2023-02-10

With a considerable delay, in August 2022, Law 16/2022, of 16 August 2022, (“Electronic Communications Law” - "ECL") transposed into Portuguese law the European Electronic Communications Code (“European Code” - “EECC”).

Despite the absence of changes in critical elements, the ECL brings in some crucial innovations regarding (i) consumer rights, (ii) sanctioning framework, and (iii) privacy in electronic communications.

Compared with 2005 electronic communications law (Law 5/2004, of 10 February), the ECL has a more extensive scope due to a broader definition of “electronic communications service”. Under the new definition, in addition to the individually addressed signal services delivered through electronic communications networks, "electronic communications services" now include other services not dependent on numbers, such as internet access services, machine-to-machine communications and the so-called over-the-top services (“OTT”).

The rules entered into force 90 days after the ECL enactment (14 November 2022), with the following exceptions:

  • Rules covering the charges required in the event of early termination of the agreement on the consumer's initiative (see articles 136/4 and 136/5 of the ECL) will enter into force only 60 days after its publication, i.e., more precisely, on 13 January 2023;
  • Rules on emergency communications and a single European emergency number which shall take effect from the moment the access to an emergency service is opened to the public by the competent national authorities; and
  • Rules on network and service security, including additional requirements and assistance and cooperation arrangements with the National Computer Security Incident Response Team (Equipa de Resposta a Incidentes de Segurança Informática Nacional), which came into force immediately with the publication of the ECL.

It is worth mentioning that, back in 2004, the Portuguese legislators had already unified five EU Directives into a single piece of legislation, creating a structurally cohesive framework that was broadly maintained until 2022. Even so, by mid-2021, in addition to the 2004 Electronic Communications Law, the Portuguese communications’ regulatory framework consisted also of 46 other diplomas: 23 laws and 16 administrative regulations.

Therefore, it is not a surprise that, despite substantive changes, particularly regarding consumers and the sanctioning framework with a material impact on the operators’ financial and operational balance, the ECL has generally preserved the structure of the preceding legislation.

1. ANACOM AND OTHER COMPETENT AUTHORITIES

The Portuguese Communication Authority (Autoridade Nacional de Comunicações - "ANACOM") is Portugal’s National Regulatory Authority (Autoridade Reguladora Nacional - "NRA") for the communications sector.

The definition of “communications”, which serves to set ANACOM’s scope, includes electronic and postal communications. The ECL clarified ANACOM’s role in areas where its jurisdiction was undefined and extended its role to new market sectors.

As an example, the ECL's expanded regulatory authority now covers Over-The-Top (OTT) services. While these services operate exclusively at the application level of data transmission networks, the ECL classifies OTT as network services for legal and market analysis purposes, including what concerns end-users’ rights.

The ECL assigns ANACOM a broad range of regulatory, supervisory, control, and enforcement responsibilities for the entire communications sector. Specifically, ANACOM is responsible for the following:

  • Promoting the competition in the electronic communications networks and services supply;
  • Ensuring access to networks, infrastructures, facilities, and services;
  • Protecting the rights and interests of consumers and other end-users; and
  • Ensuring access to the universal electronic and postal communications service, including by enforcing universal service obligations.

Among other changes, the ECL grants ANACOM additional powers and responsibilities, particularly around spectrum management. ANACOM now has the authority to promote shared use of the radio spectrum, where multiple operators can access the same frequency bands through the allocation of rights of use for frequencies (in Portuguese, “Direitos de Utilização de Frequências” or “DUF”).

Additionally, the ECL clarifies that regulations for competitive or comparative selection procedures for radio spectrum rights of use will be approved by the government official in charge of the communications sector.

The ECL is aligned with the European Electronic Communications Code in including the participation of "other competent authorities" in the communications sector. These entities, such as the National Authority for Emergency and Civil Protection (Autoridade Nacional de Emergência e Proteção Civil – ANEPC”), are legally granted specific powers, particularly when it comes to end-users rights.

For this reason, the ECL mandates ANACOM to cooperate with "other relevant entities" in organising public consultations and sharing information on matters of joint interest related to emergency communications.

2. GENERAL AUTHORISATION, FREQUENCIES, NUMBERS AND SECURITY

2.1. GENERAL AUTHORISATION FRAMEWORK

The provision of electronic communications networks and services is free; companies are free to offer electronic communications services without the need for prior authorisation from the regulator, except for the allocation of rights of use for elements such as frequency bands (DUFs) and numbering rights.

Companies that wish to provide public electronic communications networks and publicly available electronic communications services are required to notify ANACOM before starting operations. This notification must include the following:

  • A statement of the applicant’s intention to begin operations;
  • Identification details of the applicant, as well as its website associated with the provision of public electronic communications networks and publicly available electronic communications services;
  • Contact information for communications and notices, including a mandatory email address;
  • A brief overview of the planned network and services; and
  • The expected service launch date.

It is worth mentioning that companies not subject to the general authorisation regime under the ECL are not required to fulfil this prior notification to ANACOM requirement before launching their operations. Similarly, this requirement does not apply to providers of electronic communications services not intended for public access.

Through specific regulations, ANACOM may also exempt from this requirement companies providing specific public electronic communications networks and publicly available electronic communications services.

2.2. GENERAL AND SPECIFIC CONDITIONS

Companies providing electronic communications networks and services will continue to be bound by several general conditions established in the previous law. These include:

  • Access obligations;
  • Obligations related to the processing of personal data and the protection of privacy in the electronic communications sector;
  • Obligations to install and make lawful interception systems available to national authorities and to provide decryption means when such facilities are offered;
  • Conditions of use of the radium spectrum for electronic communications services; and
  • Conditions of use to ensure communications between emergency services, competent authorities, and civil protection agents with the public in general.

Entities not subject to the general authorisation regime are not subject to these general conditions.

In addition to these, companies providing electronic communications networks and services may be subject to specific conditions, particularly in relation to access and interconnection, retail market controls, and universal service.

Finally, it is also important to note that companies offering independent interpersonal communications services may, in certain cases, be subject to access and interconnection obligations under the changes introduced by the ECL.

2.3. OPERATOR’S RIGHTS

The ECL grants rights to companies providing electronic communications networks or services, whether intended for public access or not, including the right to request the establishment of rights of way and the right to use the radio frequency spectrum to deploy their networks and services.

Companies offering public networks or services have additional rights such as the right to apply as universal service providers or to deploy their coverage in all areas of the country.

These rights may be modified by legislation, regulatory or administrative statutes, provided these are objectively justified and proportional, and must be approved by the rights holder, and are subject to a public consultation procedure, which allows interested parties to offer their view, unless the changes are considered insignificant or do not affect the fundamental nature of the rights of use.

The holders of DUF as well as numbering resources have a general guarantee of non-restriction and irrevocability of these rights until the end of their validity period. However, the law sets out criteria by which these rights may be restricted or revoked in advance by the NRA. Such cases include:

  • Permission given by the holder;
  • Justified circumstances to ensure the effective and efficient use of numbering resources or radium spectrum; and the application of technical implementing measures adopted under article 4 of the Radium Spectrum Decision.

Restriction or revocation of rights without the consent of the holder or in unjustified cases must follow a legal procedure that respect the principles of proportionality and non-discrimination.

In case of restriction or revocation, holders are entitled to compensation for any unique and abnormal charges or damages suffered, which will be calculated by ANACOM under the State and other public entities' extra-contractual liability rules.

Summarising, the ECL does not bring significant innovations in this area, but it clarifies that the rules apply to Over-The-Top (OTT) services and companies that wish to offer electronic communications services not accessible to the public.

2.4. THE RADIO SPECTRUM

The radio frequency spectrum, through which electromagnetic waves with frequencies between 3kHz and 3000GHz may be transmitted, constitutes a public resource of great economic and social importance for the country. This is evident not only in the amounts paid for rights to use it but also in the intense public debate surrounding issues related to it.

ANACOM is responsible for the management of the spectrum and must promote its efficient use pursuant to the principle of technological and service neutrality. The first of these principles states that any forms of technology may be used in the frequency bands allocated to electronic communications services, and the second that any type of electronic communications services may be offered through the available frequency bands.

The ECL did not make any fundamental changes to ANACOM’s role, which continues to hold most of the powers it previously had, such as the power to assign, modify, or renew rights of use, and even the power to authorise their transfer or lease.

Following the 5G DUF auction debacle, the ECL introduced two seemingly contradictory changes on future frequency awarding procedures. On the one hand, new powers are granted to ANACOM, as regarding the protection of competitive usage of frequencies. At the same time, ANACOM was stripped of the ability to decide on the selection frequency allocation procedures, which the Government must directly approve.

From a legal perspective, the regulator is responsible for establishing the general conditions for authorisation and determining the most appropriate technical requirements for the use of the radio spectrum.

The ECL reiterates that ANACOM's responsibilities for granting rights of use for frequencies of electronic communications networks or services. These rights are always subject limited in time. For example, rights of use for the spectrum for wireless broadband electronic communications services are granted for 15 years, subject to possible renewal.

Like the previous regime, ANACOM is also responsible for defining conditions associated with the rights of use of the spectrum, which, if breached, allows the regulator to revoke the rights of use or impose other measures. These conditions must be proportional, transparent, and non-discriminatory, such as setting maximum periods of rights of use.

The ECL innovates by introducing the possibility of shared use of the radio spectrum.

The renewal of rights of use is possible, but the renewal rules have been significantly changed under by the ECL:

  • Under the previous law, the renewal of rights of use for the radio frequency spectrum was solely dependent on the initiative of the holder; and
  • Under the ECL, ANACOM may proactively determine the need for the renewal for the radio frequency spectrum.

