Portugal pledges 3 billion euros to lower power prices for companies

By Sergio Goncalves

LISBON (Reuters) -Portugal will inject 3 billion euros ($2.91 billion) to curb energy prices paid by companies next year via a combination of state spending and regulatory measures, the government said on Wednesday.

The environment and energy minister, Duarte Cordeiro, told reporters that it was the biggest intervention ever made in the country’s energy markets and should save around 30% of the estimated electricity tariffs for 2023 and between 23% and 42% on gas.

Spain and Portugal capped the price of gas used in power generation in June, helping to curb consumer prices. Lisbon has also allowed households and small businesses to switch to lower regulated tariffs since the beginning of October.

But many companies, such as in the tiles industry and other energy-intensive sectors, are still fully exposed to soaring natural gas prices since Russia’s invasion of Ukraine.

The plan is expected to come into force on Jan. 1 and will require a direct transfer of 1 billion euros from this year’s budget. A further 500 million euros will come from other policy measures and the remaining 1.5 billion euros from as yet unspecified regulatory measures.

Cordeiro said the plan “was calibrated to counter a scenario of a significant increase” in electricity and natural gas market prices during 2023.

Under its most unfavourable scenario, the government forecasts market electricity rates to roughly double to an average of 258 euros per megawatt hour in 2023, while gas prices could more than triple from the current 53.3 euros.

As a result, companies’ electricity costs could jump to 6.5 billion euros in 2023 from 1.7 billion now, while their gas costs could reach 2.7 billion-4.9 billion euros from 745 million, Cordeiro said.

“If electricity and gas prices don’t go up that much, then the savings for companies will be even greater than we anticipate today…We are directing this support to companies on the assumption that domestic consumers are already protected,” he added.

($1 = 1.0303 euros)

(Reporting by Sergio Goncalves, editing by Andrei Khalip, Kirsten Donovan)