Energy sectors’ need for regulation, performed by ERSE, comes from a variety of reasons.

First, regulation is justified by the implementation of the European Internal Energy Market (IEM) for Electricity and Natural Gas. This process foresees the existence, in all European countries, of independent regulatory entities that ensure the enforcement of transparent rules and access to the infrastructure vital to those sectors, supported on clear economic rationales. The creation of the IEM also justifies that those entities guarantee the proper functioning of both wholesale and retail markets. Community Directives that frame the electricity and natural gas sectors envisage the establishment of these entities, such as ERSE.

In addition, both sectors provide essential public services and are central to the economy, which legitimizes their regulation even more.

In economic terms, transmission and distribution of both electricity and natural gas sectors are natural monopolies, which forces the regulation of different aspects of these activities (access, revenues, quality of service, among others), in a context of market liberalization.

Thus, ERSE sets the allowed revenues to be recovered through tariffs, for some activities in the electricity and natural gas sectors: transmission and distribution, the logistic operations for switching supplier, supplier of last resort and, in the natural gas sector, reception, storage and re-gasification (terminal) and underground storage. In the Autonomous Regions of Açores and Madeira, tariffs convergence between these regions and continental Portugal, set by law, justifies that ERSE also defines the allowed revenues associated with production in those regions.

The companies/entities whose revenues are dependent of ERSE’s regulation are:

• Electricity Sector:
• EDA, S.A.
• E-Redes - Energia S.A.
• SU Eletricidade
• EEM, S.A.
• ENONDAS, Energia das Ondas, S.A.
• Logistic Operations for Switching Supplier (ADENE - Agência para a Energia)
• REN, S.A.
• REN Trading, S.A.

• Natural Gas Sector:
• Beiragás - Companhia de Gás das Beiras, S.A.
• Dianagás - Sociedade Distribuidora de Gás Natural de Évora, S.A.
• Duriensegás - Sociedade Distribuidora de Gás Natural do Douro, S.A.
• EDP Gás Serviço Universal, S.A.
• Lisboagás GDL - Sociedade Distribuidora de Gás Natural de Lisboa, S.A.
• Lisboagás Comercialização, S.A.
• Lusitaniagás - Companhia de Gás do Centro, S.A.
• Lusitaniagás Comercialização, S.A.
• Medigás - Sociedade Distribuidora de Gás Natural do Algarve, S.A.
• Logistic Operations for Switching Supplier (ADENE - Agência para a Energia)
• Paxgás - Sociedade Distribuidora de Gás Natural de Beja, S.A.
• REN Armazenagem, S.A.
• REN Atlântico, Terminal de GNL S.A.
• REN Gasodutos, S.A.
• REN Portgás Distribuição, S.A.
• Setgás - Sociedade de Distribuição de Gás Natural, S.A.
• Setgás Comercialização, S.A.
• Sonorgás - Sociedade de Gás do Norte, S.A.
• Tagusgás - Empresa de Gás do Vale do Tejo, S.A.
• Transgás, S.A.

The main principles that guide this economic regulation, which mostly translates in defining allowed revenues recovered through tariffs, are:

• promotion of economic efficiency in regulated activities, maintaining both quality of service and security of supply standards,
• fair sharing of the outcomes achieved through incentive regulation among regulated companies and consumers,
• promotion of economic sustainability of all regulated activities, in all timeframes.

By defining the allowed revenues for regulated activities, ERSE aims to push companies to perform their activities efficiently, which means optimizing quality of service at the lowest possible cost for consumers while ensuring their economic sustainability.

At the same time, ERSE tries to safeguard the correct interaction of agents throughout the value chain of electricity and natural gas sectors by assuring the adequate behaviour of wholesale and retail markets, through supervision and monitoring.

There are also other energy sectors regulated by ERSE, either for their extreme relevance to the economy (oil sector, which includes petroleum-based fuels, namely liquid fuels, and liquefied petroleum gases) or their technical elements and their expected impact on the economy (electric mobility).