The government is working to recover some of the money paid to EDP over the last 10 years in the complex ‘Costs for the Maintenance of Contractual Equilibrium’ scheme.
The accounts are not yet complete, but the numbers point to a credit of around €500 million with the government now waiting for a report from the Energy Regulator which is analysing the ‘excessive income’ that EDP has managed to accrue by stiffing its own customers.
Successive government administrations have been involved in these complex formulae all along, with the 2016 State Budget including a "final adjustment of costs" paid under the CMEC system and a request for a study into the whole CMEC set-up by the first half of 2017.
Prime Minister, António Costa, this week gently criticised the electrical supply sector because of the excessive revenues it has managed to get its hands on, as if the government had not been aware.
With police raids at the head offices of EDP and the electricity distributor REN, as part of a corruption investigation that already has led to seven defendants being named, the whiff of corruption and fraud now is in the air.
António Mexia, the boss of EDP, João Manso Neto, the president of EDP Renováveis, Pedro Furtado and João Conceição, both from REN and a former president of REN, Rui Cartaxo, now are official suspects in an inquiry that is looking at the CMEC system set up in 2007 to pay for the early termination of power supply contracts, various dam compensation payments and the Sines power station contract where the State is reckoned to have lost out on €400 million.
If the government is after €500 million, this may not be enough to compensate consumers as the Public Prosecution investigation team says that EDP creamed in twice that, if you go back to 2004 from when political decisions taken by successive governments benefited EDP by “more than €1 billion.”
The total that EDP has received, with government approval and blessings over the years, is €2.5 billion to 2017, with a further €340 million in CMEC payments due to be paid to 2027. Some of this is legitimate, the rest is down to 'gouging the consumer' with the government's knowledge.
EDP’s gain has been the consumer’s loss, a situation which had the "absolute awareness of the policy makers" duped by technical recommendations leading up to the liberalisation of the electricity market.
The €1 billion figure comes from the Attorney General's Office, backed up by external experts, and is contained in a report that looks at the benefits to EDP to the detriment of the State and to electricity consumers.
The PM was weak in parliament last Friday, stating that these payments are "as per the contract" but, as in the oil concession deals, if these contracts were not in the best interests of the nation, they need to be challenged and those responsible, prosecuted.
EDP was sold to China Three Gorges in 2012 with the Chinese basing their offer on financial and contractual factors that included this flow of free CMEC money, or ‘excessive revenues.’
If the government twists a refund from EDP, António Costa then will have to deal with the Chinese when EDP’s share price takes a nose-dive.
Comments
No. It means EDP get fined by the State and we customers end up paying it. It's called stealth tax!