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ENERGY

Danish opposition calls for tax cuts and cheap electricity to tackle crisis

Denmark’s opposition Liberal (Venstre) party has asked for tax cuts and lower electricity prices in talks with the government over a political deal to help people and companies through the ongoing energy crisis.

Danish opposition calls for tax cuts and cheap electricity to tackle crisis
Denmark's opposition has proposed new measures to tackle the energy crisis during ongoing negotiations with the government over a potential deal. Photo:Henning Bagger/Ritzau Scanpix

The opposition party was in negotiations on Sunday with the government on new measures to help Denmark residents and companies to deal with rocketing electricity and gas prices.

The finance spokesperson for the Liberal party, Troels Schack Poulsen, said that “good and constructive” talks had involved his party’s demands being tabled.

“The first thing is that we put electricity taxes down to the EU’s minimum rate. That would benefit consumers in the situation we are in,” he said.

“And what is more than just delaying payments, we want to give some people actual money for themselves,” he said.

The government last week announced a proposal to allow households to delay payment of energy bills which exceed bills incurred last year. The difference would be repayable in instalments over a period of up to five years.

Calculations by Danske Bank have shown that reducing electricity taxes in Denmark to the EU’s minimum levels would save a typical family with two adults and two children up to 3,600 kroner per year.

The Liberal party wants to put the measure in place for six months, meaning possible savings of 1,800 kroner.

The party also wants to suspend tariffs imposed by Energinet, the state operator of Denmark’s energy infrastructure.

The tariff of 11 kilowatts per hour, which covers the company’s operations and administration expenses, would be suspended for nine months under the Liberal proposal.

Energinet has earned between two and three billion kroner from selling energy to Denmark’s neighbouring countries at high prices. Some of this revenue can be passed on to businesses and individuals, the Liberal party argues.

The party is against raising taxes on energy in the 2023 budget.

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How will Nord Stream pipeline leaks affect gas bills in Denmark?

Gas prices increased on Wednesday morning in the wake of gas leaks from the Baltic Sea Nord Stream pipelines and Russian threats to close off remaining gas supplies to Europe.

How will Nord Stream pipeline leaks affect gas bills in Denmark?

The stock market price of gas rose from 15 kroner per cubic metre on Tuesday morning to 18 kroner per cubic metre on Wednesday, according to energy analyst Kristian Rune Poulsen of Green Power Denmark.

“The gas leaks in the Baltic Sea have made the market nervous and prices increase by 5-10 percent in the wake of that,” Poulsen told news wire Ritzau.

“But on top of that, [Russian state gas monopoly] Gazprom has threatened to shut off supplies to Europe through Ukraine and that has made the price of gas go up even more,” he said.

The two Nord Stream gas pipelines linking Russia and Europe were hit by unexplained leaks, Scandinavian authorities said on Tuesday, raising suspicions of sabotage.

The three gas leaks on the Nord Stream 1 and 2 pipelines were visible Tuesday in waters off Denmark with huge areas of bubbling spreading from 200 to 1,000 metres in diameter, the Danish military said.

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The leaks occurred off the Danish island of Bornholm in Danish and Swedish economic zones, but in international waters.

“The Nord Stream pipelines were already inoperative for an indefinite amount of time, so the reaction on the market has been limited,” Poulsen said.

Russia is still sending some gas to Europe – around one-fifth of pre-war levels, the analyst said.

If Gazprom follows up on its threat to shut off another pipeline – which travels through Ukraine – the remaining amount would be halved, he said.

“That would hit the sparse supplies we actually have,” he said.

Gas prices are still some way from a peak on August 26th, when the price reached 30 kroner per cubic metre.

“Since August 26th, the trend has in fact been downwards, and the price was roughly halved [compared to the August peak] up to yesterday,” Poulsen said.

Consumers who use gas to heat their homes in Denmark will nevertheless feel the impact of Wednesday’s price hike, however.

“Consumers cannot follow gas prices hour by hour like with electricity prices,” Poulsen said.

“If the price is high, their gas bills will also go up. But they will not see that until three months from now when the next heating bill comes,” he said.

The analyst said he expects gas prices to remain high at around 20 kroner per cubic metre throughout the winter, and even during the following winter.

“The next two winters look like they will be very expensive if you use gas,” he said.

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