Acer does not set electricity prices in Norway

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No. The European Union, as expected, lost the so-called Acer case in the Supreme Court. Three courts have now decided that the Constitution was not violated when Parliament agreed in March 2018 to include the EU’s third energy market package in the EEA Agreement. As a result, Norway became a member of the EU energy agency ESER.

No to the EU claimed that Parliament’s decision contravened the constitution because it was not adopted by a three-quarters majority, but instead by a simple majority. According to Article 115 of the Constitution, decisions involving the transfer of power that are more than minimal interference must be taken by a three-quarters majority.

Frankly misleading

The Supreme Court ruling, published on October 31, shows that much of the discussion about Acer has been completely misguided. The Supreme Court has ruled that not only is devolution intrusive, it falls at the extreme of what can actually be called a devolution.

According to the EU’s “No”, Acer is responsible for the fact that in Norway we have seen an increase in electricity prices in recent years. This has now been rejected by the Supreme Court. In the ruling, the Supreme Court made clear that Norwegian policy and the market – not Acer – determine electricity prices and energy policy in Norway. So the fact that Acer is important for Norwegian electricity prices is nothing but a myth.

Despite Norway’s membership in Acer, Norwegian politicians are still involved in deciding where to build new power generation and a new grid, as well as new power cables to other countries.

On the other hand, electricity prices are determined by the market. There, supply and demand help determine prices, and here weather conditions such as wind, rain, temperature and melting snow play great importance.

The supply increases when the weather is windy and wind energy production increases, or when hydroelectric energy production increases when it rains or snow melts. Electricity demand also depends on the weather, rising when it gets so cold that people turn on their heaters, or when it’s so hot that you use the air conditioner inside.

In addition to these weather-related factors, electricity prices are also affected by the transmission capacity available to other price zones and other countries, and by the prices of CO2, coal and gas allocations. What determines the price of electricity at any given time is how expensive it is to produce one unit of electricity at a power plant at the highest cost of all power plants that must produce electricity to meet demand.

We are part of the European market. In other countries, there are still many power plants that have to burn coal or gas to produce electricity, and therefore have to buy carbon dioxide. For this reason, the prices of carbon dioxide, coal and gas quotas have an impact on electricity prices in Norway.

The Third EU Energy Market Package was adopted in 2009 with the aim of contributing to the further development of the internal market for electricity and natural gas. It took a full nine years before it was incorporated into Norwegian law.

You are facing a big change

Thanks to this package, cooperation between EU regulatory authorities has been strengthened through the establishment of the ACER Energy Agency. Acer plays a central role in developing the new regulations to complete the third package, acting as an advisor, supervising and having decision-making authority in certain areas.

The world is facing a massive restructuring of the energy system, a restructuring that is absolutely necessary for us to limit climate change. In both Norway and the European Union, the goal is to reduce greenhouse gas emissions by 55 percent below 1990 levels by 2030. Here in Norway, we have so far only been able to reduce emissions by 5 percent. Therefore, we still have a long way to go to reach climate goals, and there are only seven years left to achieve these goals.

Huge investments

The transition from fossil to renewable energy will involve large-scale development of new renewable energy and a new grid, and huge investments, both here in Norway and in the rest of Europe. It is important for countries to cooperate across borders in this regard. If all countries did it alone, it would be more costly for everyone.

We hope that the Supreme Court’s clear conclusion in the Acer case will lay the groundwork for a more fact-based energy debate in the future, with less misinformation and misinformation. This will make it easier to focus on what we should actually be doing, namely developing enough renewable energy to reduce emissions and get the electricity we need for new green electricity and industry.