The Minister for the Environment and Energy Transition estimates a 3.5% reduction on part of customers' electricity bills next year.
João Pedro Matos Fernandes, said that anyone who wants to pay less VAT on energy can always choose to lower the contracted power, and, bingo, you pay VAT at 6%.
Fernandes stated that the Government says there is a proposal under the 2019 State Budget, that the VAT rate for the lowest contracted power rate will be reduced
The Council of Ministers approved a move that two-thirds of the revenue from the Special Contribution of the Energy Sector will go towards reducing bills. This is double the old rate.
According to a proposal from the Energy Services Regulatory Agency, electricity tariffs in the regulated market are expected to rise 0.1% for domestic consumers as of January 1st next year.
Despite this rise, the increased transfer of money from the environmental fund will make it possible to reduce bills by €190 millions, hardly a world-beating figure.
The minister said that "on top of this reduction" there is a proposal that, in the 2019 State Budget, the VAT paid on the lowest power contracts can be accessed if people switch to this lower power rating.
Fernandes said that "almost 50% of the contracts in Portugal have a contracted power of less than 3.45 kilovolt amperes (kVA)."
"It is worthwhile to be all alert and from a consumer perspective to know if we can actually model our consumption or reduce even the power contracted because this corresponds to a reduction in energy consumption and of course also a reduction of the price that is paid," he said.
The minister was asked by Jorge Costa, a Left Bloc MP, "the fact that the government has limited the 3.45 kilovolt amperes contracted power, the reduction of VAT leaves two million domestic consumers, with contracted power of 6.9 kVA which is used extensively in the country, deprived of the lowering VAT rate."
With a somewhat trite response, the minister said that the lowest contracted power is "a good example of energy efficiency and usage."
The contracted power defines the maximum amount of electricity that the household can receive. This determines the number of electrical appliances that can be used at the same time.
The low contracted power rate, as expounded by Fernandes, will run a refrigerator, a washing machine, a television and a computer. If customers want to turn on the microwave at the same time, the lot will be shut down.
According to the EDP simulator, to have a refrigerator, a washing machine (clothes or dishes), a microwave or a heater, one or two televisions and a computer, the contracted power should be 4.6 kVA. Many Portuguese choose to contract a power of 6.9 kVA to avoid problems.
But the world according to the Minister of the Environment and Energy Transition, leads him to conclude that “a family of four can live with the lowest contracted power, what is common is that people contract power, for comfort, above what their real need is."
