The Norwegian government on Friday said it would re-allocate up to 10 billion Norwegian crowns ($999 million) in revenue from state-owned power grid firm Statnett to prevent a rise in household and corporate fees amid spiking electricity prices.

Power prices in southern Norway have hit record highs this year, buoyed by soaring gas and electricity prices in Europe as well as dry year in the hydropower dependent region that has depleted reservoirs.

The high prices have also put a strain on local distribution grid operators, who have to buy the power that is naturally lost in transmission at market rates and warned of a hike to grid fees they charge their customers.

The government said it will re-allocate so-called bottleneck income earned at Statnett, which manages the long-distance grid system and operates cross-border connections, to help cover these additional grid loss costs.

This would save ordinary households some 3,000 crowns a year, it said.

Norway has subsidised household electricity bills since December and now covers 90% of the portion of power bills above a certain rate.

The scheme is set to remain in place until at least March 2023 and was last expected to cost 34.8 billion crowns.

Statnett announced in August it was waving grid fees until the end of 2023 to its customers, typically large industrial companies and local distribution grid firms. ($1 = 10.0073 Norwegian crowns) (Reporting by Nora Buli, editing by Terje Solsvik)