Holders of rights of use for the radio frequency spectrum may also apply for renewal to the regulator on their own initiative, at least 18 months and no more than five years before the expiration date. It is worth noting that the previous law only allowed for a minimum of one year's notice. In any case, the regulator must respond to renewal requests within a maximum period of six consecutive months, starting from the date of receipt.

In the case of rights of use whose number is limited, interested parties must be given the opportunity to provide their opinions on the renewal during a public consultation procedure.

Since rights of use are licensed to operators, they are subject to periodic payment of fees, which, except in exceptional cases, are mainly intended to cover the costs of radio supervision.

Finally, it is worth mentioning that the National Frequency Allocation Framework (Quadro Nacional de Atribuição de Frequências - "QNAF", which may be accessed through this link) is the instrument for the technical management of the radium spectrum, which defines the conditions of use according to its purpose.

2.4.1. TRANSFER AND LEASE OF RIGHTS OF USE

The ECL allows the transfer or leasing of rights of use for the radium spectrum.

As a rule, if the holder of the right wishes to transfer or lease it, they can do so through a request to the regulator. The regulator must then decide within 45 business days.

However, in some cases, the transfer or leasing of rights of use is not permitted. These cases include, for example, rights that have been allocated free of charge or for the provision of radio program services and the distribution of television and radio program services, as part of specific procedures for meeting public interest objectives.

2.4.2. COMPETITION

Under the ECL, the NRA must promote effective competition in the European Union internal market when allocating, modifying, or renewing rights of use for frequencies, by avoiding any distortion of competition to the extent possible. In this context, ANACOM, as the NRA, has been given strengthened powers to adopt or propose remedies to other competent authorities to prevent competition distortions. These measures may include, among others:

  • Restricting the number of spectrum bands for which rights of use are granted or attaching conditions to these rights;
  • Setting aside parts of a spectrum band or group of bands for allocation to new market entrants; and
  • Refusing to grant new rights of use or authorize new uses of spectrum in specific bands, and attaching conditions to their allocation, transmission or lease, to prevent competition distortion.
  • In taking such measures, the regulator should base its decisions on an objective and prospective assessment of the competitive conditions in the market and the necessity of such actions.

2.5. NUMBERING RESOURCES

The ECL establishes ANACOM as the entity responsible for managing numbering resources in Portugal.

The “numbering resources”, that is the structured set of codes used by electronic communications networks to route signals, are part of the National Numbering Plan (Plano Nacional de Numeração – “PNN”, accessible through this link), or an international numbering plan. ANACOM has the power to administer and assign these numbers, which can identify networks, network elements, end-users, services or applications using these services and networks.

The ECL states that ANACOM is responsible for ensuring that numbering resources are available for the provision of public electronic communications networks and publicly available electronic communications services.

Companies must submit a specific and justified request to ANACOM to be allocated the rights to use these resources.

ANACOM uses the National Numbering Plan as the technical tool to manage the allocation of these numbers, which also includes the criteria for each number range.

2.6. SECURITY AND EMERGENCY

The ECL not only outlines general responsibilities for the coordination of electronic communication networks and services during crisis, war, serious accidents or disasters, and threats to internal security, but also emphasizes two specific regulations:

  • First, companies offering mobile interpersonal communication services based on numbers must provide free public warnings in the event of imminent or ongoing emergencies, accidents, or disasters; and
  • Second, all end-users of communication services have the right to access the European emergency number 112, free of charge, to make emergency calls.

3. MARKET ANALYSIS AND REGULATORY CONTROLS

3.1. GENERAL PROVISIONS

According to the ECL, the market analysis and the imposition of specific undertakings must comply with the principle of full justification, meaning that decisions must be based on legal requirements and follow a prior public consultation procedure.

The definition of relevant products and geographic markets in the telecommunications sector and the determination of which companies have significant market power are ANACOM’s responsibilities.

3.2. MARKET ANALYSIS

The ECL assigns ANACOM the responsibility of defining and analysing the relevant product and service markets in the electronic communications sector, considering the level of infrastructure competition in those areas.

Based on this analysis, ANACOM may determine that it is necessary to impose specific obligations when:

  • There are barriers to market entry;
  • The market structure does not allow for effective competition; and
  • Competition Law alone is not sufficient to address specific shortcomings.

This analysis can be conducted not only for national and transnational telecom markets, in cooperation with European authorities.

3.3. OBLIGATIONS ON OPERATORS WITH SIGNIFICANT MARKET POWER

The ECL maintains the traditional definition of significant market power is a strong economic position allowing a company to act independently of its competitors, customers and end-users.

Like the previous law, the ECL allows the regulator to impose certain obligations on companies that have significant market power. These obligations may include the following:

  • The requirement to meet reasonable requests for access to and use of infrastructure, such as civil engineering assets owned by the company;
  • In the absence of effective competition, the regulator may impose cost-oriented pricing and cost accounting system obligations for specific types of interconnections and access. However, the ECL now has stricter conditions for applying these obligations. ANACOM must consider the benefits of having predictable and stable wholesale prices that encourage efficient market entry and incentives for companies to develop new and more advanced networks, particularly in areas of low population density; and
  • The ECL aligns with the European Electronic Communications Code by recognizing that establishing a wholesale market can positively affect retail market competition, reducing competitive risks.

As a result, wholesale companies will be subject to a more favourable regulatory regime. They may only be required to comply with non-discrimination obligations, access and use of specific network elements and associated facilities, or obligations related to fair, equitable, and reasonable pricing. However, the applicability of this rule is dependent on the company meeting strict cumulative requirements. This may make it difficult for some companies to qualify.

Companies with significant market power are now subject to specific obligations regarding infrastructure migration. For example, to address the potential competitive consequences of migration from old copper networks to next-generation networks, legislation requires these companies to provide prior notification when they plan to deactivate or replace their infrastructure, in whole or in part.

Access obligations do not only apply to companies with significant market power. To ensure some level of economic efficiency, the regulator has the power to impose required access obligations on operators or owners of cabling and associated facilities inside buildings, or up to the first point of distribution outside the building, regardless of whether they are companies with significant market power. This will help to strengthen symmetric regulation, which applies to all operators.

3.4. ACCESS AND INTERCONNECTION

3.4.1. INTERCONNECTION

Companies providing electronic communications networks and services are free to negotiate and enter into interconnection agreements.

ANACOM has the authority to impose access and interconnection obligations on companies with or without significant market power, as long as they are objective, proportionate, transparent, and non-discriminatory. The regulator may impose, for example, access and interconnection obligations on companies that, due to their general authorisation status, control access to end-users.

3.4.2. REGULATORY OBLIGATIONS

The new law closely follows the EECC and maintains the regulatory obligations established by the previous legislation. However, the ECL also introduced new regulatory obligations that are more stringent and complex.

One example of this is the new law's emphasis on symmetric regulatory obligations’ measurement. This includes access obligations, such as access to cabling up to the first distribution point, and the power to impose access to civil engineering assets and national roaming. These new provisions are meant to provide more regulatory oversight and ensure fair competition in the market. However, the requirements for these regulatory obligations have become more stringent and have made these rules more complex to implement.

While these new rules may have been introduced to improve user protections, they may raise concerns regarding their implementation complexity.

3.4.3. NATIONAL ROAMING OBLIGATIONS

Following the EECC, the ECL introduces the concept of national roaming. This is viewed as an important regulatory mechanism to overcome physical or economic barriers in the provision of services and networks requiring on access through rights of use for radio spectrum frequencies (namely, mobile network providers) for end-users.

When access and sharing of passive infrastructure are not sufficient to ensure adequate coverage, the regulator may impose obligations for active infrastructure sharing or the obligation to conclude national roaming agreements. However, these obligations may only be imposed if certain requirements are met, such as the existence of insurmountable physical or economic hurdles that result in poor or non-existent access to end-users, such as building limitations in protected areas.

The recourse to this mechanism will only be justified when there is an insufficiency of access and sharing of passive infrastructure.

3.4.4. INTERNATIONAL ROAMING

International roaming is a service offered by early 2G mobile networks that allow customers of one operator to use their mobile devices on the networks of third-party operators in different countries. This service is essential and enables users to make and receive voice calls, send, and receive text and multimedia messages, or access the internet through their equipment. It is one of the most important factors that contributed to the global popularity of mobile services over GSM networks.

However, roaming costs traditionally are higher than those of the home network, as third-party operators are free to set their own fees for visiting users. Although in the European Economic Area, these costs have been decreasing due regulatory pressure, since to the implementation of the EU’s "Roam Like at Home" concept in 2017, international roaming users in the Union are charged the same tariffs as in their home network.

It's worth noting that international roaming is not regulated by the ECL, but by European regulations, specifically by Regulation (EU) 2022/612 of the European Parliament and the Council of 6 April 2022.

3.5. REGULATORY CONTROLS IN RETAIL MARKETS

The imposition of specific obligations appropriate to retail markets by ANACOM depends on:

  • Absence of effective competition; and
  • The imposition of further obligations would not meet the general aims of regulation.

The law aims to prevent excessive pricing by operators and that they discriminate end-users.

4. USERS' RIGHTS, UNIVERSAL SERVICE AND ADDITIONAL MANDATORY SERVICES

4.1. END-USERS’ RIGHTS

Companies, including OTTs, offering networks or services are now, in their entirety, subject to the rules of end-user’s rights outlined in the ECL.

As an exception are the micro-entities number-independent one-to-one communications services, which although exempt from these regulations, must nonetheless inform end-users of this subject.

According to the ECL, in addition to end-users who are consumers, the rights apply to micro-entities, small enterprises, or non-profit organisations, if they have not waived their application.

