Europe court rejects Norway rules on hydro ownership

An international court ruled June 26 that Norway’s regulations on ownership of hydropower concessions, which force private owners to relinquish licenses after 60 years, are against European Economic Area rules.

The judgment of the European Free Trade Association Court in Luxembourg was broadcast on Norwegian public radio NRK.

European Union outsiders Norway, Iceland, Liechtenstein, and Switzerland constitute the European Free Trade Association (EFTA). The EFTA Court interprets the European Economic Area (EEA) treaty that links Norway, Iceland, and Liechtenstein to the single European market.

A suit was brought against Norway by the EFTA Surveillance Authority (ESA), a body that monitors compliance with the EEA treaty. ESA has said that the Norwegian system, which allows public owners of hydropower to hold licenses in perpetuity, discriminates against private owners or prospective buyers of Norwegian hydropower assets that see their licenses revert to the state.

Norway’s government said last year it would maintain century-old rules favoring public ownership of hydropower concessions, rejecting European Union demands to amend them to allow more private investment in the sector. (HNN 4/24/06)

Municipalities and county councils own about 50 percent of Norway’s power generation capacity and the state, through power company Statkraft, about 37 percent. Private owners have about 13 percent of the total capacity. Norwegian energy authorities say public control has been central to Norwegian management of hydropower resources since 1909 and they would try to preserve it.

“I am very disappointed with the judgment,” Oil and Petroleum Minister Odd Roger Enoksen said.

Enoksen said every effort would be made to secure continued public control of Norwegian hydropower but he did not say what actions Norway would take.

Endowed with many rivers and waterfalls, Norway is the world’s sixth largest hydropower producer and has the world’s largest per capita hydropower output. Annual production in a year with normal precipitation is about 120 terawatt-hours. Hydroelectric plants account for about 99 percent of Norwegian generation.

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