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.

ERSE publishes an annual report  with an analysis of the electricity and natural gas retail markets in Portugal, including detailed information from an annual perspective and considering the medium and long term evolution.

As part of the activity of following up and monitoring the wholesale electricity market, ERSE collects information on the commercial activity carried out by market agents in the different spot market references, namely the daily market, the intraday (auctions and continuous) market and the system services market.

To this effect, ERSE discloses information on the evolution of organised markets of the Iberian Electricity Market (MIBEL), the use of cross-border capacities between Portugal and Spain and the evolution of the system services market in Portugal in the MIBEL Daily Market Newsletter.

Regulation Reserve Band Auctions

Taking into account the major changes that have taken place in the National Electricity System (SEN), namely the decommissioning of coal-fired thermal power stations and the end of the interruptibility service, it is now necessary to increase the national electricity system’s operational reserve with a regulation reserve band, which is to be supplied to the system by consumers qualified to do so, in order to safeguard SEN’s security of supply.

Directive No 16/2021, of 18 November, which establishes the Regulation Reserve Band market, managed by the transmission network operator, lays down the rules governing the operation of the Regulation Reserve Band market, contributes to ensuring a regular and stable supply of electricity in the Electricity Sector, replacing the Interruptibility Service.

The Regulation Reserve Band Market is operated through a competitive auction and is open to qualified electricity consumers. Market agents that are Very High Voltage (VHV), High Voltage (HV) or Medium Voltage (MV) consumers are eligible for the Regulation Reserve Band service.

The Regulation Reserve Band Market is operational as of 1st January 2022 and ERSE holds prior calls for all Regulation Reserve Band Auctions, as established in the regulatory framework in force.

Extraordinary PRE auctions

Regulation No 951/2021, of 2 November, approved a set of extraordinary measures in the scope of the Electricity Sector and the Gas Sector, that govern the commercial relations between market agents.

More specifically, the Regulation establishes a mechanism with specific conditions for contracts with other market agents for electricity from production under a special scheme (produção em regime especial - PRE), with a guaranteed tariff, as provided for in Section III of Regulation No 951/2021.

Provisions in Section III of Regulation No 951/2021 set out the methodology and procedures for the implementation of each extraordinary auction, through a competitive procedure for bilateral contracting rights with the supplier of last resort (SLR) for electricity acquired by the latter from producers under a special scheme. Auctions must be published at least 5 working days before the deadline for submission of bids and 10 working days before the first date for implementation of bilateral contracting rights.

Together with the above-mentioned publication, ERSE publishes the list of market agents qualified to submit bids for the implementation of the mechanism, as well as the maximum volume of rights put up for bidding during the period for the submission of bids.

In this respect, ERSE holds prior calls for all Extraordinary PRE auctions, as established in the regulatory framework in force.

PRE Placement Auctions

As of 2011, ERSE, in compliance with the RRC (Directive No 5/2011) provided for the setting up of a regulated mechanism for the sale of energy resulting from production under a Special Regime (Produção em Regime Especial - PRE). This would, on the one hand, stabilise the conditions for its placement on the market. On the other hand, it served as a supply and price risk hedging tool for suppliers in the market scheme - the holding of auctions of forward products (futures) delivered in Portugal -to cover the supply needs and price risk of agents operating in the Portuguese electricity system.

This mechanism was amended, with the publication of Directive No 11/2019. This Directive provided the possibility of participation in the mechanism of other selling entities that acquired energy produced under special regime, without a guaranteed tariff, with the exception of large hydroelectric production and cogeneration, as well as the possibility of smaller suppliers acquiring 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 risk hedging tool that is appropriate to the size of their portfolio.

In this respect, ERSE carries out, on the basis of annual programming releases and prior calls, all PRE Energy Placement Auctions, publishing the respective results, as established in the regulatory framework in force.

SLR Purchase Auctions

In the regulatory amendment to the Electricity Sector Commercial Relations Code of 2011, ERSE provided for the setting up of a regulated mechanism for purchasing electricity which would, on the one hand, stabilise the conditions for its placement on the market and, on the other, serve as a supply and price risk hedging tool for the Supplier of Last Resort (SLR).

This mechanism is put into operation by means of general rules, under the Electricity Sector Commercial Relations Regulation (Directive No 13/2019), which consists of holding auctions open to the participation of other suppliers in the market scheme, in the event that there is sufficient liquidity on the supply side and provided that the SLR achieves its supply targets.

In this respect, ERSE carries out, on the basis of annual programming releases and prior calls, all Auctions for forward contracting of electricity by the SLR, publishing the respective results, as established in the regulatory framework in force.

IPE Auctions 

Pursuant to the Procedures Manual of the Mechanism for Joint Management of the Portugal-Spain Interconnection approved by Directive No 10/2018, of 10 June, as amended by Directive No 1/2019, of 7 January, and in accordance with the harmonised allocation rules established under Regulation (EU) 2016/1719, including regional requirements and specific requirements for bidding zone borders, the transmission network operator, as issuer of financial rights for interconnection capacity between Portugal and Spain (known as FTR - Financial Transmission Rights), participates in auctions organised by the JAO - Joint Allocation Office which acts as the Single Allocation Platform (SAP) for all transmission network operators operating in accordance with European legislation.

For more information, check the JAO website.

Iberian adjustment mechanism

The Governments of Portugal and Spain agreed on the establishment and implementation of an exceptional and temporary mechanism for adjusting the production costs of electricity (hereinafter, the Adjustment Mechanism) with an impact on the formation of the MIBEL electricity market price. This mechanism was embodied in law with the publication, in Portugal, of Decree-Law No 33/2022, of 14 May, and, in Spain, of Real Decreto-ley 10/2022 de 13 de mayo.  In the case of Portugal, for reasons which are specific to the national legal system, part of the mechanism’s implementing provisions are enshrined in Directive No 11/2022, of 14 May.

Within the scope of the application of Directive No 11/2022, of 14 May, for the proper application thereof, a technical implementation note was drafted, whose primary purpose is to clarify market agents operating in the Portuguese zone of MIBEL, in a comprehensive and transparent manner, with regard to specific aspects of the implementation of the aforementioned Adjustment Mechanism.

For the purpose of the application of Order No 9799-B/2022, with respect to the specification of the mechanism for adjusting production costs in MIBEL in the end customer invoice, ERSE publishes information, on a daily basis, with data regarding the costs and benefits of that mechanism. You may find that information here.

Directive No22/2022, of 28 September - Implementation of Order No 9799-B/2022, of 8 August