Under the ECL all end-user is entitled to:

  • Have written information about the terms and conditions of access and use of services;
  • Be informed, at least 15 days in advance, of the operator intention to cease the provision of a specific service;
  • Have information about expected and provided service levels;
  • Receiving itemised billing, detailing, among other things, information about costs and the end of the minimum contractual period;
  • Increase protection in cases of express non-authorisation/contract;
  • Have access to pricing and other conditions tools;
  • Have an immediate and proportional reduction in the monthly fees in cases of failings in the quality of service, without prejudice to other compensation that may be due;
  • Continuous access to the contracted services, and information about the suspension of the service; and
  • Number portability.

Broadly speaking, the protection of end-users became a core aspect of the ECL. Paradoxically, in its attempt to empower users, the ECL seem to have taken a step too far while, at the same time, failing to provide adequate guidance, thus creating an unwelcomed and unexpected sense of uncertainty. As an example, under the ECL, operators are banned from unjustifiably discriminate against customers on the ground of nationality and place of residence; however, no guidelines on what may be construed as justifiable discrimination were provided. This is a sensitive matter that may lead to future litigation.

The ECL seeks to empower end-users by ensuring fair treatment in the market. The protection of end-users is a core aspect of the ECL. As part of the framework, these non-discrimination rules ensure that consumers have equal access to services and that companies cannot discriminate against users based on their nationality or domicile.

4.2. AGREEMENT INFORMATION REQUIREMENTS

The ECL strengthens the framework for the disclosure of pre-contractual information. Under the ECL, public communication providers and operators, except machine-to-machine service providers, are now required to make available to the consumer, before entry into an agreement, information (under the Consumer Protection Act) concerning its key aspects. Among other things, operators are required to disclose information on:

  • The main characteristics of the goods or services;
  • The identity of the provider, including, company name, postal address and telephone number and other contact information;
  • The total price of the services, including the fixed fees and applicable taxes, additional set-up charges, and other relevant charges, including those relating to maintenance; and
  • The price calculation method, in cases where, due to the nature of the service, the price cannot be calculated before the conclusion of the agreement.

The ECL also formalizes the obligation to adopt and make available the agreement summary template, making it considerably more detailed.

4.3. CONTROL MECHANISMS FOR CONTRACTING AND INVOICING

According to the ECL, the billing for publicly available electronic communications services must be done monthly, and the invoices for these services must be sent free of charge to the end user and include the following information:

  • The services provided and the corresponding prices;
  • The remaining term to complete the minimum contractual term obligations; and, when applicable,
  • The social tariff for providing broadband Internet access services and its application to consumers with low incomes or special social needs.

4.4. DURATION OF THE AGREEMENT

Due to the prevalence of bundled services (triple, quadruple and quintuple play, with implied discounts) particularly in the residential fixed-line market segments, local operators tend to waive set-up fees and replace them with minimum contract periods, which, if infringed, will give rise to steep early termination fees. Therefore, it is no wonder that minimum contract periods, is probably the most debated issue in consumer law.

However, the ECL still emphasised its continuity when it comes to minimum contract period and early termination charges, opting to make surgical changes such as clauses by introducing the concepts of initial and follow-up minimum contract period and capping them.

Therefore, operators offering publicly available communication services, are required to offer services without any customer lock in period, and the minimum contract period was limited to 24 months.

Furthermore, the subscription to supplementary services or terminal equipment by the consumer, may not be used to extend the initial contractual loyalty period, except when the consumer agrees to it at the time of subscription.

4.5. TERMINATION OF THE AGREEMENT

Regarding contract termination, in its quest to protect consumers, the ECL introduced some significant deviations to general principles of law, particularly, on contract default and liability. While these are naturally restricted to specific contracts, they are nevertheless of interest.

According to the ECL, suspension of services to defaulting non-consumer end-users is allowed but subject to notice. It should be noted that in any case cutting off access to emergency services is not permitted.

For defaulting consumer end-users, a notice must be served for a grace period of at least 30 days comes into effect, after this period elapses, the operator is allowed to suspend the service for an additional 30 days. Once this second period elapses, and provided that certain notification requirements are met, the contract will be automatically terminated without further notice.

On the other hand, in cases of services unavailable for longer than 24 hours, the ECL imposes a proportional reduction of the bill regardless of any consumer's request. If the service remains unavailable for over 15 days, the end-user has the right to terminate the agreement without any cost.

Also in this case, the ECL established other specific causes for breach of agreement in addition to those previously mentioned.

One example of these new provisions is the fact that the ECL considers the existence of “significant discrepancy between the actual performance of the services and the performance indicated in the agreement” may serve as the basis for the end-user's demanding corrective measures, which are not defined, notwithstanding, its right to terminate the agreement without any penalty. Again, it will be interesting to see how the courts will apply these arguably vague concepts.

As mentioned above, the ECL introduced specific changes on the admissibility of minimum contract periods, along with the mentioned restrictions; the law has also restricted the early termination charges in case these lock-in periods are not complied with by the customer.

The ECL considers that a customer may be able to terminate its agreement with an operator without incurring any early termination charges if the consumer:

  • Changes their address, the company cannot demand additional charges if it cannot provide the contracted service or equivalent service in terms of characteristics and price at the new address; The consumer changes its permanent address and, cumulatively, the address is the primary location of the services provided by the operator, and the operator is unable to provide the same or an equivalent service at the new dwelling;
  • Loses their disposable monthly income due to unemployment through no fault of their own;
  • Is permanently or temporarily incapacitated for work or loses monthly income due to a long-term illness;
  • Migrates to a third country. For this purpose, emigration is defined as the unforeseeable move of the contract holder's permanent residence out of the national territory; or
  • Is absence from its residence due to imprisonment or by being dependent on the care provided by a third person.

Although the ECL sets these causes of breach of contract to protect particular cases in, what undoubtedly the legislator thought to be fair cases, the overuse of vague concepts such as “unforeseeable move (…) out of the national territory” or “loss of income due to illness” will not contribute to a peaceful application of the law soon.

4.6. UNIVERSAL SERVICE

The ECL has set these causes of breach of agreement with practical consequences to reinforce the protection of end-users and make the termination process fairer.

According to the ECL, universal service is a minimum set of services that must be available to all consumers at an affordable price in the national territory, considering specific national conditions. The aim is to prevent social exclusion resulting from lack of access and enable citizens to participate in social and economic life.

Universal service should ensure the availability of the following:

  • An adequate broadband internet access service at a fixed location;
  • Voice communications services, including the underlying connection, at a fixed location; and
  • Specific measures for consumers with disabilities to ensure equivalent access to services available to other users.

The ECL brings about some important changes to universal service, particularly promoting social regulation mainly through the so-called "social internet tariff".

4.7. ADDITIONAL MANDATORY SERVICES

According to the ECL, the government may make additional services available to the public within the national territory beyond those included in the universal service obligations. However, in those cases, a compensation mechanism involving specific companies should not be imposed.

5. TRANSPORT OBLIGATIONS AND EQUIPMENT

ANACOM may, for public interest reasons, impose signal transportation obligations on companies in the television and radio program services market and provide adequate compensation in return.

To comply with the ECL, digital television equipment used by consumers must be able to decode digital television signals and reproduce signals that have been broadcast without encryption, and providers must also facilitate the interoperability of equipment to encourage reuse.

Lastly, any activity involving illegal devices, including the manufacturing, importing, distributing, selling, renting, installing, maintaining, promoting, acquiring, and using such devices, is considered a severe administrative infraction.

An illegal device is any equipment or software designed or adapted to allow unauthorised access to protected services in an intelligible form without the service provider's consent.

6. FEES, SUPERVISION AND CONTROL

6.1. RATES

Operators who offer communication networks and services under the general authorisation framework are subject to an annual fee. This fee is based on the administrative costs of managing, controlling, and enforcing the general authorisation framework, as well as the rights of use and specific conditions.

Additionally, operators are also responsible for paying fees related to the following:

  • The allocation and renewal of frequency rights;
  • The allocation, reservation, and renewal of numbering resource rights; and
  • The allocation of rights of way.

6.2. SUPERVISION AND CONTROL

6.2.1. DISCLOSURE OF INFORMATION

To effectively carry out its responsibilities, ANACOM has the right to access and to require information from operators as it sees necessary, if it is deemed objectively justified, non-discriminatory and reasonable.

Specifically, companies must provide financial information as any additional information that ANACOM or other competent authorities may request, if counted as necessary and objectively justified, to ensure compliance with administrative charges, authorisation, and other specific obligations imposed on these companies. In general, operators must provide financial and technical information to guarantee compliance with administrative charges, authorisation and other specific obligations arising of the services operators are registered to provide.

6.2.2. CONTROL

As a regulator, ANACOM is responsible for supervising compliance with the ECL, the Portuguese Food and Economic Security Authority (Autoridade de Segurança Alimentar e Económica – “ASAE”) and the Portuguese Tax Authorities (Autoridade Tributária e Aduaneira). As a regulator, ANACOM is responsible for overseeing the electronic communications sector overall.

However, under the ECL and other applicable statutes, judicial courts, central Government agencies, such as the national cybersecurity agency (Centro Nacional de Cibersegurança – “CNCS”) and other authorities and agencies also have some degree of jurisdiction over the sector. Among them, there are the above-mentioned ANEPC (the emergency and civil protection agency), the Food and Economic Security Authority (Autoridade de Segurança Alimentar e Económica – “ASAE”), the Competition Authority (Autoridade da Concorrência – “AdC”), the Tax and Customs Authority (Autoridade Tributária e Aduaneira AT”) and the municipalities.

6.2.3. NEW SANCTIONING FRAMEWORK

The ECL has significantly expanded its sanctioning framework. It includes more than 120 administrative infractions, of which almost 97% are considered severe or very serious and can result in fines of up to one million or five million euros.

Figure 1 - Distribution of administrative offences foreseen in the ECL according to their seriousness.

Regarding compliance with the end-consumers rules, more than 40 applicable sanctions represent more than a third of the total number of the ECL’s administrative infractions.

