Natural gas in Portugal

In Portugal, the natural gas market is liberalized, which means that consumers can choose their natural gas supplier from a number of companies. The market is divided into two segments: the regulated market and the liberalized market. The regulated market is gradually being phased out, so most consumers have switched to the liberalized market, where they can choose their supplier based on prices and quality of service.

Understanding the natural gas market

The natural gas market in Portugal is divided into the regulated market and the liberalized market.

In the Regulated Market, prices are set by the government through the regulator, ERSE. These prices are more predictable but are gradually being eliminated, pushing consumers towards the liberalized market. Traditionally, the regulated market offered stability to consumers, especially those who preferred not to deal with fluctuations in market tariffs.

In the liberalized market, prices are set by suppliers based on competition and market conditions. This gives consumers the power to choose their supplier and plan, encouraging competition in the market. By 2022, more than 90% of natural gas customers had migrated to the liberalized market, where suppliers offer varied tariffs and promotions to attract consumers.

Types of tariffs and choice of supplier

Consumers in Portugal can choose between different types of tariffs:

Fixed tariffs

These tariffs offer a constant rate per kWh throughout the duration of the contract. They are ideal for consumers looking for price stability and predictability in their energy bills, especially during periods of market volatility.

Variable tariffs

These tariffs are linked to market rates and can fluctuate based on changes in supply and demand. Variable tariffs can offer lower rates during periods of low market prices, but can lead to higher bills when prices rise.

Most suppliers (such as Galp, EDP, Iberdrola and Endesa) also offer dual energy contracts, which combine electricity and gas services, often with additional discounts or incentives. It is advisable for consumers to compare these combined offers and carefully evaluate the terms and conditions.

Suppliers sometimes offer introductory discounts or promotional packages for new customers. Please note that these discounts may expire after a certain period of time.

Components and fluctuations in the price of natural gas

The price of natural gas in Portugal is influenced by several fundamental components:

• Cost of Energy. This is the basic cost of purchasing natural gas on the international markets. Portugal’s dependence on imported natural gas makes it particularly vulnerable to fluctuations in global gas prices. The cost of gas is often linked to oil prices due to long-term contracts.
• Network Access Tariffs. These are fees set by ERSE to cover the costs of maintaining and expanding the infrastructure needed to supply natural gas to consumers, such as pipelines and distribution networks.
• Supplier margin. This is the margin that suppliers charge to cover their administrative and operational costs. The level of competition between suppliers can influence the impact of these margins on the final price paid by consumers.

Natural gas prices for domestic use in Portugal are generally in the medium-high range when compared to the rest of the European Union.

Portugal imports the vast majority of its natural gas, mainly from countries such as Algeria, the United States and Nigeria. This dependence on external suppliers, combined with market conditions, often results in higher prices compared to countries with domestic production or more diversified supply chains.

VAT in Portugal on natural gas is set at 23%, which is relatively high compared to countries like Germany or Spain, where lower VAT rates apply to energy products. In addition, network access tariffs in Portugal can be more substantial due to the cost of maintaining and modernizing infrastructure in a country with a dispersed population.

Energy Efficiency Incentives and Green Options

Portugal is committed to improving energy efficiency and promoting sustainability.

The Portuguese government offers various incentives to encourage energy efficiency, such as rebates or reduced tariffs for energy-efficient appliances and improvements to home insulation. These programs are designed to help consumers reduce their energy consumption and their bills over time.

Although renewable energy is most often associated with electricity, some suppliers in Portugal are exploring green gas options such as biogas or carbon offset plans. Consumers who prioritize sustainability may find these options attractive.

Consumer rights and protection

The Entidade Reguladora dos Serviços Energéticos (ERSE) is the regulatory authority that oversees the energy market in Portugal. ERSE monitors market practices, sets tariffs for the regulated market and ensures that consumer rights are protected. It has also set up a dispute resolution mechanism, which can be contacted in the event of complaints relating to billing, unfair practices or contractual disputes.

For low-income families, there are social tariffs that offer reduced rates. Make sure you check if you are entitled to any tariffs or social support plans.

Emergency situations and safety protocols

Gas leaks or technical problems can be dangerous. Make sure your supplier offers clear instructions and an accessible emergency hotline for dealing with these situations. The law requires regular inspections and maintenance of gas installations. Suppliers may offer these services or recommend authorized contractors.

These aspects will help you not only to select the right supplier, but also to manage your contract efficiently and take advantage of incentives and services.