Norway may tax power exports to keep domestic prices down

A general view of the construction site of NordLink subsea interconnector power cable to connect Norway and Germany at the Vollesfjord fjord near Flekkefjord
A general view of the construction site of the NordLink subsea interconnector power cable to connect Norway and Germany at the Vollesfjord fjord near Flekkefjord, Norway May 31, 2018. REUTERS/Lefteris Karagiannopoulos/File Photo

OSLO, Feb 15 (Reuters) - Norway's government said on Wednesday it would consider taxing electricity exports and impose other changes to its energy market to preserve more power for domestic use and keep a lid on prices.

An expert commission was appointed to evaluate six proposals that also included the creation of separate electricity auctions for domestic and foreign use and the carving out of some power consumption from the spot market.

Under heavy domestic pressure to lower electricity prices for households and industries to help ease the cost of living, the minority centre-left government earlier on Wednesday said it will subsidise a bigger part of household electricity bills.

The Labour-led government has also faced a domestic backlash over new power exchange cables to Britain and Germany, which have been partly blamed for higher electricity prices.

Previous Norwegian plans to curtail power exports have been met with criticism from neighbouring Denmark, Finland and Sweden, which argued that such moves may force others to adopt similar measures, weakening regional energy security.

While Norway is not a member of the European Union, it takes part in the EU's common market and is thus bound by rules and regulations governing competition, limiting the country's ability to act on its own.

Still, the government on Jan. 27 announced plans that could lead to exports being restricted if water reservoirs at hydropower stations fall to very low levels, which it said was consistent with EU rules.

The new commission will deliver its report to the government by Oct. 15.

The European Commission is itself drafting a revamp of EU electricity market rules, with the aim of cushioning consumer bills and avoiding a repeat of the surge in prices triggered last year by cuts to Russian gas supply.

Denmark, Germany, the Netherlands, Estonia, Finland, Luxembourg and Latvia have warned Brussels not to rush into major changes, however, calling instead for limited tweaks to the system.

Reporting by Terje Solsvik, editing by Nora Buli and Bill Berkrot

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