Equalization of grid tariffs

Vista Analyse has been commissioned by Samfunnsbedriftene Energi to assess various models for equalizing grid tariffs. The report is available here (in Norwegian).

While the costs for the transmission grid are currently distributed equally, there are large geographical differences in grid tariffs for the distributional and regional grids.

Vista Analyse believes there is a good scientific basis for geographical equalisation of grid tariffs. Among other things, we find that both geographical distribution considerations, efficiency losses due to different prices for the use of the power grid and the consideration of socially rational development of the regional grid suggest equalisation. We are more uncertain about the consideration of socially rational development in the distribution grid, but believe that there is certainly no strong argument against more equal grid tariffs.

We recommend that equalization takes place through a subsidy over the national budget, that should be allocated based on a fixed rule. We assume that the electricity grid will continue to be financed through the electricity bill, and recommend that the subsidy be financed through an excise tax or an increase in the electricity tax. We recommend a targeted scheme with a threshold, which will have much in common with the previous equalization scheme. However, the consideration of effective organisation will in some cases be weakened if the equalization scheme has a threshold. In the long term, more extensive schemes without a threshold should be investigated.

We assume that the equalization will apply to the costs of grid development and operation. To the extent that grid tariffs expose grid users to the socio-economic costs of using the grid, this should not be affected by the equalization scheme.

Project manager has been senior economist Åsmund Sunde Valseth, while CEO Haakon Vennemo was responsible for quality assurance.