Response to interpellation 2022/23:135 on price increases for district heating

Energi- och näringsministern Ebba Busch (KD)

Madam Speaker! Joakim Sandell has asked me about the government and whether I have any plan to handle the natural monopoly that district heating suppliers operate in and what the government and I can do to prevent unreasonable price increases on district heating.

Russia's invasion of Ukraine and the effects on Russian exports of fossil fuels have affected most energy markets. Both private individuals and industry are pressured by unreasonable energy prices, and both the government and the EU are working intensively to manage the situation. It is quite obvious that Russian fuels need to be replaced with fossil-free alternatives. It is as necessary for the economy as it is to curb climate change. The district heating sector is an important part of the energy transition.

Competition in the heating market is based on the fact that customers can choose heating technology. District heating suppliers must be competitive so that property owners do not eventually choose other alternatives.

The industry has itself initiated the so-called Price Dialogue, which is a system to strengthen the local dialogue regarding changes in the district heating price. The system has spread rapidly, and in evaluations it has been noted that the customers are positive towards the process.

The District Heating Act (2008:263) also regulates that consumers who do not accept a certain price can turn to the District Heating Board for mediation. The trend, however, has been that the number of disputes has decreased significantly, and in recent years, the District Heating Board has only had to handle individual cases.

So we come to the point. The population, especially in southern Sweden, is heavily affected by the current energy crisis. We need to join forces to increase the energy system's robustness, save electricity, and support households and companies. In the current situation, it is therefore important that the district heating companies act responsibly. The Government will follow the developments in the heating market very closely.

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Joakim Sandell (S)

Madam Speaker! Thank you, Minister, for the answer to the question! The background to the interpellation is Eon's, to say the least, substantial increases in Malmö and Burlöv, where they have announced increases of 13 percent for private households and 20 percent for business customers during the next year.

Today, it works in such a way that those who live within a district heating area do not have the possibility to choose between different actors. On the other hand, as the Minister says, one has the possibility to choose between different types of sources. One of the alternatives is geothermal energy, but it does not work – if I express myself a bit cautiously – so well down in Malmö and Burlöv. The other alternative is to switch to air-source and heat pumps, for example. But that would increase the load on the electricity grid, and there we have familiar problems down in Skåne.

We thus have a very big concern. One can say in this context that the market is an excellent servant but a poor master. When it comes to the system, which is nevertheless developed in dialogue between customers and the industry, I think that a couple of rotten apples can ruin the whole basket, but two healthy apples cannot make the rotten ones healthy. In the same way as it is important that we have an energy system that does not only function when it is sunny and windy, as the Minister for Energy usually says, we must have district heating and pricing for it that works both when there is a crisis and when there is no crisis.

The system of Prisdialogen has functioned well, but Eon has been expelled from Prisdialogen because they have not lived up to the requirements. When it comes to reports, seen over a timeline, there are very few such instances. Last year there were 2. This year there are 200, regarding only Eon.

There is, therefore, every reason to take a closer look at a regulation, such as the one that exists in other countries, for example Denmark. Another alternative to look at is to do as is done in the electricity market - to have an actor who is responsible for the grid but allows other suppliers in. I intended to ask the Minister if this is something the government intends to look into.

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Patrik Björck (S)

Madam Speaker! We have discussed the energy issues with the Minister for Energy during the day, and we have had difficulty getting answers. The Minister for Energy has previously felt that we have interpreted her somewhat negatively.

If one is to try to interpret the Minister for Energy positively, the answer to this interpellation, where Joakim Sandell asks if the government can do anything to prevent unreasonable price increases on district heating, is that the government shall follow the development closely. If one is very positive, one could possibly say that the government has given an answer. But it is, to put it diplomatically, not a satisfactory answer – that one is following a difficult development closely but does not intend to act or react. But okay, it is an answer, even if it is not satisfactory.

One more thing that has accompanied us during this day as we have discussed energy issues is, Madam Speaker, that I have on several occasions asked the Minister for Energy about the narrative she preferred for the voters before the election: that fuel prices, energy prices etcetera were the then government's full responsibility and that there was no world market, no wars or anything else that affected energy prices. I then asked a very concrete question to which I received no answer: whether one should now call the high fuel and energy prices Putin prices or Ebb prices.

