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Energy, Portuguese Style.

by Torres Fri Oct 27th, 2006 at 11:12:59 AM EST

During the last 2 weeks Energy has dominated politics in Portugal.
In line with EU policy, a liberalization of the energy market is in course and among other things, an Independent Tariff Regulator was established in order to, presumably, regulate tariffs.

Last week came the announcement that a raise of 15% on the price of electricity was due to home consumers, industry having its own tariffs also due to raise, but less. This raise was justified by the fact that 10 years ago during the previous Socialist Government lead by António Guterres, a dispatch was made to keep electricity raises no bigger than inflation. Apparently this caused in recent years a serious disconnect between consumer prices and production prices.
So, a raise of 15% was in order to correct the deficit over the next 6 years or so.

From the diaries ~ whataboutbob


Things got interesting when an obviously politically inept Secretary of State of Energy came forward to justify the raise as being the fault of consumers, who for too long were spending too much energy at unduly low prices. This stupid way of explaining an obviously painful raise of the already burdened monthly spending of Portuguese families caused the expected uproar from everyone.

The consequence was that the Socrates Government acted like it was not expecting such a figure and quickly cooked a dispatch that allows them to overrule the Independent Regulator and set a cap of 6% on the raise of tariffs.

The Portuguese market is hardly attractive for any foreign operator at this point, namely Spanish ones, like Iberdrola who were positioning for the opening, due to happen next year.

In the mean time, this started a discussion of Energy policy, which is a good thing. Portugal is highly dependent on imports of oil and coal, but plagued with huge degrees of inefficiency. The energy efficiency of the average home is deplorable due to poor construction standards, it's not infrequent to have a house that is colder than outside in winter, and hotter than outside in summer. I know, as I live in one.

Portugal has an envious amount of resources for renewable energies. Sun exposure is high, expertise in wind and hydroelectric production is in place, the vast coastal line provides opportunities either for offshore wind farms like those presented by Jerome (although im not sure f the sea bottom is as friendly at 25km...) or  projects that use tides to produce energy.
Heck, we even have the Azores if we want to try Geothermal...

But the reality now is quite bleak. The fact is that, for example, natural gas for home users has 5% VAT and isolation materials you may want to buy in order to make your home more efficient, get a 21% tax. Fiscal policy is surely sending the wrong message...

PS: Quick addendum: EDP, the current energy monopoly already partly privatised presented consecutive record profits the last 2 years, of respectively 2.481 million euros, in 2005, and 2.997 million euros in 2006. This makes the 15% number a bit hard to swollow... And also the claims of tranparency-

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Hey Torres, great to hear from you, and thanks for the article on Portuguese energy issues too!!

"Once in awhile we get shown the light, in the strangest of places, if we look at it right" - Hunter/Garcia
by whataboutbob on Fri Oct 27th, 2006 at 06:58:19 AM EST
Thank you, i felt it was due... I have been lurking around here, as always. Portuguese politics tend to make me sad... maybe that's why i don't write more about it...

I should try  one of those Wine and Food diaries...

by Torres on Fri Oct 27th, 2006 at 07:38:59 AM EST
[ Parent ]
Energy, food, wine...whatever you want to talk about, we all have much to learn about Portuagal (food and wine topics do tend to perk up the spirits!)

"Once in awhile we get shown the light, in the strangest of places, if we look at it right" - Hunter/Garcia
by whataboutbob on Fri Oct 27th, 2006 at 11:11:58 AM EST
[ Parent ]
I would never find such clear info about Portugal in my anglo-based reading.  Please, keep it up.

Our knowledge has surpassed our wisdom. -Charu Saxena.
by metavision on Fri Oct 27th, 2006 at 08:41:57 AM EST
Is there a country where "energy liberalisation" has not failed to live up to hype?...

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Fri Oct 27th, 2006 at 10:43:42 AM EST
In a recent TV debate it was diturbing to see everyone agreeing that ANY solution could only be found wothin the premisse of a free market.
In the middle of all that i have to give credit to those that called for a completely free energy market, where small scale and individual iniciatives didn't bump against the protections for the big operators...
by Torres on Fri Oct 27th, 2006 at 11:11:14 AM EST
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