Figure 2 - Distribution of sanctioning rules according to the subject (as a % of the total number of administrative offences provided for in the ECL).

Under the ECL, issuing guidelines, recommendations, or instructions to employees, agents, or business partners prone to result in a violation of rules or ANACOM's instructions is considered a severe administrative infraction.

As opposed to the initial version of the bill presented by the government in May 2022, the ECL does not provide for individual liability for members of management bodies and company directors.

Along with a long list of violations for which operators are liable, under the ECL, a severe or very serious administrative offence is committed whenever an operator issues its employees, agents, or business partners guidelines, recommendations, or instructions that are likely to result in a violation of rules or ANACOM's instructions.

It should be noted that this type of provision is uncommon in this context in Portuguese law. However, it should be noted that this provision seems to be a compromise in relation to the initial version of the bill submitted to Parliament, where the personal liability of company directors and senior staff of the operators was proposed. Considering the broad and ambiguous wording of these sanctioning provisions, it will be interesting to see how they will be applied.

7. OPEN INTERNET PRINCIPLE

The open internet principle guarantees that citizens of the European Union have unrestricted access to online content and services, regardless of location or time, without any form of discrimination or interference from internet service providers.

This is reflected in Portuguese law through the ECL, which states that any actions taken to maintain the quality of internet access must comply with Regulation (EU) 2015/2120 of the European Parliament and of the Council, of 25 November 2015.

The principle of an open internet is crucial today, where information is readily available through the internet. This principle is essential to guarantee that individuals and companies have unrestricted access to online content and services.

For example, internet service providers are prohibited to block or slow down their competitors’ content, applications, or services, except in limited cases, such as network security and integrity. Under this principle, e.g., internet providers must prevent unjustifiable blocking or slowing down content, applications, or services, except in limited cases, such as to maintain network security and integrity. Similarly, service providers are inhibited from prioritising traffic on their networks based on payment from a particular source. At the same time, they are required to provide equal access to online content and services without interference from the interests of internet service providers.

2023-01-31

A public hearing for the proposal of the areas dedicated to installing offshore electricity renewable generation plants opened last January 27th (Order 1396-C/2023). It follows the Portuguese government's recent announcement that an auction for offshore wind energy production would be launched by the end of September.

The proposal (a Portuguese language version can be found here) subject to public hearing until March 10th, comprises the following areas: Largo de Leixões, Figueira da Foz, Ericeira and Sintra-Cascais, Sines and Viana do Castelo (through an extension of the existing pilot area).

These territories comprise 3,393.44 km2 of national maritime space, occupying roughly 5.9% of the space between the coast and the territorial sea's outer boundary and 0.71% of the EEZ, respectively.

The locations in depth from around 75 meters to 200 meters and hence call for the construction of floating structures fastened to the seabed, have a total installable power of 10 GW and are as follows:

Profundidades ente cerca de 75 m e cerca de 200 m
PROPOSED AREAS AREAS (KM2) POWER (GW)
Viana do Castelo 663,00 2,0
Leixões 463,36 1,5
Figueira da Foz 1237,29 4,0
Ericeira 256,84 1,0
Sines 498,66 1,5
Total 3209,9 10

 

The locations with a maximum depth of 50 meters – allowing the installation of fixed structures on the seabed – add up to an installable power of roughly 1 GW:

Depths up to 50m
PROPOSED AREAS AREAS (KM2) POWER (GW)
Matosinhos 180,90 0,995
Port of Sines jurisdiction area 9,64 0,005
Total 200,54 1

 

These areas will be relevant for the Offshore Renewable Energy Allocation Plan and they will be integrated into the National Maritime Spatial Planning Situation Plan (PSOEM), which is being drafted in accordance with Order 12020/2021 of the 7th of December.

These are the onshore connection points to the national grid (RNT) highlighted in the report:

AREAS

LOCATION

Viana do Castelo

Between Ponte de Lima and Vila Nova de Famalicão substations

Leixões

In the area around the Feira substation (Santa Maria da Feira) along the 400 kV Lavos-Feira/Paraimo-Recarei north-south axis

Figueira da Foz

North of Lavos substation (Figueira da Foz), along the Lavos-Feira/Paraimo-Recarei axis, including the future Lares cut-off pole, up to the zone of the Paraimo substation (Anadia), and, south of Lavos substation, up to the area of the RNT north of Leiria

Ericeira

From the north-east area of the Carvoeira substation (Torres Vedras) to the area surrounding the Alto da Mira substation (Amadora)

Sines

Within the area of influence of Sines (Santiago do Cacém) substation

 

Additionally, on January 27th, Notice 1976-A/2023 extended for an additional 10 days the deadline to comment on the proposed order defining the technological free zone for renewable energies with maritime origin or placement off the coast of Viana do Castelo.

2022-11-03

Despite this growth, the wind energy potential in Portugal is far from exhausted, and offshore wind energy has the possibility to contribute to the National Energy and Climate Plan (PNEC2030) and to the Carbon Neutrality Roadmap (2020-2050).

Recently, the Government has committed to achieve the production of energy through renewable sources by 80% in the end of 2026 (four years earlier that the goal set out in the PNEC2023).

As a result, the Government established, on late 23rd September, a Task Force for the planning and operationalization of electro-producing centers based on renewable energy sources of oceanic origin. This working group must produce a report, until  May 31, 2023, containing a set of proposals covering several issues raised regarding this type of energy production, such as: mapping the most suitable locations; the titles of private use of maritime space model; the technical and investment model for the development of electrical infrastructure in offshore.

An offshore wind auction is expected tb be launched in later 2023 for the installation of 10 GW of capacity.  Considering that in Portugal the production of hydroelectric power and onshore wind represent 7.3 GW and 5.6 GW respectively, we can better understand the meaning and dimension of this auction.

LICENSING GENERAL RULES

In general, the production of electricity is submitted to a prior control system under the following terms:

  • Production and Exploration License: production and self-storage with installed capacity over 1 MW, or if it is submitted to an EIA or environmental incidences assessment procedure.

  • Previous Registration and Operation Certificate: production with installed capacity higher than 30 kW and equal to or less than 1 MW and self-storage with installed capacity lower than 1 MW.

  • Prior Communication: production with installed capacity higher than 700 kW and equal to or less than 30 kW.

  • Production projects with installed capacity equal to or less than 700 W are exempt from prior control.

The emission of the Production License depends on the previous attribution of a reserve title of injection capacity at the RESP ("TRC"). 

The TRC can be obtained through one of the following three modalities:

  • General Access: This applies if there is reception capacity at the RESP. It is dependent on the payment of a deposit to DGEG in the amount of EUR10,000.00/MVA for a minimum period of 30 months, or until the power station and/or storage facility comes into operation.

  • Agreement with the operator of the RESP: This applies if there is no reception capacity at the RESP and the maximum annual injection capacity at the RESP has been defined by Government order, to be allocated in this modality until January 15 of each year. Conditioned to the payment of a security deposit to the operator of the RESP in the amount of EUR15,000.00/MVA for a minimum period of 24 months. After the agreement is signed, the deposit is returned and it is mandatory to provide a new deposit to DGEG under the terms of the General Access.

  • Competitive Procedure: This applies if the Government has determined that a competitive procedure for the award of the TRC should be opened. The terms and conditions of the award of the TRC and of the provision of the guarantee are set out in the pieces of the procedure.

LICENSING STEPS

The installation of a electricity producer follows a licensing process with several steps, as follows:

  • Environmental analysis: projects with an installed capacity of more than 50 MW, or more than 20 MW but located in sensitive areas are submitted to EIA, or to an environmental incidences analysis procedure when, regardless of the installed capacity, they are located in sensitive areas.

  • Production License (installed capacity over 1 MW): The process is instructed with the elements mentioned in Annex I of DL 15/2022.

  • Prior Registration (production with installed capacity higher than 30 kW and equal to or less than 1 MW with installed capacity lower than 1 MW): The process is instructed with elements referred to in DGEG Order 6/2020 of February

  • Municipal control: Construction of power generation centers or storage facilities are dependent on obtaining a building permit or a prior communication. Exempt from municipal control the installation of photovoltaic panels that do not exceed the roof area of buildings and the height of the building by 1m.

  • Connection to the RESP: Connection of the RESP connected infrastructures built at the promoter's expense. The promoters may request expropriation for public utility, as well as request the constitution of easements on the properties required for the installation of the electricity infrastructure that will be an integral part of the RESP.

  • Exploration License: Must be requested within one year from the date of the issue of the Production License, with the possibility of extension, once only, for another year.

  • Exploration Certificate: must be requested within nine months from the date of issue of the Previous Registration, with the possibility of extension, for a single time, for another half of the initial period.

MARITIME SPACE PLANNING
 

Law No. 17/2014, of April 10, establishes the bases of the National Maritime Space Planning and Management Policy, and determine that the planning of the national maritime space is carried out through:

Situation plans for one or more areas and or volumes of areas of the national maritime space, with the identification of places for the protection and preservation of the marine environment and the spatial and temporal distribution of current and potential uses and activities;?

Plans for the allocation of areas and/or volumes of national maritime space zones to different uses and activities.

In turn, the same law states that maritime space is, as a rule, for common use and enjoyment; however, its private use may be admissible "by reserving an area or volume for an environmental or marine resource use or ecosystem services that is greater than that obtained through common use and that results in an advantage to the public interest".

The private use is developed under a title of private use of maritime space ("TUPEM").

The law also expressly provides that the award of a TUPEM "does not grant its holder the right to use or exploit maritime space resources", and is also subject to a concession, which may have a maximum duration of 50 years, and is awarded by the respective concession contract.

MARITIME SPACE PLANS

DL 38/2015, of March 12 develop the Basis, which, together with the legal scheme for territorial management instruments, establishes the articulation and compatibility of territorial programs and plans with national maritime space management plans.

