The liberalization of the electricity market began in 1995, and, as of September 2006, all consumers (domestic and non-domestic) have the right to choose their electricity supplier.

In 2011, termination process of regulated end user tariffs for electricity began, and transitional end user tariffs started to apply. This termination process had the following schedule:

• January 2011: Very High Voltage (VHV), High Voltage (HV), Medium Voltage (MV) and Special Low Voltage (SLV) consumers
• July 2012: Normal Low Voltage (NLV) consumers with a contracted power greater than or equal to 10.35 kVA
• January 2013: Normal Low Voltage (NLV) consumers with a contracted power of less than 10.35 kVA

Suppliers of last resort (SLR) started applying the transitional end user tariffs to electricity consumers who were still being supplied on a regulated market basis and had not chosen a new supplier. These tariffs are expected to exist until the transitional period ends, on 31 December 2025(Administrative Rule No 83/2020, of 1 April).

On 1st January 2018, the scheme  equivalent to transitional tariffs was established, according to which any NLV customer may choose an electricity supply contract with prices matching the regulated market, through their supplier or, if the supplier does not offer a contract with these characteristics, by switching to the SLR.

Economically vulnerable customers maintain access to the regulated end customer tariff and to applicable social discounts.

As part of the activity of following up and monitoring the retail electricity market, ERSE collects information on electricity prices (Order No 18637/2010, of 15 December), namely:

• Prices of commercial offers (reference prices), made available by the various suppliers
• Invoiced prices, which are sent to ERSE every quarter by all suppliers in the electricity market (free suppliers and regulated suppliers)

The prices of commercial offers are disclosed by ERSE through the Commercial Offers Newsletters and the energy price simulator, which help consumers choose their supplier.

ERSE publishes the Liberalised Market Newsletter, which includes various matters, namely those relating to the evolution of the liberalised market, market shares, the intensity of supplier switching, the structure of switching or market concentration.

Within its wholesale electricity market monitoring activity, ERSE collects information on the commercial activity carried out by market agents in the spot market, namely the daily market, the intraday market (auctions and continuous) and ancillary services.

To this end, ERSE publishes information on market evolution of the Iberian Electricity Market (MIBEL), the use of cross-border capacities between Portugal and Spain and the ancillary services market in Portugal in the MIBEL Daily Market Bulletin (PT).

Regulation Reserve Band Auctions

Taking into consideration the profound changes that have been occurring in the SEN, namely the decommissioning of coal-fired power plants and the end of the interruptibility service, there is the need to supplement the SEN operational reserve with regulation reserve band, to be supplied to the system by consumers entitled to do so, in order to safeguard security of supply.

To this end, ERSE published Directive no. 16/2021 (PT), of 18 November, following consultation with stakeholders, which approves the implementation of the regulation reserve band, thus contributing to ensuring regularity and stability in the supply of electricity in the SEN

The operation of the regulation reserve band market is carried out through a competitive auction, open to all electricity consumers duly qualified for this purpose. The following market agents are eligible to provide ancillary services in Extra High Voltage (EHV), High Voltage (HV) or Medium Voltage (MV).

The regulation reserve band market is operational since the 1^st January 2022, following the completion of the regulation reserve band auction under the terms and conditions expressed in the notice (PT), subject to the Interpretative Clarification (PT).

Extraordinary Guaranteed Revenue Generation Auctions

Regulation No. 951/2021 (PT), of November 2, approved a set of extraordinary measures within the scope of the electricity national system and the gas natural systems, applicable to commercial relationships  between markets agents in said systems.

A mechanism for extraordinary guaranteed revenue generation auctions was established, with specific contracting conditions for electricity supplied by guaranteed revenue generation by market agents specified in Section III of the said regulation.

The rules contained in this Regulation establish the methodology and procedures for implementing each extraordinary auction, through a competitive procedure for bilateral contracting rights with the supplier of last resort (SoLR) in relation to its electrical energy acquisitions to special regime producers, defining that it must be publicized with a at least 5 working days deadline for submitting offers and a 10 working days advance to the first date of execution of bilateral contracting rights.

Simultaneously with the above-mentioned publication, ERSE releases the list of qualified market agents eligible to submit offers for completion, as well as the maximum volume they can submit during the offer submission period.

In this context, ERSE carries out notices prior to all extraordinary PRE Auctions (PT), as established in the current regulatory framework.

Guaranteed revenue generation auctions

From 2011, ERSE under the CRC (Directive No. 5/2011, PT) provided the existence of a regulated mechanism for energy acquired from guaranteed revenue generation, which would allow, on the one hand, to stabilize its market placing conditions, and on the other hand, to serve as a tool for supply and price risk mitigation to retail suppliers  - holding auctions of forward products (futures) with delivery in Portugal to cover supply needs and the price risk of agents operating in the Portuguese electricity system.

This mechanism was revised, with the publication of Directive No. 11/2019 (PT), which highlights the possibility of mechanism participating by other selling entities that purchase energy produced under a special regime without a guaranteed tariff, with the exception of large hydro and cogeneration, as well as the possibility for smaller suppliers to acquire contracts with a trading tick of 0.1 MW, lower than the standard 1 MW, the so-called mini contracts, thus allowing these suppliers to benefit from a hedging instrument risk appropriate to their portfolio size.

In this context, ERSE carries out annual programming announcements (PT) and notices for all guaranteed revenue generation auctions (PT), publishing the results as established in the current regulatory framework.

Supplier Of Last Resort Supply Auctions

In the 2011 regulatory revision to the electricity sector commercial relations code, ERSE provided for the existence of a regulated mechanism for contracting electricity that would allow, on one hand, to stabilize the conditions of market acquisitions, and on the other, that would serve as a supply and risk coverage tool to the supplier of last resort (SoLR).

The operationalization of such a mechanism is carried out through general rules, under the electricity sector commercial relations code (Directive Noº 13/2019, PT), which consists on auctions open to the participation of other suppliers under a market regime, in case there is sufficient liquidity and as long as the SoLR achieves its supply objectives.

In this context, ERSE carries out annual programming announcements (PT) and notices calls for all supplier of last resort supply auctions (PT), publishing the results as established in the current regulatory framework.

IPE Auctions

In accordance with the manual of procedures of the joint management mechanism of the Portugal-Spain Interconnection (PT) approved by Directive No. 10/2018, of 10 June, with the changes introduced by Directive No. 1/2019, of 7 January, and in accordance with the harmonized allocation rules established under Regulation (EU) 2016/1719, including the regional requirements and specific bidding zone border requirements, the transmission system operator, as the issuer of the interconnection capacity financial rights between Portugal and Spain (FTR – Financial Transmission Rights), participates in the auctions organized by JAO - Joint Allocation Office which functions as a Single Allocation Platform (SAP) for all transmission network operators that operate in accordance with the European legislation.

For more information, see the JAO website.