Unchanged operating result in the power industry

1997 was the second year with a fully deregulated electricity market in Norway, Sweden and Finland. It was a year of increasing competition among the power companies, an ample supply of power and lower spot prices than the previous year. Thus, the power plants that were vulnerable to competition found their profit margins squeezed and their profits reduced, while the aggregate operating result for all enterprises in the power sector remained unaltered.

In the period 1995 to 1997 the operating result in the power sector changed little and amounted to about NOK 10.4 billion yearly. Both the power producers and the wholesale utilities had a decrease in their operating result before taxes in 1997 of about 7 percent. For the producers the return on total capital declined from 7 percent in 1996 to 5.3 percent in 1997. The total return on assets in the wholesale utilities dropped from 7.8 percent in 1996 to 7 percent in 1997.

The distribution activities and the network companies were the ones that showed the greatest improvement in their operating result. The Norwegian Water Resources and Energy Administration (NVE) introduced new regulations for the network activities effective 1997, where a limit was set for how much income the companies are allowed to derive from this monopoly activity. Moreover, NVE imposed individual efficiency requirements on the network companies. Thus, the network companies and the distributors had to make their operations more efficient or make greater cost reductions than those in the efficiency requirement in order to achieve an increased profit. This seems to have occurred in many companies.

New statistics
Electricity statistics, 1997. Preliminary accounting figures.
The statistics are published annually in the Weekly Bulletin of Statistics. For more information and e-mail contact: johan.lindstrom@ssb.no, tel. +47 21 09 47 70. Tables can be found in the Statistical Annex on pages 35-36.

Weekly Bulletin issue no. 39, 1998