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In the last five years, power grid companies have increased their rates five times more than the consumer price index. The two largest, Eon and Vattenfall, have increased profits in monopoly grids to levels where up to half are pure profits, largely going to parent companies rather than investments in power grids.
The prelude is that electricity grid companies have in recent decades appealed against government decisions and thus have been able to increase electricity grid rates. The Minister of Energy, Anders Ygemans (S), wanted to end the judicial process through an agreement with the electricity grid companies. What became a bill that could give companies 28 billion SEK more in revenue in the next few years but was halted by a majority in the Riksdag on Wednesday after DN’s earlier disclosures.
DN can now, with hitherto unknown documents, talk about the secret game behind the deal.
It was made known in part at a press conference on October 25 last year. Energy Minister Anders Ygeman (S), together with then-Eon Energy Distribution CEO Johan Mörnstam, at Pågen Bakery in Malmö, stated that they had resolved the energy shortage in Skåne.
Energy Minister Anders Ygeman (S) together with Johan Mörnstam de Eon and Anders Carlsson Jerndal in Pågen.
Photo: Peter Frennesson
On paper, companies would invest more in electrical networks. But according to the responsible authority Energimarknadinspektionen (Ei) and various experts, power grid companies can charge the additional billions of customers, without achieving the purpose of increasing the capacity of power grids.
It all started on June 14 of last year, according to previously unknown documents. The Energiföretagen industry association, which includes Eon and Vattenfall, had an internal working meeting. In what they themselves say is a draft, the consequences were divided if the government did not comply with their demands:
The document that DN has read contains a list of different consequences if the government were to comply with the industry requirements.
Photo: Jonas Fröberg
● The power grid industry is likely to sue the state for constitutional violations.
● Investments in electricity grids will be reduced by “an estimated 35-40 percent” in the years 2020 to 2023.
● The industry must stop legislation that goes against them in the Legal Council and the Riksdag.
● All decisions of the Energy Market Inspection must be appealed to the Administrative Court.
Pernilla Winnhed is CEO of Energiföretagen:
– There are unfortunate word choices, but we have never threatened the government on the matter in any way, he says.
After the internal meeting of the electricity grid companies they meet with the Ministry of Infrastructure. According to documents obtained by DN, they will meet with the Secretary of State, named Sebastián de Toro, and a unit manager on June 20, 2019.
The parties appear to be fast approaching a secret agreement. Little more than a week later, the energy companies confirm in writing to the Ministry that they will stop appealing, if they meet the requirements. It appears in a letter that DN has read.
Part of the document that DN has read.
Photo: Jonas Fröberg
A working group will start in August, led by a ministry official. Ei, Energiföretagen, Eon and the Ministry of Finance also participate.
Then it goes fast. DN can reveal that many were harassed by the final agreement between the ministry’s political leadership and the power grid companies when it was presented on October 25 under some confusion.
According to a source with transparency several members of the government’s own internal task force were unaware.
The Svenska kraftnät managers who were simultaneously working on their own solution that solved the power shortage in Skåne did not know. The chairman of the Business Committee, Lars Hjälmered (M), was also put to bed by the agreement.
When Lars Hjälmered requested documents on the high-profile deal, he got the message: there are none.
Something that has become explosive Is that the liquidation according to the supervisory authority Ei has no effect. Ei points out that the current regulation of the electricity grid already provides full cost coverage for investments, and that the bill even means that electricity grid companies can earn more revenue and reduce investments in a monopoly market.
They are supported by Stefan Yard, Emeritus Professor of Business Administration at Lund University and one of Sweden’s largest authorities on power grid regulations:
– The conditions in the bill are such that probably everyone can use the previous income limits without increasing their investments. You can raise the fees and put every penny in your own pocket, he says.
Going back to the industrial organization, the CEO of Energiföretagens, Pernilla Winnhed.
Pernilla Winnhed admits that the demands to the electricity grid companies can be discussed and is ready for dialogue with political parties.
Photo: Magnus Hallgren
What do you say about that?
– They think there are too low requirements on the invoice. You can always discuss where the requirements should be. But the government has presented the bill and we think it is a good proposal.
But if the requirements are so low that you don’t need to invest, why should you have them?
– Because you need this money to make the necessary long-term investments. But we are open to talking to the parliamentary parties about the levels.
Eon is the company with the highest amount of money at stake: SEK 8 billion. In 2019, Eon had an operating profit margin of 51 percent and gave 75 percent of operating profit in group contributions rather than, for example, making investments.
Why should your companies take funds from clients and not through loans or owners, in a monopoly market?
– Businesses also take out loans, but loans must also be financed in the long term. Raising funds to invest will be essential for Swedish societies to move towards a fossil-free society. We believe that the revenue framework that applies from this year is too narrow.
Following the previous revelations of DN, V, C, L, KD, M and SD have now decided not to support the government’s proposal, which thus falls.
Energy Minister Anders Ygeman writes in a commentary, among other things, that: “On one occasion, the court granted power grid companies the right to increase prices. It would be unlikely to assume that the power grid companies would agree to stop them without reference to their legitimate expectations. The risk then is that the electricity grid companies will once again succeed in the courts and that the electricity grid consumers will have to pay the price.
