Energy market and regulation
The Energy Market Regulation Department is the national regulator for the Norwegian electricity and downstream gas market.
The Norwegian Energy and Water Directorate's main statutory objective is to promote social and economic development through an efficient and environmentally sound energy production, as well as efficient and reliable transmission, distribution, trade and efficient use of energy. NVE's responsibility covers the regulatory area as well as other activities defined by law, regulations and decisions from the Norwegian Parliament.
NVE has delegated powers according to the Energy Act (in Norwegian). NVE has the authority to issue regulations on economic and technical reporting, network revenues, market access and network tariffs, non-discriminatory behavior, customer information, metering, settlement and billing as well as the organised physical power exchange (Nord Pool Spot). In addition, NVE issues regulations on system responsibility and quality of supply. NVE may take necessary actions to fulfill the delegated powers according to the Energy Act.
NVE is the national independent regulatory authority for the electricity market in Norway. The Director General acts as regulator. NVE has no ownership or economic interests in the electricity industry. NVE is an independent legal entity with its own budget set by the Government and has the authority to act in the scope of its competences. A new Energy Regulation Department was established in 2013 in order to prepare for the implementation of the Third Energy Market Package.
NVE has a cooperation agreement with the Competition Authority (market surveillance) and the Financial Supervisory Authority of Norway (financial markets for electricity derivatives). NVE also has a cooperation agreement with The Directorate for Civil Protection and Emergency Planning.
In Norway, there is only one TSO, the publicly owned company Statnett, which has been legally unbundled since 1992. In addition, the ownership of the TSO and the publicly owned electricity producer Statkraft, has been divided between two different government ministries since 2002. Norway, therefore, complies with the requirements of the Electricity Directive 2003/54/EC for ownership unbundling.
DSOs with more than 100 000 connected customers in Norway are legally and functionally unbundled. In 2014, there were six DSOs in this category, representing 54% percent of the total connected customers. In addition to the unbundling requirements, these companies are subject to participation in a compliance program according to the Electricity Directive. The participants of the program have to produce an annual report to NVE that enables NVE to monitor the DSOs fulfilment of the regulations regarding legal and functional unbundling.
146 of the Norwegian DSOs have less than 100 000 connected customers, and are, therefore, exempt from the regulations regarding legal unbundling. However, in the event of a merger or acquisition that activates the obligation to acquire a trading license, NVE can request a vertically integrated company that not only distributes, but also generates or supplies electricity, to reorganise into separate legal entities. In addition to the six DSOs with more than 100 000 customers, there are 26 legally unbundled DSOs. All 146 DSOs are under regulation concerning neutral and non-discriminatory behavior when it comes to the DSO’s management of information flow to customers, supplier switching, metering data and billing, and these regulations are subject to supervision by NVE. The majority of the Norwegian DSOs are publicly owned.
The Norwegian Ministry of Petroleum and Energy has proposed an amendment to the Energy Act that imposes legal and functional unbundling of all DSOs, irrespective of size. The Parliament approved the amendment in March 2016, and it comes into force 1 January 2021.