Norway should prepare to offer utility credits, industry groups say


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OSLO, Sept 7 (Reuters) – Norway is expected to join neighbors Sweden and Finland in offering credit to utilities exposed to volatility in the energy derivatives market, although Norwegian companies have less urgent need for support , industry officials said Wednesday.

Utilities often sell electricity in advance to lock in prices, but must keep a deposit, called a margin, in case of default. This margin requirement has risen alongside soaring electricity prices, leaving many companies scrambling for cash.

Sweden and Finland plan to offer more than $35 billion in loans and guarantees to utilities facing margin calls after Russia shut down the Nord Stream 1 gas pipeline. Read more

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Toini Loevseth, head of the markets section of Energy Norway, which represents around 300 companies involved in electricity generation, distribution and trading, said the Norwegian government should follow suit.

Although “at the moment few players in the Norwegian market say they have difficulty with margin requirements”, given the volatility of the market, “we would like the government to put guarantees in place”, he said. she declared.

Another industry group, the Nordic Association of Electricity Traders (Naet), has echoed this call. “It’s better to be safe than sorry,” Naet chairman Hermund Ulstein said.

The Norwegian government said it would monitor the situation.

Norwegian Energy Minister Terje Aasland said after a meeting with his Swedish counterpart in Stockholm on Monday that there was no need for Norwegian measures now, but “we are monitoring developments from close”.

While households in many countries typically sign long-term electricity contracts, most Norwegians pay their supplier based on daily spot market prices, reducing the need for generators to cover future electricity commitments. delivery, Loevseth said.

For energy-intensive industries, contracts are often also concluded outside the financial energy market.

“Most of our price hedging is in long-term physical contracts… with no margin requirements,” said Hallvard Granheim, head of market operations at state-owned Statkraft, the country’s largest power producer. Norway.

This means the company is less exposed to margin risk, but it has nevertheless built up an “abnormally high” buffer of liquidity to deal with growing market uncertainty, he added.

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Reporting by Nora Buli; Editing by Terje Solsvik and Jan Harvey

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