By Sergio Goncalves LISBON, March 19 (Reuters) - Portugal's government on Thursday approved a bill allowing it to temporarily cap electricity prices for households and most businesses, but said the
Portugal Approves Electricity Price Caps to Shield Households and Businesses
Government Measures to Address Electricity Price Surges
By Sergio Goncalves
LISBON, March 19 (Reuters) - Portugal's government on Thursday approved a bill allowing it to temporarily cap electricity prices for households and most businesses, but said the Iberian wholesale market was well below the level that would trigger its use.
Global Energy Concerns and Portugal's Position
Across the world concerns have risen that energy costs linked to the U.S.-Israeli war on Iran will dent the global economy and pressure household finances, but Portugal's high levels of renewable production should shelter it from the most severe impacts.
Consumer Protection Mechanism
The country's consumer protection mechanism would be implemented if retail electricity prices rise by more than 70%, or exceed 2.5 times the five-year average, surpassing 180 euros per megawatt-hour.
The price of electricity in the Iberian wholesale market MIBEL traded at around 37.6 euros per MWh on Thursday.
Triggering an Energy Crisis and Government Response
Declaration of Energy Crisis
ENERGY CRISIS WOULD BE DECLARED
If the trigger level were hit, Cabinet Minister Antonio Leitao Amaro said an energy crisis would be declared and the government "would be able to take measures to support households and businesses, excluding only very large companies".
Market Intervention Measures
"These market intervention measures include the possibility of limiting (retail electricity) prices or setting prices below the cost (of production)," he told a press conference after the Cabinet meeting.
The government would cover the initial cost of support that "would be recovered later," he said without clarifying how.
Energy Efficiency Requirements
He said the electricity price limits would be accompanied by energy efficiency measures, with households required to cut consumption to 80% of the previous year's level and companies to 70%.
Impact of Global Energy Markets on Portugal
Benchmark Brent crude rose more than 3% to $110.83 on Thursday, following Iranian missile attacks on energy facilities in Qatar, Saudi Arabia, and Kuwait, while European gas prices soared to their highest in more than three years.
Portugal's Renewable Energy Advantage
Portugal is less dependent on natural gas for its electricity compared with many European countries and in the first two months of the year, about 79% of the electricity consumed in Portugal came from renewable sources, according to official data.
(Reporting by Sergio Goncalves; editing by Barbara Lewis)
