points out that the variable agreements are not meant to beat the spot price, but rather to give the customer an increased degree of predictability, by knowing the price of electricity up front and thus not having to factor in hourly differences.
The market is characterized by a high degree of uncertainty. Recently, on Saturday, we were expected to get double digits with a negative score next week. Shows huge differences. Ekeland says the scope for the outcome is large.
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