Specifically, in accordance with DL 38/2015, the Situation Plan represents and identifies the space and time distribution of existing and potential uses and activities in the national maritime space, considering those that are being developed under a TUPEM. Its material content includes, among other elements, energy resources and renewable energy.

The Situation Plan was approved by Council of Ministers Resolution no. 203-A/2019, of December 30, 

In turn, the allocation plans allocate areas or volumes of national maritime space to uses and activities not identified in the Status Plan, establishing, where applicable, the respective parameters of use.

Allocation plans may be initiated by public initiative (similar to the situation plan), but also by private initiative.

Those who are interested in the preparation of an allocation plan may submit to the member of the Government responsible for the area of the sea a proposal for a planning contract that has as its object the preparation of an allocation plan, which must contain the objectives and rationale for its preparation, as well as the geo-spatial representation with the identification of the spatial and temporal distribution of uses and activities to be developed. 

Once the contract for land use planning is signed, the interested party prepares and completes the land use plan project. 

The final version of the allocation plan is submitted to the government for approval by resolution of the Council of Ministers.

Whenever the allocation plan has been prepared by a private entity, by means of a development contract, with the approval of the allocation plan the interested party is awarded the corresponding title for private use of the national maritime space. 

ENVIRONMENTAL IMPACT ASSESSMENT 

The environmental assessment aims to identify and evaluate “any significant effects on the environment resulting from a plan or program” and is materialized, namely, in the preparation of an “environmental report”, as determined by the Plan and Program Assessment Regime approved by Decree-Law no. 232/2007, of June 15.

With regard to maritime spatial plans, and as already mentioned, according to the Situation Plan, Portugal has a pilot area off Viana do Castelo for the installation of renewable energy, with the installation of the WindFloat Atlantic Offshore Wind Power Plant already planned. 

Thus, if it is intended to install the offshore wind power plant outside the pilot area, the process of obtaining the title of use will necessarily have to be preceded by the approval of an allocation plan for the projected area of the installation.

In this regard, Law 38/2015, specifically in its article 23, for the purposes of applying the scheme for Environmental Impact Assessment (EIA Decree-Law), approved by Decree-Law 151-B/2013 of 31 October, compares the allocation plan to a project. 

As a result, it is in the EIA Decree-Law that we will find the answer to the legal need/requirement to subject the plan/project to environmental impact assessment, which, where applicable, should always take into account the environmental report that accompanied the environmental assessment of the situation plan.

A wind farm project is subject to EIA if:

  1. Reaches the thresholds provided for in the EIA Decree-Law; or
  2. It is located, even partially, in a sensitive area and the EIA authority understands that it is likely to cause significant impact, in accordance with no. 6 of art. 3; or
  3. Not reaching the thresholds and not being located in a sensitive area, the EIA authority understands that it is likely to cause significant impact, under the terms of art. 3.

Download the full pdf below. 

2022-10-17

The transition to an emission-neutral and environmentally sustainable economy is underway. The European "Green Deal", with the Portuguese PNEC, the European taxonomy, and green finance marks the beginning of a new approach to financial investments.

The environmental crisis represents one of humanity's greatest challenges today.

According to McKinsey to prevent a rise of more than 1.5°C, no more than 400 gigatons can be emitted, which means cutting present emissions levels by two-thirds over the course of the decade.

The first attempt to codify the environmental obligations of States at a global level was the Kyoto Protocol signed in 1997 and, more recently, the Paris Agreement of 2015 and the Glasgow Climate Pact of 2021.

At the European Union level, a set of sustainability policies, called the "Green New Deal", was approved in 2019, with the aim of transforming Europe’s economy, and setting the following objectives:

(1)  Neutral greenhouse gas emissions by 2050; and

(2)  Reduction of greenhouse gas emissions by at least 55% (compared to 1990) by 2030.

The Taxonomy Regulation, approved in 2020, establishes a European Union classification system in order to determine whether an economic activity is environmentally sustainable.

Portugal has joined the European Union’s and the World’s efforts to promote environmental sustainability since the beginning of the millennium, with aggressive investments in renewable energy, such as wind and hydroelectric power, and, more recently, in solar energy.

On 10 July 2019, Portugal approved the National Energy and Climate Plan (PNEC) which sets out Portugal’s agenda for the next decade in the environmental field and the country’s environmental goals to be achieved by 2030, of which we highlight:

(1) To reduce greenhouse gas emissions by 45% to 55%, in comparison with 2005 emissions;

(2) To increase to 47% the value of energy from renewable sources in the gross final consumption of energy; and

(3) To reduce primary energy consumption by 35% compared to 2005.

These goals can only be achieved through the development of renewable energy projects. The investments are large; therefore, sponsors should plan and use financing strategies appropriate to the projects they develop.

The "Green New Deal" highlighted the need to act in the field of financing green projects and announced the development of a renewed strategy in this area. To this end, a new European directive is under development that will standardize the issuing and negotiation of financing instruments for sustainable projects in Europe.

The issuance of so-called "green bonds" has become one of the new and most important financing instruments for sustainable projects. In this briefing, we describe what green bonds are, how they work and how they may be issued.

This briefing also describes the criteria used for qualifying bonds as "green" and also the process for issuing bonds under Portuguese law.

1. Looking for "Green" Investments

The case for a “green” revolution has been made in the economic press and general press since the beginning of the millennium, but “green” investments are only now beginning to make significant strides.

Global investors are beginning to demand that public and private companies and organizations make clear, precise, and measurable environmental commitments that can be verified and audited by the market. This movement extends to all types of financial assets: equities, government bonds, exchange-traded funds (ETFs), or hedge funds.

According to recent data from Bloomberg Intelligence, ETFs linked to ESG policies (an acronym for "Environmental, Social, Governance") cumulative assets accounted for more than $360 billion in 2021, almost 4% of global ETF assets.

Sustainable bonds accounted for 10% of overall global debt market activity, which exceeds the 6.6% of 2020 by large.

According to the 2021 Global ETF Investor Survey by US bank Brown Brothers Harriman, 82% of global investors plan to increase investment in ETFs linked to ESG policies, and over the next five years, nearly 56% of ETF investors plan to allocate at least 11% of their investments to funds that follow sustainable policies.

By 2021, a total of USD 500 billion was invested in green bonds, issued by companies, financial institutions, and governments to finance environmentally sustainable projects, reaching a new record high.

The global value of green bonds reached $488.8 billion, almost doubling 2020 levels. In several issues, green bonds have increased by 54% compared to 2020.

Europe accounted for 54% of the sustainable bond market, compared to 22% in America and 18% in the Asia Pacific region.

In 2020, European Union was the global leader in green bonds, responsible for 48 % of global issuances and 51 % of the global volume of green bonds being issued in the European Union.

2. What are green bonds?

As the name suggests, 'green bonds' are first and foremost bonds, i.e. financial instruments representing debt issued by a public or private entity, whose special feature, compared with other bonds, is that the bond proceeds are used exclusively for 'green' projects, i.e. projects that meet certain environmental objectives.

The first issue of green bonds was made in 2007, by the European Investment Bank, and served to finance, through loans, several projects developed by other entities. In the following years, other financial institutions, such as the World Bank, issued debt to finance environmental projects.

Since 2014, developers - usually private entities - have taken the initiative to directly issue green bonds in search of financial investors with an interest in this type of investment, and there are now numerous financial investors specializing in environmentally sustainable industries.

In general, a few types of green finance can be identified:

  • Bonds with recourse to the issuer: the same credit rating applies as for other bonds of the issuer;
  • Municipal or guaranteed bonds: the issuers' revenues arising from fees, taxes, etc. (e.g. on electricity) are pledged as collateral;
  • Project bonds: the resource is limited to the project's assets and balance sheet;
  • Securitised bonds: the resource is limited to a group of projects that have been pooled;
  • Covered bonds: with recourse to the issuer and, if the issuer cannot repay the bonds, to the portfolio provided as collateral;
  • Loans: with full recourse to the borrower(s) in the case of unsecured loans and to security interests in the case of secured loans;
  • Other debt instruments: Convertible bonds, Schuldschein, Commercial paper, Sukuk, Debentures.

3. The ICMA “Green Bond Principles”

In the absence of specific legal rules for green bonds, the contribution of the International Capital Markets Association (ICMA) has been of particular importance in defining the green bond principles, which cover the following aspects:

  • Use of proceeds;
  • Project evaluation and selection;
  • Management of proceeds; and
  • Reporting.

First, the ICMA Principles state that funds should be used to finance "Green Projects" defined as projects that provide clear environmental benefits.

For ICMA, the eligible green projects categories include:

  • Renewable energy, including production, transmission, appliances, and products;
  • Energy efficiency, including new and renovated buildings, energy storage, district heating, smart grids, appliances, and products;
  • Pollution prevention and control, including air emission reduction, greenhouse gas control, soil remediation, waste prevention, waste reduction, waste recycling, and energy-efficient waste;
  • Environmentally sustainable management of living natural resources and land use, including environmentally sustainable agriculture; environmentally sustainable animal husbandry; climate-smart farm inputs, such as biological crop protection or drip irrigation; environmentally sustainable fisheries and aquaculture; environmentally sustainable forestry, including afforestation or reforestation, and the preservation or restoration of natural landscapes;
  • Conservation of terrestrial and aquatic biodiversity (including protection of coastal, marine, and hydrographic environments);
  • Clean transport, including electric, hybrid, public, rail, and multimodal transport, infrastructure for clean energy vehicles, and reduction of pollutant emissions;
  • Sustainable water and wastewater management;
  • Climate change adaptation, including information support systems such as climate observation and early warning systems;
  • Eco-efficient and/or circular products, technologies, and adapted processes (such as development and introduction of environmentally sustainable, eco-labelled, or environmentally certified products, resource-efficient packaging, and distribution); and
  • Green buildings that meet regional, national, or internationally recognized standards or certifications.

