The hierarchical restructuring collective

There was of course many small entities within the Norwegian electricity sector. In 1938 the number of distribution companies was 478⁶⁵. By 1973, it had been reduced to 337, of which 100 supplied less than 1000 customers, and additionally 157 companies supplying between 1000 and 5000 customers. Together, these 257 companies (76%) served around 24% of the customers. In the other end, the two largest distributors supplied 21%. The intermediate 78 companies accounted for the remaining 55%. By 1990, right before the implementation of the new market system, the number of distribution companies had decreased to 198, and several other mergers like in Østfold County and in the Sunnmøre region, were planned and carried out in 1991/92. In 17 years the number had decreased by 41%. Many of these followed from administrative mergers of municipalities, but through out the 1980’s the hierarchical restructuring collective managed to mobilize for vertical integration within various regions of the country.

The cooperative system in many ways represented a much larger degree of integration than what appeared to follow from the large number of companies. Many cooperated on the basis of federative organizational principles within larger geographical areas without giving up the formally independent status of their own organizations. Midttun, Joa and Garsjø (1994) demonstrate how the country had become structured into 16 networks of electricity companies integrated in different ways; through political ownership systems, long term contracts, cross ownership, a mix of these or through complete vertical and horizontal integration. Of total consumption in 1991, close to 50% of the volume was supplied in completely vertically integrated systems. Across these structures there was also larger regional cooperative organizations – usually organized to negotiate contracts between regions with energy surplus and those with a deficit, and national organizations like Samkjøringen and NEVF served as operational and policy making hierarchical centers respectively for the entire cooperative system.

One could say that the sector was actually highly structured and tied together

65 Numbers are taken from Hildrum, 199:118 and from Barth Jacobsen, 1998

by a multiplicity of relations. And on top of it, there was a strong state-cooperative regulatory system framed by the concession law system.

The hierarchical restructuring program was constituted as government policy with the presentation of a parliamentary report in 1960 about the organization and competence of the NVE⁶⁶. A special unit within the NVE –

“The Energy Directorate” – got established to be responsible for planning, rationalization and coordination of energy resources. The AP government thereby engaged in an ambitious project to restructure the many small organizational entities and to create a new unified structure. But, which one?

Should it be based on the traditional historical cooperative systems and Samkjøringen, or should it be more of a state political hierarchy based on regional political institutions: the 19 counties and the NVE/Statkraftverkene?

To do the job in the E-directorate, were appointed Gunnar Vatten who became its director in 1962, and Asbjørn Vinjar. The young engineer Erling Diesen was also employed and served almost as a personal secretary to Vatten. Gunnar Vatten had been educated as an engineer in Copenhagen and worked in the NVE until 1956 when he went to work at Westinghouse in the US. He also worked at Oklahoma Gas and Electricity Company before he was called back to serve in the new directorate because of his knowledge about how to operate large utility companies. Asbørn Vinjar had been to EdF as a trainee from 1951 and brought with him knowledge about the centrally planned and nationally coordinated electricity system in France. To Vinjar, the EdF model came to serve as an ideal model for the organization of an efficient and professionally governed electricity system (Barth Jacobsen, 1998:80).

These two men obviously reflected the two major sources of organizational inspiration and professional authority at the time; the American large scale utilities and the French EdF. They worked together on the restructuring issue until 1978, when Vatten got appointed head of Department in the newly established Ministry of Petroleum and Energy, from where he advanced the program further. Erling Diesen followed him to the ministry to work with a new energy report to parliament, where as Vinjar took over as the director of the E-directorate in NVE.

The model of the future electricity system constructed by Vatten and Vinjar in the early 1960’s was based primarily on the EdF organizational model,

66 St.prop. nr. 100, 1959/60: Om Norges Vassdrags- og Elektrisitetsvesens organisasjon og kompetanse.

and was denoted “Norgesdrift”. The model and the plan to implement it soon got strong support from the other NVE-directorate; Statkraftverkene and its director Sigurd Aalefjær. The basic idea was to establish one national cooperative organization for all public electricity generators and distributors to take over from Samkjøringen or as an expansion of it. In the new organization, state control and coordination was thought of in similar terms as within the EdF system; a centralized hierarchical system based on professional technological and economic expertise.

