Portugal: EU 'awaiting clarification' on funding model for social energy tariff - Plataforma Media

Portugal: EU ‘awaiting clarification’ on funding model for social energy tariff

The European Commission is awaiting “further clarification” from Portugal on the funding model for its social energy tariff for less well-off consumers, after a 2020 request for verification submitted by privatised utility Energias de Portugal (EDP), alleging that it was discriminatory, according to an EU source.

The source told Lusa that “the Commission has been in contact with the national authorities to assess EDP’s complaint about the social tariff [and] is awaiting further clarification from Portugal.”

Last week, EDP told Lusa that the commission had confirmed the discriminatory nature of the funding model, in response to the company’s 2020 request for verification.

“In its response, the European Commission recognises the legitimacy of the issues that have been raised and confirms the discriminatory nature of the financing model of the social tariff in Portugal, in force since 2010, not following European [Union] guidelines in this regard,” an EDP source said at the time.

According to the company, in its response the EU executive also recalled “the ruling of the European Court of Justice on an issue of identical nature, involving Viesgo and other Spanish companies, whose conclusions also apply to Portugal, given the discriminatory nature.”

EDP reiterated that it is “in favour of the existence of a social tariff, but disagrees with the current funding model” – by which it is the companies that must bear the cost of the measure.

The company on 29 October 2020 announced that it would ask the European Commission to analyse the funding mechanism of the social tariff, arguing that it alone had borne cumulative costs of more than €460 million since 2011.

“EDP decided, following the periodic litigation analysis, that it will raise with the European Commission the analysis of compliance regarding the future of the financing mechanism of the social tariff, borne by producers under the ordinary regime, in relation to the standards and principles of the European Union,” reads a statement on the company’s results for the third quarter of 2020, sent at the time to the Securities and Exchange Commission (CMVM).

The social energy tariff guarantees a 33.8% discount on end-user tariffs for households with financial difficulties. In 2020 it was extended to those facing situations of unemployment.

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