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Norwegian government urged to improve energy support scheme for households

Norway's government was under pressure on Wednesday to increase its support package for households struggling with sky-high energy costs, with one organisation suggesting the government pick up three-quarters of consumers energy bills.

Published: 5 January 2022 15:27 CET
Pictured are powerlines on a cloudy day.
The Norwegian government is under increasing pressure to make changes to the measures it introduced to combat rising energy prices. Pictured are power lines. Photo by Grianghraf on Unsplash

At the end of last year, the government unveiled a package aimed at helping consumers cope with soaring energy bills in Norway.

One of the headline measures included in the package was the government covering 55 percent of the public’s energy bills when the spot price rose above 70 øre per kilowatt-hour throughout the winter.

Despite the presence of the support scheme, many households are faced with energy bills up to several times higher than typical during winter due to high energy prices caused by low power stocks and high exports to the continent.

READ MORE: This is how much electricity in Norway will cost this winter

Both the Confederation of Norwegian Trade Unions (LO) and Huseierne (The Homeowners Association) have called on the government to improve the package.

Peggy Hessen Følsvik said the government should launch a “2.0” version of its support scheme.

“The government’s electricity package, which was launched before Christmas, must be followed up with an electricity package 2.0,” she told broadcaster TV2.

Følsvik also called the government’s decision to export large volumes of energy abroad when prices were so high domestically as “illogical, incomprehensible and unfair”.  

One bill payer described the support to broadcaster TV2 as a “small plaster on a large wound”.

“Yes, the power support is like a small plaster on a large wound. In any case, we are left with a net bill of around 5,000 kroner. Then we have to cut back on things like service on the car, repairs in the house and on leisure activities,” Daniel Vilseng Hilsen told the broadcaster.

READ ALSO: How to save on your Norwegian electricity bill

Figures from the Norwegian Water Resources and Energy Directorate (NVE) have estimated that around 1.9 million households will have their electricity bills for December subsidised.

Despite this, Huseierne has suggested that the government increase the proportion of the bill it covers from 55 percent to 75 percent.

“The state and publicly owned companies make a fortune on the high electricity prices, while the money flows out of the household budget of ordinary people. The government and the Storting must do something about this. The power support scheme that was adopted just before Christmas must be improved immediately,” the secretary-general for the association, Morten Andrea Meyer, wrote on the association’s website.

Additionally, the Socialist Left Party, which the government negotiated the package with to receive a parliamentary majority for the support scheme, has told newswire NTB that it would be open to sitting down with the government to discuss ways of improving the measures.

How has the government reacted to the pressure? 

The government has said it is open to changing and tweaking the scheme if needs be but first wants to see how the package, which it claims was put together in ‘record time’, works in practice.

“It is difficult to rule anything out. The government has presented a scheme that is large and precise, and we will see over time (if it works),” Amund Vik, state secretary in the energy ministry, told TV2.

“It is a scheme that has been put together in record time, and, naturally, we will look at how it works before we take any action,” he added.

Vik also explained that he could understand why many would want to see the measures reinforced further,

“The prices are extraordinarily high, so that the desire to improve the scheme is completely understandable and legitimate,” he said.

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MONEY

EXPLAINED: How wealthy is the ‘average’ Norwegian? 

Norway is known for its high wages and stable economy. New figures have revealed the wealth of the average resident in the Nordic country. 

Published: 23 April 2024 15:50 CEST
EXPLAINED: How wealthy is the 'average' Norwegian? 

High salaries go hand in hand with the high cost of living in conversations about Norway.

However, other factors, such as high homeownership rates, indicate that there is plenty of disposable income for locals to save and invest in their futures. 

Previous studies have also suggested that Norwegians are the seventh wealthiest nationals in the world. 

Norway’s national data agency, Statistics Norway, has compiled its own set of figures indicating that the average Norwegian household has a net wealth of around 3.8 million kroner. 

Net wealth accounts for everything a person owns, including property, stocks, or cash, minus any debts or liabilities. 

The vast majority of this wealth was derived from the estimated value of property. This alone gives the average Norwegian an estimated wealth of 3.74 million kroner. 

READ ALSO: How much does an apartment in Norway cost?

The value of second homes was included, which skewed things as only around 10 percent of households owned a secondary residence. 

The average price of a home in Norway was 4.5 million kroner in March of this year, and house prices have increased substantially in recent years. 

Savings, cash, stocks and other capital accounted for 1.72 million kroner, giving Norwegians an average wealth of 5.46 million kroner. Average debts of 1.68 million kroner gave Norwegians an average net wealth of 3.8 million kroner.  

The figures from Statistics Norway were obtained using figures from tax returns for 2022, which were submitted in 2023.  

Those aged between 67 and 79 years old were the wealthiest generation in Norway on average. This is partly because they have more capital than most other groups and more expensive property. 

However, the most significant factor is the lower levels of debt. They had half the debt of the next richest group, those aged between 55 and 69. 

Younger age groups weren’t as wealthier as they had much higher debts and lower capital. 

Still, Norway’s wealthiest individuals significantly boosted the average. When using the median, the average Norwegian household had a net wealth of just under 2 million kroner. 

When the median was applied to capital, the figure was 339,300 kroner compared to the average of 1.76 million kroner. 

The large difference in capital was attributed to Norway’s wealthiest individuals significantly pulling up the average. 

“This is mainly due to large fortunes in shares and securities, where a few own very much. Shares and other securities and share savings accounts are assets with a median value equal to zero, which indicates that these are not important asset items for most households,” the report said. 

Money kept in the bank was still important for most residents of Norway, though. The median value of bank deposits in Norway was 215,000 kroner, compared to the average of 600,000. 

The gulf between the average value of property owned and the median was roughly 500,000, with the median being 3.25 million kroner. 

Furthermore, Norway’s median debt level was around 860,000 kroner compared to the average of 1.67 million kroner. Around 85 percent of Norwegian households were in some form of debt. 

Significant differences also exist between Norway’s wealthiest and poorest residents. Residents belonging to the country’s poorest ten percent had an average net wealth of almost minus 1 million kroner. 

Meanwhile, Norway’s wealthiest ten percent had a net wealth of 19 million kroner. The top 50 percent also owned considerably more than the bottom 50 percent. 

“Despite the former comprising 1.27 million households, while the latter comprises approximately 25,000 households, the bottom 50 percent own only 4 percent of the total net worth, while the top 1 percent owned as much as 22.3 percent in 2022,” the report read. 

There was also significant variation in wealth depending on household type. For example, a single mother or father with a child aged between 6 and 17 had a net wealth of 2.24 million kroner, compared to a couple with children of the same age with an average net wealth of 5.12 million kroner. 

Typically, households with more than one person had more money as more than one wage earner likely lived at the address. 

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