Regional entities were primarily thought of as based on county borders. To Vinjar, this came to mean the counties as institutions in between the state and the municipalities. Others, like Hveding - and to some extent also Vatten - hold a more pragmatic view which recognized that it would be practically impossible to force the inter-municipal cooperatives to transfer their property rights to the counties against their own will. However, Vinjar’s county based organizational structure model was the one which became presented to parliament in 1974⁶⁷. The majority in parliament opposed to the idea and rejected it from serious political treatment⁶⁸.

There seems to have been only a reluctant support also from the government for the very ambitious hierarchical program in the 1970’s – which might partially reflect the much weaker political basis for the various minority AP governments in between 1971 and 1981. The project was obviously pushed from within the E-directorate and from Statkraftverkene. Two elements contributed substantially to their hierarchical restructuring project. One was the way Nordic electricity trade got organized, and the other was the ambitious program for atomic energy which was pushed from collectives associated with the Auratom project and the Norwegian research institution affiliated with it: The Institute for Atomic Energy (IFA) (Andersen, 1987).

Nordic electricity trade had been a subject for some controversy. Electricity trade with Sweden and, from 1976, also with Denmark, became organized mainly in accordance with the hierarchical program. It provided an important arena for state coordination and a market monopoly for Statkraftverkene towards other Norwegian generators. In the 1950s, a regional power company – “Sør-Trøndelag Kraftlag” had established an export contract to sell electricity to Stockholm. This led to an intervention by NVE director general Fredrik Vogt which in practical terms turned foreign electricity trade

67 St.meld. nr. 100, 1973-74

68 Innst. Stortinget, nr. 255, 1974-75

into a state monopoly in order to maintain national control with electricity export. A system of state monopoly trade accordingly was established in which the foreign market became a system for short term power exchange rather than long term contracting – based on a principle of national supply responsibility. With the cables to Denmark, the Danish (and the Swedish) thermal power plants in the Norwegian perspective became the “swing producers” needed to manage the large stochastic influences within the Norwegian hydro-power system.

Because transmission capacities were constrained, the international market did not clear supply and demand at Norwegian occasional power market price. To solve this problem, prices where set at the middle point in between the Norwegian occasional power market price and the calculated marginal cost of the marginally producing plants in Sweden and Denmark. This provided opportunities for the state monopoly to gain an additional profit, and Statkraftverkene argued that this profit should be kept by the state company as a compensation for its investments into transmission capacity to foreign markets. The parliament however, supported the other generators, and forced NVE/Statkraftverkene to distribute profits from foreign trade among all the generators. The controversies and strategic behaviors which followed, later became an important point of critique from Einar Hope.

The atomic energy project contained more arguments to support the hierarchical program. The project was an important point in the 1970 energy report from the coalition government, and had been forcefully pushed by an entrepreneurial collective associated with the IFA since the mid-1950s.

Among them were leading personalities among the AP post-war industrialists; Jens Chr. Hauge, Finn Lied and professor in physics Gunnar Randers. Hveding and the NVE were not particularly interested in the controversial technology, but were more or less forced into it from two different directions. One was from the breakthrough of the atomic power project in the government’s energy report and the other was from the new emphasis on area planning which had recently been introduced to counties and municipalities. The NVE accordingly engaged in investigating possible locations in case parliament should decide to establish a large scale atomic power plant. However, these investigations and its report opened the stage for protests from environmentalists and communities who angrily attacked the NVE and refused to have an atomic power plant in their neighborhood.

The NVE area planning project thereby opened up for a rapid political breakdown for the atomic power program. The discovery of large oil and gas resources in the North Sea which provided less controversial alternatives, added to the reluctant reception of the atomic power program in parliament.

Despite the efforts of technological experts to convince the public about its

tight safety standards, the atomic power program in Norway dropped dead and finally got abandoned also by the AP at the end of the 1970s.

The 1970 energy report had suggested that decisions on the construction of an atomic power station could be taken by parliament as early as in 1973.

The majority in parliament however, pointed at the need to establish an adequate legislation to regulate such a new technology before further decisions could be made⁶⁹. This initiated work on a new energy legislation which was first to culminate with the new market oriented energy law in 1990. By 1974, it had become clear that the parliament would not support the atomic energy project, and the plans were pushed aside. From now on, thermal power ambitions came to be concentrated on establishing links to foreign thermal power generators and on exploring the natural gas alternative.