Public consultation on competitive equilibrium mechanism
29/01/2025
ERSE - Energy Services Regulatory Authority is putting out for public consultation today a modification to the methodology for studying extra-market events in the National Electricity System, which is necessary each year to determine the compensation to be paid by Portuguese generators and to restore the competitive equilibrium, neutralising the effects on Portuguese consumers.
The competitive equilibrium mechanism, which aims to ensure the equilibrium of competition in the wholesale electricity market in Portugal, is provided for in Decree Law no. 74/2013, of 4 June, in its current wording, and other related legislation, and requires ERSE to carry out a study of the impacts of extra-market events, to be taken into account in the decision of the member of the Government responsible for the energy area.
Due to various circumstances, some of them involving temporal discontinuities in the elements of the study's application (see suspensions of the regime applied in Spain, which is the centrepiece of external extra-market events) or even changes in the operating conditions of the spot market (see the exceptional and temporary mechanism initially adopted with the approval of Decree-Law no. 33/2022 of 14 May), the application of an econometric approach, such as the one currently used in the studies carried out by ERSE, no longer guarantees the same degrees of adherence to the conditions of marginal price formation in the MIBEL day-ahead market.
ERSE also held a pre-consultation in 2024 with the market agents directly affected by the competitive equilibrium mechanism in the most recent past, in order to be able to specify a methodological proposal that is more in line with current market conditions, which are also felt by the respective agents.
On a formal level, the legal framework in force does not establish the obligation of a methodological proposal to be developed by ERSE prior to the realisation of each study, nor its public consultation. However, for reasons of transparency and regulatory tradition, ERSE intends to consult on the terms under which it proposes to carry out the methodological review of the study provided for under the competitive equilibrium mechanism.
With the aforementioned methodological revision, ERSE aims to achieve the same main objectives that were established in the past, namely the transparency of the study conditions, their replicability and the representativeness of market conditions.
Comments are requested from all interested parties by 11 March 2025.
Access to the Public Consultation