Galp to Hike Electricity Prices Amid Rising Access Tariffs in 2024
Portuguese energy company Galp has announced a forthcoming increase in electricity prices for the year 2024, prompting concerns among consumers.
Casey Parker
- 2023-12-29
- Updated 02:07 PM ET
(NewsNibs) - Galp's decision to raise prices was communicated to customers through an email message detailing the upcoming changes. The company cited the surge in the Access to Networks Tariffs, a fee determined by the Energy Services Regulatory Authority (ERSE), as the primary reason for the hike. Despite a drop in the acquisition cost of electricity, Galp explained that it could not absorb the increase in network tariffs, which led to an unavoidable rise in the final price to consumers. The details of the increase were outlined in a letter distributed on December 29, although the company has withheld the average value of the anticipated price increase.
Impact of Regulatory Decisions
The increased tariffs come on the heels of ERSE's announcement on December 15, setting the prices for the regulated electricity market for the next year. These prices, which will see a 2.9% increase in 2024 compared to the previously estimated 1.9%, impact a fixed component of the electricity pricing structure affecting both the regulated market and the liberalized market wherein Galp operates. The Access to Networks Tariffs specifically have seen a drastic hike of 316%.
Response from Other Market Players
Comparable energy supplier EDP announced a reduction in the Tariff of Energy, a portion of the electricity price that is under the control of marketing firms, by 21%. However, EDP has also refrained from providing an estimate of how this will affect the overall average price change after the regulation. In response to the regulatory changes, Endesa has reduced its commercial margin by 38% since January 2023 to alleviate the effects of the tariff increase on its customers. Goldenergy's CEO, Miguel Checa, highlighted that his company is actively examining the access tariffs with the aim of mitigating their impact on final pricing. These developments indicate a varied response from different electricity companies, with many choosing not to disclose the specific impact of the regulator's decisions on their rates, as noted by consumer watchdog Deco Proteste and financial analysis group Capital Verde.
Insight into the Evolving Energy Market
As multiple electricity suppliers review their pricing strategies amid regulatory changes, the reluctance to reveal the ultimate financial impact on consumers has created an atmosphere of uncertainty. Although Galp has initiated a price increase, the wider trend and precise changes in consumer electricity bills remain to be fully understood as the energy market continues to adjust to the regulatory environment.
