Norway, Sweden open borders to electricity

Norway and Sweden removed their border tariffs for electricity on Jan. 1, 1996, creating an international electricity exchange. The exchange allows both generators and consumers to trade across the border. The pool is viewed as a beginning for a much larger market, to include Finland, Denmark and mainland Europe. Germany receives electricity from Denmark already and will begin importing electricity from Norway in 1998. Norway boasts the world`s only complete power exchange for trading and clearing standardized electricity contracts. Electricity is being treated as a “normal commodity” traded on the stock exchange. In 1994 the domestic stock exchange, Statnett Marked A/S traded 25 percent of the Norwegian electricity consumption, or 28 TWh. Trade for 1996 is projected to top one-third of total consumption. The new, wider electricity market is expected to increase competition and stabilize prices from the sharp peaks and troughs that had been seen on the market.

“Volatility will decline when we have a substantial futures market,” said Per Hjorth, Statnett Marked CEO. “But, as with any commodity, there will always be volatility because of variations in temperature, consumption and supply.”