I received no answer in the previous debate. Perhaps one could find a hint of an answer in this response to Joakim Sandell's interpellation, Madam Speaker. Here, the Minister for Energy actually admits that Russia's invasion of Ukraine and the effects on Russian exports of fossil fuels have affected most energy markets. Both private individuals and industry are being pressured by unreasonable energy prices, and the government and the EU are working intensively to manage the situation. Quite obviously, Russian fuels need to be replaced etcetera etcetera.

Then my question is: Should I interpret this as that the Minister for Energy has now decided that it is Putin prices? Is that the case, if one is to continue to make a positive interpretation of the message that the Minister for Energy gives? That is the question I would like to ask. Is that how we are to interpret the answer?

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Energi- och näringsministern Ebba Busch (KD)

Madam Speaker! If I were a resident of Joakim Sandell's constituency - regardless of what I would have voted for, whether it had been far to the right or far to the left - I would have been very satisfied to have Joakim Sandell as a member of Parliament, because this is exactly how it should work.

Here we have a system, a market, that has functioned relatively well in peacetime. Ways have been found to self-regulate. But now it is obvious that one has run into a wall and that it is not working as intended. Much of what is intended to be solved through the Price Dialogue cannot be solved if one of the heavy actors has left it or been expelled because the actor's impact on households is so great and differs so markedly from all other actors' actions.

This is a complex system, as is much in the energy area. It is about the actual conditions and how it is intended to function. Then one has a reality in how the geography looks. This makes it a deeply problematic situation.

Since this interpellation was submitted and received a formal written response, we have also had reason to answer more questions in the media. It is regrettable that we have not managed to have this interpellation debate earlier. I will return to that. It is my absolute ambition to hold the debates as closely as possible to when the interpellations are submitted. But this is not a question that we take lightly, and I welcome dialogue on where we have found suitable ways to respond to similar situations in other countries. It is obvious that it is a situation for households and that it now does not work as intended.

So far, we have a situation where the system functions to such an extent that reports can be made. The intention is that reports should be able to be made, but now we see a marked increase regarding the reports. We need to see a bit how it develops. That is the reason why, in my response, I emphasize that we are following the situation very closely. We must have a basis to act on.

But I want to be very clear. Thank you for raising this question in the chamber! We will not drag our feet if we see that we need to act and that this is not being handled through the reports, and I question whether it will actually be handled through the reports.

We cannot suddenly change an entire market model based on one actor's actions. Therefore, I note that we are following this very closely, and depending on how it develops, we will not refrain from taking action.

I have repeatedly pointed out that Sweden is not immune to the global situation. I do not want to accuse any Member of Parliament of lying, but it is directly incorrect to claim that I, during the election campaign, would have said that Sweden is not affected by the global situation, global market prices, and so on. On the contrary, I have taken this into account and said that it is precisely because of this that it is serious that we in Sweden, on top of Putin prices, have repeatedly made decisions that have increased our vulnerability, made us more sensitive to price pressure from other countries, and placed a heavier stone on an already heavy burden.

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Joakim Sandell (S)

Madam Speaker! Thank you, Minister, for the answer! I have also noted in an interview in Sydsvenskan that the government, as I understood it, was also open to looking at a regulation of this if no change were to occur. I think that is good.

This question also has other underlying dimensions. We have enormous concerns regarding inflation. Regardless of which party we represent, we want to do what we can to push down inflation. Much focus in that issue has been on the fact that we are in a collective bargaining cycle, and one pleads with the parties in the labor market to hold back. But the question then becomes how the business sector acts in other situations.

E.ON had, according to a document I have received, a profit margin of 18 percent on district heating during 2022. With the increase that has now been announced, they will have a profit margin of 21-21.7 percent during 2023. Furthermore, for 2024, they have flagged further increases, or rather, a range between minus 5 and plus 20 percent. Other actors have flagged a range between minus 2 and plus 8. Should they increase by as much again, we are talking about profit margins of up to 25-26 percent, i.e., that every fourth krona goes back to the owners.

Those who live in Malmö and Burlöv and are now entering a contract movement and are told that they must hold back cannot think it is reasonable that in a natural monopoly, every fourth krona goes into the owners' pockets.

For the individual household - now we are talking about tenants in public housing - it is about 1,400 kronor in increased costs just for district heating. Fastighetsägarna Syd says 2 percent. Then there are other costs that have increased during these years, not least interest rates and the like.

