The Energy Regulation and Markets Review - Stikeman Elliott

Norway
market organised by the Nordic power exchange, Nord Pool Spot, which accounted
for a traded volume of approximately 316TWh in 2011. In addition, wholesale players
trade power derivatives representing multiple volumes in the financial forward or futures
market organised by Nasdaq OMX Commodities. Electricity is also traded bilaterally
between wholesale players, both on a physical and financial basis.
End-user market
Anyone who buys electricity for his or her own consumption is an end-user. Small endusers
normally buy power from an electricity supply company. Larger end-users, such as
industrial enterprises, often buy directly in the wholesale market.
All end-users are free to choose electricity supplier and contract type. The most
common contracts for households have prices that vary according to market conditions.
International power trading
Norway was traditionally a net exporter of power; however, in the late 1990s consumption
of electricity rose faster than the power supply, as hydropower development has been
limited in recent times. Thus, Norway is on average a net importer.
Norway has interconnectors towards Sweden, Denmark, Finland, the Netherlands
and Russia. The transmission capacities towards Finland and Ruåssia are low, and the
connection with Russia is used only for imports to Norway. The highest transmission
capacity from Norway goes to Sweden, at about 3,600MW, while the capacity in the other
direction is somewhat lower. Capacity between Norway and Denmark is about 1,000MW.
ii Energy market rules and regulation
Nord Pool Spot organises the leading power market in Europe and offers both day-ahead
and intraday markets to its customers. 350 companies from 20 countries trade on the
market. In 2011 the group had a total turnover of 316TWh, which includes the auction
volume in the UK market N2EX. In 2010, total volumes traded over Nord Pool Spot
amounted to 310TWh, including the UK auction volume on N2EX. This represented
a value of €18 billion.
Nord Pool Spot AS is owned by the Nordic transmission system operators
Statnett SF (30 per cent), Svenska Kraftnät (30 per cent), Fingrid Oyj (20 per cent)
and Energinet (20 per cent). Nord Pool Spot AS is licensed by the NVE to organise and
operate a market place for trading power with physical delivery, and by the Norwegian
Ministry of Petroleum and Energy to facilitate the power market with foreign countries.
Nord Pool Spot and NASDAQ OMX Commodities operate the N2EX in the
UK market.
While a licence is required under the Energy Act in order to trade or organise
marketplaces for physically deliverable electricity (see Section II.ii, supra), certain aspects of
regulation of financial trading in electricity falls under the Securities Trading Act. Regulated
activities include receipt, mediation and execution of orders, portfolio management and
investment advice in electricity derivatives, all of which require an investment services
licence. The licensing regime implements Directive 2004/39/EC (‘the MiFID’). In
addition, the Securities Trading Act regulates market behaviour such as insider dealing and
market manipulation by implementing the requirements of Directive 2003/6/EC (MAD).
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