Norway's power grid operator Statnett should retain a monopoly on building and operating international power links, the country's competition regulator said on Wednesday, in an unusual move.
Statnett was granted exclusive rights by the former centre-left government in 2013, putting on hold a project to build a NorthConnect link to Britain by a group of Norwegian power companies and Sweden's Vattenfall.
Nordic power producers would like to see more links to export surplus power which sent Nordic electricity prices to 15-year lows last year.
The Competition Authority, however, said in a letter to the Oil and Energy Ministry, which proposed to change the laws last year, that Statnett's monopoly should be protected, because the state-owned grid operator was in a position to decide what's best for wider society.
"Competition is a tool to find good solutions for society as a whole and in this case and in energy overall, a grid is a natural monopoly, so competition will not give better solutions ... or lower prices in the market," Oeyvind Nilsen, deputy head of the Competition Authority, told Reuters.
"It's not about defending Statnett's monopoly, but we believe that you need one company to operate the grid, and grid operations should be separated from power production," he added.
Statnett is already involved in two projects to build power links to Germany and Britain by 2019 and 2021 respectively.
Norway's current right-wing minority government, which came to power in 2013, promised to reduce the state's role in the economy and allow others to build power links.
The Oil and Energy Ministry proposed relevant amendments to the Energy Law last year to boost the competition in developing costly projects.
The Competition Authority also expressed concerns that private owners might be inclined to manipulate transmission capacities to profit from power sales.
"Power generators can, for example, have an incentive to limit the capacity of interconnectors to create temporary bottlenecks in the electricity market and therefore increase energy prices," it said in a letter to the ministry.
Odd Oeygarden, chairman of NorthConnect, said the Competition Authority's conclusions were made on wrong assumptions.
"The conclusions doesn't correspond to the reality. They haven't studied properly how such cables operate," he told Reuters.
The authorities could ensure projects meet public needs when issuing licences, while power flows would be decided by market prices at both ends, he added.
Oeygarden said he expected the Norwegian parliament, which will have the final say on the amendments proposed by the Oil and Energy Ministry, to make a decision by mid-March.
(Reporting by Nerijus Adomaitis)