Second, it is recommended that the green bond issuer communicates to investors:

  • the goals of environmental sustainability;
  • the process that led the issuer to integrate the project into the categories of eligible Green Projects;
  • the related eligibility criteria, including, where applicable, exclusion criteria, or any other process applied to identify and manage potentially material environmental and social risks associated with projects, notably by providing information on the internal objectives, strategy, and processes that make the project environmentally sustainable, which can and should include, where possible, the indication of green standards and/or certifications awarded to projects and make use of audits or certification by external and independent entities.

Compliance with this principle involves the technical assessment and provision to investors of information on the environmental sustainability goals that the green project will, in the specific case, promote.

Third, bond proceeds should be credited to sub-accounts or accounts controlled by a formal internal process to ensure that the proceeds are utilized in eligible green projects and can be audited by the issuer and external auditors.

Finally, and for reasons of transparency, the ICMA Principles establish that issuers should disclose and keep available information about the allocation of the proceeds, projects, and their impact, on an annual basis or whenever there is a material change, including qualitative and, where possible, quantitative performance indicators, to allow greater investor scrutiny of the use of funding and its management.

4. The EU Taxonomy Regulation

In 2020, the European Parliament approved Regulation (EU) 2020/852 ("Taxonomy Regulation"), which aims to promote sustainable investments and to create a secure, precise, and rigorous classification of eligible project types and the objectives of sustainable projects.

The Taxonomy Regulation defines as environmentally sustainable the economic activities that:

  • Contribute substantially to one or more environmental objectives, i.e. (i) climate change mitigation, (ii) adaptation to climate change, (iii) sustainable use, (iv) protection of water and marine resources, (v) transition to a circular economy, (vi) prevention and control of pollution and (v) protection and restoration of biodiversity and ecosystems;
  • Not significantly impair any of the environmental objectives listed in Article 17 of the Taxonomy Regulation;
  • Are developed by certain minimum safeguards; and
  • Satisfy the technical assessment criteria set by the Commission in Delegated Regulation (EU) 2021/2139.

The requirements set by the Taxonomy Regulation provide the basis for the concrete definition of the commitments that should be at the heart of green financing.

The Taxonomy Regulation requires projects to comply with the following requirements:

  • Identify the most relevant potential contributions to the environmental objective and the minimum requirements that must be met to avoid significant harm to any relevant environmental objectives;
  • Be quantifiable or, when this is not possible, use sustainability indicators;
  • Be based on conclusive scientific evidence and the precautionary principle;
  • Take life-cycle considerations into account by considering the environmental impact of the economic activity and the environmental impact of products and services resulting from that activity, the nature and scale of the economic activity, and the potential market impact of the transition to a more sustainable economy; and
  • Covering all relevant economic activities in a specific sector and ensuring that these activities are treated equally.

5. The Future Green Bond Regulation

In July 2021, the European Commission published a proposal for a Regulation on European Green Bonds (Green Bond Regulation).

The proposed Green Bonds Regulation foresees the creation of a standard for the issuance of European green bonds, available to all issuers, with the following features:

  • Inclusive and voluntary. European Green Bonds can be issued by any type of issuer, listed or unlisted, public or private, including the Member States voluntarily. The issue of green bonds complying with different standards is not prohibited, the only consequence being that such bonds may not be designated as European Green Bonds.
  • Alignment with Taxonomy regulation. European Green Bonds will require issuers to allocate 100% of the bond proceeds to activities that are compliant with the Taxonomy Regulation requirements.
  • Long-termrm projects. The proceeds of European Green Bonds can be used to fund long-term projects, up to 10 years, which involve an economic activity compliant with the Taxonomy Regulation.

Although the green bond regulation has not yet been approved it can already be used in the preparation of green bond issues.

The proposed Green Bond Regulation sets out the following requirements for the classification of bonds as "European Green Bond":

  • The proceeds of the bonds should be applied in activities that comply with the Taxonomy Regulation (Regulation (EU) 2020/852)
  • Before issuing, issuers must complete a factsheet following the model attached to the Regulation, obtain external certification, and publish both documents;
  • Issuers must prepare an annual report on the allocation of the proceeds until they are fully used and a report on the environmental impact of the use of the proceeds at least once during the lifetime of the bonds; and
  • Issuers should obtain a post-issuance verification of the report regarding the allocation of bond proceeds by an external entity.

6. Advantages of Green Bonds

6.1. Signaling

An advantage associated with the use of this type of instrument is the information transmitted to the market and investors.

In general, all investors today seek to understand whether the companies in which they invest are committed to pursuing environmental and social responsibility goals. Understanding these matters is now socially and economically very relevant because the future of the planet depends on them and the "environmental emergency" is now an unavoidable reality.

For this reason, it is now standard practice for listed companies to inform investors and other stakeholders of their environmental and social responsibility commitments.

By issuing green bonds, companies give a clear and credible signal to the market of their environmental responsibility.

6.2. Access to the "green money" market

Related to environmental responsibility is also access to the "green money" market, i.e., to a growing range of investors specialized in sustainable projects.

In practice, this means that companies committed to environmental goals will have access to investors that other companies do not have.

The actual size of the "green money" market is not yet exactly quantified, but it is already clear that a growing number of investors are fully committed to, or at least seeking to allocate a significant portion of their investments to, environmentally sustainable projects and companies.

This justifies the exponential growth of green bond issues, as well as the guarantee of origin certificates for renewable energy production.

It is estimated that green or socially relevant projects have attracted investment to the tune of €30 billion, particularly in Europe, where half of that amount has been concentrated.

6.3. More favorable financing conditions

Finally, there is a general perception that investors are willing to pay a premium when it comes to green products.

There are some studies to this effect. However, it seems too early to say with certainty that the same is true for bonds, i.e. that compared to other types of bonds, green bond issuers benefit from more favourable financial conditions.

The reasons for our uncertainty are that not enough green bonds have been issued to date.

7. The Issuance of Green Bonds

7.1. General framework for the issue of bonds

As stated above, bonds are designated green bonds because they are issued to finance projects or entities that comply with a set of environmental responsibility rules. For everything else, green bonds follow the general bond regime outlined in the Portuguese Companies Code.

It should be noted that bonds can only be issued by companies registered for more than one year, unless, in the case of private companies, they are the result of the merger or division of companies of which at least one has been registered for more than one year or the bonds are guaranteed by a credit institution, the State or a similar public entity.

The law also requires that investors are provided with financial information on the issuer, reported to a date not exceeding three months before the issue, audited by an independent auditor registered with the Portuguese Securities Market Commission (CMVM), and prepared by the applicable accounting standards.

7.2. Limits on issuance

The issuance of bonds depends on the issuer showing, after the issue, a financial autonomy ratio equal to or greater than 35%.

Compliance with the financial autonomy ratio must be confirmed by the opinion of the supervisory board, the sole supervisor, or the statutory auditor.

This limit will not apply to companies whose shares have been admitted to trading on a regulated market or companies with a rating assigned by a rating company registered with the CMVM.

This limit will not apply either to (i) bonds secured by special security interests in favour of bondholders, (ii) bonds with a unit par value of EUR 100,000 or more, or where subscription is carried out exclusively in minimum lots of EUR 100,000 or more, and (iii) bonds fully subscribed by qualified investors within the meaning of the Portuguese Securities Code, provided that the bonds issued are not subsequently placed, directly or indirectly, with non-qualified investors.

7.3. Approval and registration of the issue

The issue of bonds must be approved by the shareholders unless the articles of association authorize it to be approved by the board of directors, and no resolution to issue bonds may be taken until a previous issue has been subscribed to and carried out.

Shareholders may authorize a bond issue approved by them to be made in series, to be specified by them, or by the board of directors.

The issuance of bonds and the issue of each of its series, when made through a private offering, are subject to commercial registration, except if their admission to trading on a regulated market has occurred within the time limit for requesting registration.

7.4. Placement of bonds

Bond issues may be placed through:

  • a public offer; or
  • a private offer.

The offer is considered a public offer when it is preceded by the disclosure of a prospectus or another document required under EU law.

Under Regulation (EU) 2017/1129 (the “Prospectus Regulation”), as a rule, a prospectus is required when the securities are offered to the public or admitted to trading on a regulated market. However, the Prospectus Regulation exempts certain offers from this requirement, such as:

  • Offers addressed solely to qualified investors;
  • Offers addressed to fewer than 150 natural or legal persons per Member State, other than qualified investors;
  • Offers of securities whose denomination per unit amounts to at least EUR 100,000; and
  • Offers addressed to investors who acquire securities for a total consideration of at least EUR 100,000 per investor, for each separate offer.

In case of offers where a prospectus is required, the steps are as follows:

(1) Submission of prospectus approval request to the CMVM;

(2) Approval by the CMVM of the draft prospectus within 10 business days of submission (or 20 business days when the issuer does not have any securities admitted to trading on a regulated market and has not previously offered securities to the public); and

(3) Publication of the prospectus.

As of 2022, public offers where a prospectus is required have the right (but not the obligation) to engage a financial intermediary to provide assistance and placement services.

In private offers, a prospectus is not required and the issuer will enter into a subscription agreement with the investor(s) to regulate the terms and conditions of the subscription of the bonds.

7.5. Rights of bondholders

7.5.1. Remuneration of bonds

The subscription of bonds gives their holders a claim on the issuer.

Bonds may confer bondholders the right to (i) a fixed interest rate, additional interest, or a redemption premium, either fixed or dependent on the profits made by the company, (ii) a variable and dependent interest and redemption plan based on profits, to be convertible into shares, whether ordinary or preferred, with or without voting rights, or into other securities, or (iii) subscribe for one or more shares, whether ordinary or preferred, with or without voting rights.

