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Portugal Approves Measures to Cut Electricity System Costs

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May 17 (Bloomberg) -- The Portuguese government approved measures to reduce the costs of the country’s electricity system as it complies with the terms of a financial aid program.

The government is cutting the cost of subsidies and other payments to the industry by about 1.8 billion euros ($2.3 billion) through 2020, Economy Minister Alvaro Santos Pereira said today at a press conference in Lisbon. Guaranteed capacity payments will be reduced alongside costs of cogeneration, renewable energy and the system that replaced long-term power purchase agreements, Santos Pereira said.

“All producers will contribute to the necessary effort to resume the path of sustainability for the electricity sector,” the minister said.

EDP-Energias de Portugal SA is Portugal’s biggest electricity company and other power generators include Endesa SA and International Power Plc, according to energy grid operator REN-Redes Energeticas Nacionais SA.

The International Monetary Fund and the European Union, which are providing financial aid to Portugal, said Feb. 28 that the pace of structural reforms must be “stepped up.”

To contact the reporters on this story: Joao Lima in Lisbon at jlima1@bloomberg.net; Henrique Almeida in Lisbon at halmeida5@bloomberg.net

To contact the editor responsible for this story: Stephen Foxwell at sfoxwell@bloomberg.net

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