Companies face 134% higher energy costs

Companies could pay up to 134% more for their energy under the terms of new 12 month contracts from electricity producers like EDP.

The director of EDP Comercial which deals with companies, Miguel Fonseca told ECO/Capital Verde that the majority of SMEs have yet to be affected but large companies are already suffering the effects of high wholesale prices charged by MIBEL (Iberian Electricity Market).
Record high electric prices in recent weeks have drawn criticism from both the Portuguese and Spanish governments.
MIBEL says the high spot prices and future prices for power are being driven by the spiralling prices of the so-called carbon certificates which give companies the right to release carbon dioxide.
The escalation of prices in Portugal’s wholesale market which sets the amount EDP, Endesa, Iberdrola and other companies charge businesses is being driven by other factors too.
For example, international gas markets are setting very high prices because the winter of 2021 was colder than usual in some countries like China which ran out of gas.
To replenish reserves for the coming winter has put pressure on demand and therefore prices which have risen from around €16 per MWh to over €46 MWh.
A SME that is currently negotiating a new contract and opts for 12 months (to September 2022) is now likely to pay even more for the electricity it uses, 134% more than last year.
A historic wholesale maximum was reached on September 2 when the price of electricity in the spot market was €140/MWh — more than 188% on the start of the year.
From 31 December 2020 to 31 August 2021 MIBEL prices increased 168% from €48.66 to €130.53/MWh.
Despite the increase, EDP customers in the residential segment have not been affected yet since the company says domestic charges have not been changed since the beginning of the year and will not be changed until the end of 2021.
As to SMEs, Miguel Fonseca says that the majority of SMEs in its portfolio have not yet felt the effects of the high wholesale prices because they have fixed energy contracts, the majority of which will expire at the end of the year.
New business clients or existing ones on short-term contracts are facing higher prices. Almost all of the SMEs are now opting for longer contracts which offer energy savings of between 47% and 60%.