The media has recently discussed rising electricity prices and the reasons behind those increases. Hjálmar Helgi Rögnvaldsson, Managing Director of Business Development and Power Markets at ON Power, was interviewed by RÚV’s radio news department this week, where he discussed the issue and said it is difficult to say whether and to what extent the increase that occurred in the wholesale market in November would be passed to consumers.

Electricity producers raised their sales prices, and in October there were no transactions as the bid prices were much lower. In November, buyers who resell the electricity to households felt compelled to raise their bid prices, resulting in an approximately 30% increase from the last market price. Hjálmar says that there was little electricity available for delivery at the beginning of next year. Most of the retail companies had already secured a large portion of the electricity at lower prices.

Hjálmar also discussed solutions to ensure priority electricity for households and smaller businesses, but last winter it was supposed to be guaranteed by a type of emergency law that would tie the hands of producers and obligate them to sell into the general market in the same ratio as they have done for the past three years. This did not happen, and today the pathways are still unshaped. ON Power believes that a solution proposed by a working group in 2022 might be best suited to resolve the issue, provided legal grounds can be found. According to this, ON Power would need to secure 17% of priority electricity, or the same ratio as the company produces of the total.

“For comparison, Landsvirkjun produces about 73% of all electricity in Iceland. Therefore, they would need to meet about 73% of the total electricity demand of the general market. However, they are currently only meeting about 50%. So there’s quite a shortfall, about one terawatt-hour, for them to fulfil these obligations. It might be necessary to find some middle ground until Landsvirkjun can meet their share of the market. We are definitely willing to work with the authorities to bridge the gap in some way,” says Hjálmar Helgi Rögnvaldsson, Managing Director of Business Development and Power Markets at ON Power.

You can listen to the news report on RÚV here and read it here.