It also becomes a bit like that when one looks at the difference between private customers and corporate customers; who, then, are the customers of the companies? Well, it is those who live in rented apartments. One can make a comparison regarding socioeconomic affiliation between those who own their housing and those who do not. At the same time, business representatives say that those who earn the least must get worse before they get better; that is their entry point into the bargaining movement. This makes me wonder. The business sector must also take its responsibility for the situation we find ourselves in right now. Here it seems, so to speak, to be a rotten apple in the apple basket.

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Patrik Björck (S)

Madam Speaker! When one has listened to the Minister for Energy before the election and after the election, one hears that it wavers. I also want to point out that it has wavered during the day today when it comes to how the Minister for Energy has answered.

If one does not stand on a stable foundation, it is easy to sway. It is extremely clear to those who have followed this debate that is the case. What it should be called can be discussed.

But, to end on a slightly positive note, I think it is a good message from the Minister for Energy that she will continue to have the ambition to follow the Riksdag's rules regarding how one answers interpellations and that they shall in the future be answered in a timely manner. We members of the Riksdag take that as very positive. Indeed, from a number of interpellants, a great frustration has arisen when they have had to wait to receive an answer from the Minister for Energy, not the normal two weeks but three, four, five, or six weeks or even up to over two months.

We therefore take this as a positive development. We will, of course, Madam Speaker, follow up on it and see whether it is a stable statement from the Minister or whether it is a shaky statement. But we will have to come back to that.

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Energi- och näringsministern Ebba Busch (KD)

Madam Speaker! Rarely have I heard so-called positive comments in such a negative spirit, but even if I may not reach Member Björck, I believe there are several members here in the chamber who have heard that I do not take the time aspects lightly. It does not mean that this will not happen again, for there have been reasons why the answers to the interpellations have been delayed, and they have been weighty reasons.

With that said, I want to emphasize that the type of interpellation debate we are holding here is precisely the type of interpellation debate that one wants to hold very closely. This shows what a fruitful instrument this actually is for raising problems that arise during a legislative period in the Riksdag. It is something that in the long run can become the subject of further decisions in the chamber.

It is, as said, a very complex system - it concerns the energy system as a whole but also district heating specifically. Not very many have a grasp of how district heating works and why it has such an important role in the electricity supply as a whole. It enables better conditions for a more robust electricity supply, especially in large cities. It relieves the electricity grid, because it results in less electricity being required for heating. It thus also reduces the risk of outages. There are therefore many important aspects when it comes to safeguarding our district heating and, as said, following this very closely.

Depending on how it develops, we will return. If the system is unable to handle this situation, we will act.

It is not the intention that companies, in this very difficult situation for Sweden and the rest of the world at large, should make war profits. Households risk, as Joakim Sandell very rightly points out, being squeezed from two sides if we see sharp price increases at one end while society otherwise tries to compensate for and dampen the inflationary development and the risk of further interest rate hikes by keeping down wage developments.

I just want to confirm that we share the picture and see that risk. That is why we also take seriously the reports on how the district heating system has now received a large question mark regarding whether the setup and the model we have had until now works or not.

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Joakim Sandell (S)

Madam Speaker! Thank you, Minister, for the answer and the discussion! I only have one plea that the Minister should take this with them. There are somewhat different ways to proceed and somewhat different proposals for solutions depending on who one speaks with. But regardless of whom I have spoken with down in Malmö, everyone concerned is in agreement that something must be done, because the current model does not work.

We have the Danish system with a price regulation, which perhaps is close to my heart. When I speak with the property owners, they may not be quite as keen on regulations in general, but they emphasize that today's model with 80 different pricing systems is unmanageable and not transparent, and that one could look at possibilities to cut it down to a handful of models instead. These are alternatives that exist, along with opening the lines for other suppliers of district heating.

There are, therefore, different toolboxes to move forward in this issue, and I hope that the government takes this most seriously and also presents proposals on how we can resolve it.

Both allmännyttan in Malmö, MKB, and Fastighetsägarna Syd have reported Eon to the Competition Authority on the grounds that they believe the company is abusing its natural monopoly. It will be interesting to see how it goes.

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Energi- och näringsministern Ebba Busch (KD)

Madam Speaker! I shall keep it brief. I would like to thank the interpellator for the question, and I would like to summarize by saying: We take these considerations with us, and by that I mean that we actually take them with us. I think that we will have reason to discuss this again in the near future.

The interpellation debate was hereby concluded.

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