The supplementary interest or repayment premium referred to above may be established as a fixed percentage of the profit of each financial year, regardless of the amount of the latter and of any fluctuations during the life of the loan, or as from a certain minimum limit to be established in the issue.

The additional interest or redemption premium may also be established based on a variable percentage based on the volume of profits produced each year or on profits to be considered more than the minimum threshold stipulated in the issue.

There may also be an allocation of profits to shareholders and bondholders in proportion to the nominal value of existing securities.

Where the terms of the issue provide for the distribution of supplementary interest or redemption premiums in the year of the issue, the amount thereof is calculated using the criteria established in the issue.

They may also be subordinated, that is to say, they may be reimbursable after the satisfaction of the common creditors, provided that this is expressly stated in the terms of issue and the documents, registers, and entries relating thereto, or they may offer special security over certain assets or income belonging to the issuer or a third party, provided that such special security is expressly stated in the terms of issue and the documents, registers, and entries relating thereto.

7.5.2. Bondholders' meeting

The bondholders may meet in a bondholders' meeting, convened by the common representative of the bondholders or, while he/she is not elected or while he/she refuses to convene it, by the chairman of the board of the general meeting of shareholders, or judicially when they refuse, provided that bondholders holding at least 5% of the nominal value of the bonds so request.

The bondholders' meeting deliberates on all matters assigned to it by law or that are of common interest to the bondholders, and in particular on:

  • appointment, remuneration, and removal of the common representative of the bondholders;
  • modification of the conditions of the bondholders' claims;
  • proposals for rescue or insolvency plans;
  • claims by bondholders in enforcement actions, except in cases of urgency;
  • establishment of a fund for the expenditure necessary to protect the common interests and the rendering of the respective accounts;
  • authorization of the common representative to bring legal proceedings.

The resolutions passed by the meeting are binding on absent or dissenting bondholders, which is particularly relevant when the meeting approves company recovery or insolvency plans that may result in a reduction in the value of the credits held by the bonds.

Download the pdf file below. 

 

2022-09-12

Our Partner João Macedo Vitorino will be a speaker at the 4th edition of the Solarplaza Summit Portugal, on October 13, 2022, at 14h40. He will talk about "The opportunity of self-consumption" in Portugal. If you want to participate, book your ticket here.  

The event will take place at the Altis Grand Hotel, in Lisbon. 

 

Transition

In Portugal, electricity self-consumption is ruled by Decree-Law 15/2022. Self-consumption promotes electricity decentralized production from renewable sources. 

Energy self-consumption is the production of renewable energy by a final consumer through one or more production unit(s) for self-consumption (UPACunidade de produção para autoconsumo) in a facility owned by that individual that can store or sell in-house produced electricity of a renewable source.

Self-consumption can be:  

  • Individual, when the final consumer produces renewable energy for themselves; or
  • Collective, when the energy produced is to be consumed in two or more facilities of different self-consumers.

According to DGEG data: between 2016 and 2021, decentralized installed power increased by 66% and photovoltaic UPAC increased by around 90%. The use of UPAC from non-solar sources was almost non-existent.

 

Prior control

Both individual and collective self-consumption is subject to a prior control procedure which, depending on the installed capacity of UPAC, can be:

  • Production and Operation License: installed capacity greater than 1 MW;
  • Prior Registration and Operating Certificate: installed capacity greater than 30 kW and equal to or less than 1 MW; and
  • Prior Notice: installed capacity greater than 700 kW and equal to or less than 30 kW.

The distribution of spare RESP injection capacity determines if a Production License can be awarded or not. The license award depends on the payment of a security deposit obtained through (i) a general access request (when there is available capacity), (ii) a request-agreement between the interested party and RESP’s operator (the interested party should cover the financial costs of construction or improvement of the grid necessary for the reception of the energy produced by UPAC), or (iii) a competitive procedure.

Spare RESP injection capacity is not necessary where there is:

  • UPAC with surplus injection into RESP of less than 1 MW;
  • Hybridization by adding a new production unit to a UPAC that uses a different primary source of renewable energy, without changing the assigned injection capacity;
  • Over-equipment through the installation of more generating equipment or inverters in UPAC if it means an installed capacity of up to 20% of the assigned connection power; and
  • Retrofit by replacing the generating equipment totally or partially, without changing the deployment polygon, with a maximum increase of 20% of the power initially assigned.

Until April 19, 2024, the award of an Operation License or Operation Certificate is not necessary whenever the network operator verifies the existence of favorable conditions for connection. The exemption must be requested three years after that verification.

 

Energy sharing and trade

Energy sharing

EGAC must inform network operators about the desired sharing method of collective self-consumption, for distributing UPAC production between self-consumers. If EGAC stays silent, the network operator shares proportionally each installation based on measured consumption.

Energy sharing can be based on:

  • Fixed coefficients differentiated by working days, holidays, weekends, and/or seasons;
  • Variable coefficients based on hierarchy or on consumption measured in each period within the time frame established in ERSE regulations;
  • The combination of fixed and variable coefficients; and
  • The use of specific dynamic management systems, through monitoring, control, and dynamic energy management (being necessary to provide network operators with measuring equipment data and sharing coefficient).

Energy Trade

Both in individual or collective self-consumption, the surplus energy from non-consumed production can be sold and paid:

  • In an organized market or through bilateral contracting, for a previously agreed price; 
  • Through the market participant against payment of a freely agreed upon price; and
  • Through a market aggregator, who must purchase the energy produced by the producers.

Until the market facilitator license is granted, the last resort supplier (CUR) ensures the acquisition of the electricity which authorized power for injection into RESP does not exceed 1 MW.

The Government can also create support schemes for production from renewable energy sources, subject to competitive procedures.

 

Collective self-consumption

There are collective self-consumers (ACC), Renewable Energy Communities (CER), and Citizens' Energy Communities (CCE).

ACC is a group of at least two end consumers who share the energy produced by both or by only one of them, as well as RESP access costs. Joining can be possible or not. ACC organization is subject to the approval of internal regulations and the EGAC system manager appointment. ACC should be connected through RESP or the internal grid. In ACC, all self-consumers are jointly responsible for compliance with legal obligations.

DGEG must be informed of any internal regulations until 3 months after the beginning of operation of UPAC, to define, at least, the criteria for the free entry of new members and the withdrawal of participants, rules for sharing energy and payment of tariffs, commercial relations, and what happens to surpluses.

CER and CEE are legal persons, created when their members (natural or legal persons of public or private nature, mainly non-profit) join, open and voluntary. Management rules should be set in articles of association or internal regulations. Participants of CER and CCE must be consumers. CCE can also produce, distribute, trade, consume, aggregate, and store energy regardless of whether the primary source is renewable or non-renewable.

The proximity between UPAC and consumption facilities is mandatory for production activities. The distance cannot be greater than:

  • 2 km or for LV networks, they must be connected to the same transformer station; or
  • 4 km for MV connections, 10 km for HV connections, and 20 km for EHV connections.

 

Electro-intensive self-consumption

The Electro-intensive Customer Statute (Estatuto do Cliente Eletrointensivo - ECE) was ruled by Ministerial Order no. 112/2022, establishing obligations and support measures for consumption facilities that stand by this statute through a standard form contract to benefit from:

  • Partial reduction (minimum discount of 75% ) of CIEG levied on the global use of the system tariff, regarding the consumption of energy that comes from RESP
  • Total exemption from charges corresponding to CIEG levied on the global use-of-system tariff, for energy that is self-consumed and supplied through RESP;
  • Access to a risk hedging mechanism, at least 10% of the electricity consumption from renewable sources acquired through long-term contracts, with a minimum duration of five years (still subject to approval by the European Commission); and
  • Exemption from the application of the proximity criteria between UPAC and the location of the consumption installation.

Electricity consumers can subscribe to this statute if they:

  • Belong to one of the business sectors identified in Annex 3 or Annex 5 of the European Commission Communication 2014/C 200/01 on “Guidelines on State Aid for Environmental Protection and Energy 2014-2020”;
  • Have an EHV, HV, or MV connection to the grid;
  • Comply with the requirements established under the EU ETS or the Intensive Energy Consumption Management System;
  • Have an annual electricity consumption equal to or greater than 20 GWh and an annual consumption (in the normal off-peak and peak hours) equal to or greater than 40% of the annual electricity consumption; and
  • Have an annual electro-intensity level equal to or greater than 1 kWh/€ of gross value added (GVA), by the arithmetic average of the last three years.

 

How to join ECE

Requests to join ECE must be submitted to DGEG until June 15. They must include: 

  • Identification of the applicant;
  • Identification of the consumption installation;
  • Indication of the sector or sub-sector and the consumption installation's activity code;  
  • Proof of the electric energy supply contract;
  • Proof of compliance with the requirements for the lawful consumption installation's activity performance, where applicable; and
  • Gross annual added value of the consumption installation in the last three years, duly certified and audited. 

If the request is accepted, DGEG will send the consumer the draft of the ECE standard form contract published through Order no. 5975-B/2022 for signature. The standard contract is valid for a year and is subject to renewal for an equal period if the consumer submits a new request by June 15 of each year. 

By joining ECE, the consumer will have to comply with technical duties, such as (i) subjecting the beneficiary installation's measurement, registration and control equipment to the technical terms to be defined by the overall manager of the National Electricity System, and (ii) observing a minimum availability rate of 90% each year. 

ECE standard form contract can terminate if the activity ends, if ECE eligibility requirements are non-complied with and if contractual terms or the terms of the obligation to install and operate measuring, recording and control equipment are changed and not communicated.

 

What is expected for the future

Solar PV capacity has grown actively in Portugal in the last decade. The country has now a PV capacity of almost 1.8 GW, and it is expected to reach 9 GW by 2030.

