The Competition Authority formally has accused Portugal’s dominant energy supplier, EDP, of abusing its position in the energy market to overcharge customers by €140 million.
The Authority filed its case this afternoon, September 3rd, and accuses the now privatised company of manipulating the electricity billing system to hike prices for domestic and business users, illegally increase its profits by doing so.
The case concentrates on the years 2009 to 2013 and focuses on the complex CMEC payment system where customers have been charged for power stations on stand-by in case they are needed.
The company, led by the pugnacious multi-millionaire António Mexia, benefited from obtaining State compensation through these CMECs at price levels set by government but which EDP is accused of influencing, such is the unseemly interface between the State and big business.
The unjustifiable CMEC compensation payments to EDP have increased prices to consumers and, by doing so, have violated EU and national competition rules.
EDP can appeal against the decision of the Competition Authority but its shareholders, including US and Chinese funds, realise that the price they paid for the company reflected profits that illegally were being squeezed from consumers.
In May, the government set up a committee of inquiry into these CMEC payments which, between 2009 and 2012, provided a sum equal to one third of EDP's profits.
The Left Bloc wanted the committee to determine the, "existence of corruption of administrative officials or political office holders with influence or power in the definition of these incomes."
The Left Bloc pointed out that the cost of electricity has risen almost 50% since 2006 and that "the impact of these CMEC payments on households' energy bills is one of the main explanations for the high level of energy poverty in Portugal.”
EDP also has point blank refused to pay an accumulated €250 million special energy tax bill, introduced as part of Portugal’s austerity programme, while happily trousering taxpayers’ cash via CMEC support payments.
In June this year, the energy expert, Pedro Sampaio Nunes, told the committee of inquiry that EDP should return €3 billion that is has received from customers under the contractual equilibrium scheme (CMEC) since 2007.
Nunes said it was "a scandal" that EDP, "with phenomenal profits, receives State aid by raising tariffs to consumers."
According to the former director of the European Commission for Energy, which in Brussels was involved in the legislation for the liberalisation of the energy market, "each year, EDP has presented a profit in the order of €1,000 million, about one third of this was from CMEC payments." On this basis, the Competition Authority is going in low.
Comments
Portugal has undergone the same "free market" con as the UK, hence the rip off.
What is needed is a 10 year jail sentence for each of the directors and a free market as now operates in the UK.
Of course not, they'll get another price hike to help pay the 140 million fine.
Nice thought, but thanks to their "friends in high places" EDP have a strangle-hold on the electricity market. Owning as they do the distribution network (EDP Distribuição) we will never be free of them. They don't have to generate one single watt of power and they're still quids-in. Best solution is to generate your own energy, a luxury not afforded to everyone.