Lisbon, May 8, 2026 (Lusa) – Portugal's Secretary of State for Energy acknowledged on Friday that "much remains to be done" regarding energy prices, but argued that various costs included in bills result from policy choices that "are part of the system."

During the presentation of the 2026 Review of Portugal's Energy Policy, prepared by the International Energy Agency (IEA), Jean Barroca stated that the government has sought to "safeguard" energy prices and eliminate "unnecessary costs".

"We have done much to ensure that energy prices are safeguarded, remain competitive, and that unnecessary costs are eliminated," he said.

Barroca said that Portugal still carries a tariff debt with a deficit of €1 billion. "These are bills we have to pay," he said.

He mentioned that, within the costs of general economic interest, approximately €600 million relates to guarantee payments, €200 million to tariff convergence with the Azores and Madeira, and €315 million to municipal rents for low-voltage concessions.

"All of these are system costs," he said. "We can call them policy choices, but they are policy choices that generate energy for the system. Therefore, I am not sure that we can consider them non-system costs."

The IEA argued that Portugal should remove costs unrelated to energy or the grid from electricity bills. The agency believes these charges artificially increase prices and reduce incentives for the electrification of the economy.

The agency recommends that the State Budget should support "costs of general economic interest" through clear multi-year commitments, according to the report presented on Friday. It also suggests abolishing temporary or distorting taxes.

The IEA identifies several such costs, including old subsidies, energy efficiency contributions, social tariff funding, the reduction of the tariff deficit, the extraordinary contribution on the energy sector, and the audiovisual contribution.

Asked about regulation costs, Barroca distinguished these charges from total system costs, stating that a solution for part of these expenses "is already underway."

"Regulation charges in Portugal are primarily due to the need for natural gas, specifically combined-cycle plants, to operate and provide services to the system, even when they are not selling energy," he said.

He said that battery storage or hydroelectric storage could replace these services.

"This decarbonisation of total system costs is a much more immediate goal that we are working on," he said.

However, he stated that Portugal cannot abandon natural gas "overnight", as it continues to play a role in the security of supply.

He said that while batteries and hydroelectric pumping can meet daily stability needs, gas remains relevant for ensuring supply during periods of lower renewable production.

Barroca announced that the 2026 security of supply monitoring report is being finalised through a collaboration between the grid operator, the Energy Services Regulatory Authority, and the Directorate-General for Energy and Geology.

Following this report, the government will submit a state aid request to the European Commission to establish a capacity mechanism. This tool aims to remunerate plants that remain available to ensure system security.

"They are paid to be ready to work, but significantly less," the official said, referring to gas plants.

The IEA report offers 10 recommendations to Portugal, including support for low-income families to purchase used electric vehicles and more proactive planning of energy networks.

SCR/RYOL // AYLS

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