I have previously mentioned in this space that the National Power Company – Landsvirkjun has resolutely refused to reveal the prices that multinational aluminium corporations pay for energy in this country. We know it’s low– but just how low has remained a mystery.
This despite the fact that Landsvirkjun is a company in the public domain, owned by us, the taxpayers.
Well, two days ago a report was leaked that revealed that one of the aluminium smelters – Alcoa – pays a 25% lower fee for energy in Iceland than the global aluminium industry pays on average elsewhere.
Katrín Júlíusdóttir, Minister of Industry, was quick to refute this, saying the aluminium industry pays an “average fee” for the power.
However, in the wake of these news, the new boss of Landsvirkjun announced that the company will open their books and make public their energy prices at their Annual General Meeting next week.
And not a moment too soon. All this conflicting information and secrecy is enough to make some folks mighty suspicious. Let’s get the facts on the table, so we can see what we’re dealing with.
Transparency, please.
{ 14 comments… read them below or add one }
It should be ‘this’ rather than ‘these’.
It’s not a post just a suggestion.
In the past, Iceland advertised to offer the lowest energy prices. So, I can’t really imagine that the aluminium industry is paying an “average fee” now. Somebody must have been lying at some stage.
As the exploitation of Iceland’s energy resources comes along with so much destruction and devastation of the natural environment, it is particularly annoying to see, that this squandering is done to benefit multinational bargain hunters.
There are so many people concerned in Iceland about loosing souvereignity, independence and natural resources by joining the EU. But I never find the same amount of reservations voiced about Iceland’s dependence on multinational aluminium companies. Somehow, the perception seems to be biased – same as about Icesave. Maybe, this is due to the aluminium industry offering nice, well-paid jobs to the relevant politicians.
I believe that the energy price is a function of the spot price for aluminium. Higher the spot price, higher the energy charge.
Isn’t it the whole point that they get the electricity cheaper? I mean that’s why they built it there, instead of somewhere closer to the customers. Don’t know if that’s a good deal or not, but I (am sure|hope) it has been calculated that it benefits the state.
I have been told that a KW/h of electricity in Iceland cost 10 Krona
Which would be around 0,057 Euros, Is it true ?
In France a KW/h cost 0,078 €. Once all taxes and other costs
are paids it amount to about 0,14€.
I have been told that the price of electricity paid in Iceland by the aluminium smelters vary according to the value of aluminium.
And surely why melting aluminium in Iceland if not for cheaper electricity ?
However indeed the political party, govenement who drafted the contract has some explaining to do.
Cheers,
When I first read this elsewhere, I (incorrectly) read it as “a quarter of”. That seemed an excessively good deal.
However, if they are just paying “a quarter less”, then what’s the big deal? They didn’t site in Iceland for the weather
.
Goupil – it was reported in the same news item that the smelter pays 2 cents US for each KW hour, while households pay around 10 cents.
Should be privatized, then the shareholders can (or at least should) turf out the management if they don’t earn the dosh for the dividends.
Or, if it is a ‘national/strategic asset’ then it should be owned/run by a soverign wealth fund (like Temasek in S’pore) – that would have little trouble firing management if they didn’t bring home the bacon.
‘Ministry of Industry’ making comments: you can bet your bottom dollar that taxpayers are getting an awful deal.
Average prices per KWh in Q4 2009 in Norway:
Energy-intensive industries: 0.026€
Households, before taxes: 0.044€
Households, after taxes: 0.102€
The largest Norwegian aluminium producer has recently opened a large plant in Qatar, where energy (natural gas) is dirt cheap. The company’s production in Norway (and Germany) has at the same time been reduced. My point is higher energy prices is probably not an option for aluminium smelters in Iceland. Low energy prices, or no aluminium industry. Still, the latter can of course be preferred.
Transparency. I rather like that word, and cannot imagine how any democracy could exist for long without an ample supply of it.
So good that Landsvirkjun will open their books, and hopefully in more than show. Meanwhile people such as Katrín Júlíusdóttir might be reminded that public companies are exactly that. It is evident that the operations of Alcoa affect more than just its bottom line or narrow industry. In electricity they are in competition with every other user in Iceland, such as greenhouses, and private citizen’s who subsidize them through taxes and the higher electricity fees they each pay. There are also serious environmental concerns. With all this and more as factors, they might be expected to be quite open and transparent as a heavily subsidized corporation.
Some members of authority, granted same by the public, believe they know best, without the need to explain as much. They of course have that entirely backwards, as widespread as this impulse may be. But the responsibility lies at last with us, the public who will lose it and their freedoms if they not exercised regularly. That extends most particularly to the affairs of government, to corporations, in stopping such agendas as ‘re-educating’ the media, indeed anything in which a society could and should have a vested interest.
It begins with a good dose of transparency, if not first the willingness to demand and use it.
Mark: I imagine you must be referring to “these news”. You are right; news is an uncountable noun. But instead of changing to “this news” a certain je ne sais quois about the style could be retained by changing “news” to “revelations”.
Sorry Alda, but I just couldn’t resist, both as an English teacher and an English language nerd.
Idunn, the heavy industry is subsidizing the private customer here in Iceland.
The establishment of the cement factory in Akranes and the fertilizer plant in Reykjavik in the 50´s made possible the power plants in the Sog river and the electrification of the Reykjavik area, the Alusuisse plant in Hafnarfjordur paid for the power stations of Thjorsa (Burfell, Hrauneyjar, Sigalda) and with it making it possible to link most of the rest of the country to the grid.
These companies are buying the bulk of the electricity in the country and are paying less for that reason.
Why is it an issue if foreign companies in Iceland are paying less than the global average electricity rate? This would seem to be an issue only if the Icelandic state is subsidising the foreign companies by providing electricity at less than cost price or corruption is suspected (eg foreign companies bribing Icelandic electricity providers / regulators). Ah, now I get it: without transparency, maybe that’s what is happening…
I love regular people that blog, it’s definitely really difficult to receive all form of awareness just about every other means. Great job.