Portugal to increase regulated electricity price by just 3.3% in 2023

The limited regulated tariff increase in 2023 will help around 941,000 Portuguese consumers with contracts based on the price, mainly households and small businesses, "which represent 6.7% of the country's total electricity consumption", ERSE said. After similar regulatory containment measures, regulated prices are expected to rise an average of 1.8% this year.

Portugal's electricity regulator ERSE approved on Thursday an average increase of 3.3% in regulated tariffs next year to be paid by around one million households and small businesses, shielding them from soaring wholesale prices.

ERSE said that the average price of electricity in the wholesale Iberian market (MIBEL) is expected to rise to an average of 223.42 euros per megawatt hour (MWh) in 2023, an increase of 74% compared to 128.25 euros for the day-ahead contract on Thursday. However, ERSE will limit the increase in the regulated price to 3.3% - below the 4% inflation forecast by the government for 2023 - by using 2.5 billion euros charged to wind and solar power generators, state subsidies and revenue from the sale of gas emission allowances, it said in a statement.

Portugal is already collecting windfall profits that wind and solar power generators are making with the high electricity prices in the wholesale market, currently driven upwards by gas prices, using them to contain the increases in regulated prices. The limited regulated tariff increase in 2023 will help around 941,000 Portuguese consumers with contracts based on the price, mainly households and small businesses, "which represent 6.7% of the country's total electricity consumption", ERSE said.

After similar regulatory containment measures, regulated prices are expected to rise an average of 1.8% this year. Prices regulated by ERSE remain fixed throughout the year, although they can be revised quarterly to a limited extent.

The limited electricity price increase would have an effect on Portuguese inflation which rose 9.9% year-on-year in November to stand at levels close to a three-decade high lifted by soaring energy prices as the country, like most of Western Europe, depends on imports for oil and gas.