Recent statistics from DGEG show that 2021 set a record of 1777 MW of photovoltaic power regarding the installation of new solar photovoltaic capacity in Portugal. According to APREN (Portuguese Renewable Energy Association), in January 2022 Portugal was the 4th country in Europe with the highest renewable incorporation in electricity generation, with 4085 GWh of electricity generated, of which 59.7% had a renewable origin.

Having in mind the targets set by the Paris Agreement and the National Energy and Climate Plan 2021-2030 (PNEC), Portugal committed to achieving a target of 80% electricity production from renewable energy sources by the end of 2030 and electrifying 65% of the economy by 2050. Regarding the decentralized solar photovoltaic energy production, the goals outlined by PNEC are ambitious with a target of 0.8 GW of installed capacity by 2025 and 2 GW by 2030.

The development of self-consumption electricity production is key to meeting Portugal’s production goals as it faces the infrastructural deficit that is the lack of reception capacity in the public network since only the energy produced and not consumed is injected into the network. The new National Electricity System Law reinforced the focus on self-consumption, by simplifying procedures and creating the Statute of the Electro-intensive Customer.

The Statute of the Electro-Intensive Customer is especially important for the democratization of self-consumption since it allows heavy industry to consume electricity produced by UPAC (owned by third parties) located in other regions of the country with easier installation and solar exposure.

With the most favorable perspectives pointing to the maintenance of high electricity prices during 2022, self-consumption is increasingly drawing the interest of companies tired of OMIE prices. 

Self-consumption is expected to grow in the next few years in Portugal. New players and business models capable of satisfying the country's energy needs are also likely to develop.

 

If you want to find out more, please download the PDF down below. 

2022-08-22

New Features

The National Electricity System (Sistema Elétrico Nacional - SEN), brought by Decree-Law no. 15/2022 of 14 January, establishes new sets of rules that were not yet available or were poorly implemented in previous regulations.

Achieving the national energy transition goals focusing on solutions to circumvent the current grid capacity shortage is SEN’s purpose: countering the grid’s inactivity and maximizing the reception potential of the Public Service Electricity Grid (Rede Elétrica de Serviço Público - RESP).

Two of the most important new features are new hydrid power production and hybridization of existing plants:

  • Hybridization is adding to an existing power plant or self-consumption production unit (unidade de produção de autoconsumoUPAC) of new production units that use several primary renewable energy sources, without changing pre-existing injection capacity of the power plant or UPAC; and
  • Hybrid new plants or UPAC are those that, for the prior control procedure, simultaneously present more than one production unit using several primary renewable energy sources.

The new framework simplifies and promotes the use of the same injection point in RESP by several technological tools with a different primary source. It allows hybrid generation systems to be set up ab initio or later through a very straightforward prior control procedure to amend the production license.

Renewable power generating plants can carry out a hybridization project; but solar and wind energy hidridized plants have specific daily and intra-annual cycles that leverage their complementarity and allow maximizing the reception point at RESP.

The scale of wind energy generation in SEN, makes the opening for hybridizarion become clearer. In the last 5 years, wind-generated electricity corresponded, on average, to 24% of mainland electricity consumption, with an installed capacity in 2021 of 5,628,00 MW and representing a production share within renewable energies of 55.71%.

 

Prior control - I

Installation of a hybrid power plant or UPAC or the Hybridization of an existing power plant or UPAC are subject to prior control under the following terms:

  • Production and Operation License: installed capacity greater than  1 MW.
  • Prior Registration and Operating Certificate: installed capacity greater than 30 kW and equal to or less than 1 MW.
  • Prior Notice: installed capacity greater than 700 kW and equal to or less than 30 kW
  • Projects with an installed capacity of 700 W or less are exempt from prior control.

The award of a Production License is dependent on the prior issue of a grid capacity reservation title into RESP (título de reserva de capacidade - TRC).

Hybridization does not require a TRC as there is no increase in the injection capacity of the existing power plant or UPAC.

TRC can be acquired in one of three ways:

  • General Access: Applicable if there is reception capacity at RESP. It is subject to the payment of a deposit of EUR10,000.00/MVA to DGEG for a minimum period of 30 months, or until the power or UPAC reaches commissioning.
  • Agreement with RESP operator: Applicable if there is no reception capacity at RESP and the maximum annual injection capacity for this modality has been established by the Government until 15 January of each year. Subject to the payment of a deposit to RESP operator in the amount of EUR15,000.00/MVA for a minimum period of 24 months. After the agreement is executed, the deposit is refunded, and a new deposit shall be provided under the terms of the General Access.
  • Competitive Procedure: Applicable if the Government set up a competitive procedure for the award of TRC. The terms and conditions for the award of TRC and the provision of the deposit  are established in the documents regarding the procedure.

 

Prior control - II

In hybridization, new prior control titles explicitly identify the injection capacity in RESP allocated to the new production unit and entail an amendment to the pre-existing TRC, performed by DGEG or, when there is an agreement with the operator of RESP, by the relevant operator.

In a prior control procedure, DGEG notifies the applicant of the elements initially submitted and that remain valid. 

When hybridization takes place in a power plant or UPAC that has been awarded with a water resources title or a title for the use of maritime space, the new prior control title and pre-existing prior control title may subsist autonomously even if water use titles are terminated, if priority of injection to the pre-existing power plant is ensured.

However, termination of the water use titles will always result in the revocation of the new prior control title in cases where the hybridization requires the title for its operation.

Termination of pre-existing and/or new prior control titles is ruled by Decree-Law 15/2022 and can occur by expiration (art. 38) or by revocation (art. 39).

Termination of the prior control title leads to the automatic expiration of the operation license and/or operation certificate, as well as the expiration of the relevant capacity reservation title into RESP.

The termination of the prior control title:

  • Pre-existing: DGEG will issue a new TRC in the name of the holder of the new generating unit and the new prior control title shall continue to benefit from injection capacity. Injection capacity in RESP of the preexisting title will be available for new allocation.
  • New: termination of the new title shall be annotated to the pre-existing title and the corresponding injection capacity remains assured in the preexisting title.

 

Transmission of the prior control title

The transmission of the prior control title is subject DGEG’s consent and legal requirements must be complied with for its award. It also includes the transfer of all elements included in or attached to the transmitted title.

Transfer requests must be submitted by the title holder and must bring:

  • Identification, technical and financial suitability details of the transferee; and
  • Statement of acceptance of the transfer and of all the conditions of the prior control title.

Until 15 business days after receiving the request, DGEG will make a decision. DGEG can also request additional information, which the title holder must provide within 30 business days.

Permission entails the endorsement of the new holder to the initial prior control title.

Until the operation license or operation certificate is issued:

  • Direct or indirect control change over the injection capacity title holder into RESP are considered an amendment to the prior control title, subject to DGEG’s consent; and
  • Requests for changing the holder of the prior control title are subjet to reinforcement of the deposit in half of its value according to the relevant TRC modality.

The autonomous transfer of the new prior control title is subject to the preceding power plant or UPAC holder’s consent and that includes the agreement and conditions established for the use of the injection capacity in RESP by the transferee.

The injection capacity title in RESP keeps on belonging to the holder of the pre-existing power plant or UPAC even if DGEG issues a new capacity reservation title in the new generating unit holder in the event of termination of the pre-existing prior control title.

 

Licensing

Installing a power plant or Hybrid UPAC or the Hybridization of an existing power plant or UPAC - generally with an installed capacity of more than 1 MVA - follows a licensing process with several steps:

In particular:

  • Environmental assessment: Projects with an installed capacity exceeding 50 MW, or with more than 20 MW but located in sensitive areas are subject to EIA, or to an environmental incidences assessment procedure if, regardless of installed capacity, they are in sensitive areas;
  • Production License: The request should also include the elements referred in Annex I of Decree-Law no. 15/2022. For Hybridizations, DGEG notifies the applicant of the elements initially submitted and that remain valid;
  • Local Government Control: The construction of a power plant or UPAC needs a building permit first. Installing photovoltaic panels that do not go beyond the roof of a building by one meter are exempt from local government control;
  • Connection to RESP: The connection between infrastructures connecting to RESP is built at the promoter's expense. Promoters may request expropriation for public utility, as well as request easement rights regarding the properties required for the installation of the electricity infrastructures that will be part of RESP; and
  • Operation License: Must be requested by the promotor until a year after the award of the Production License. Deadline can be extended, once, for another year maximum.

 

Legal unbundling

Hybridization can be granted to non-holders of the power plant or UPAC that is going to be hybridized. In that case, the new prior control title would be issued on behalf of an entity other than the pre-existing prior control title holder, or the name of the new holder would be endorsed in the new prior control title.

The holder of the power plant must submit DGEG an agreement between themselves and the holder of the new power plant or UPAC that establishes:

  • The terms and conditions of the legal unbundling of the hybridization;
  • Rights and responsibilities of the parties regarding electricity generation;
  • Injection of electricity into the grid;
  • Metering and invoicing; and
  • Ownership over the facilities and equipment and sharing of information.

In any case, the holders of the new power plant and of the preceding power plant are jointly and severally liable before the licensing and supervisory entities, the grid operators and SEN’s overall manager regarding compliance with all legal and regulatory rights and responsibilities arising from the new prior control title and resulting from the installation and operation of the new power plant and relevant grid connection.

If the legal unbundling agreement is terminated and the new power plant is not incorporated into the preceding power plant or transformed into an autonomous power plant within 30 days counting from the termination date, the new prior control certificate expires.

The incorporation of the new power plant into the pre-existing power plant or its transformation as an autonomous power plant constitute a change to the prior control title and that must follow a change procedure. If considered a transformation, a new capacity reservation title should be issued.

 

If you wish to learn more, please download our PDF below. 

2022-07-13
Introduction

Until 2006, Eletricidade de Portugal, E.P. (“EDP”), a state-owned company, held all the electricity production, transmission, distribution and supply market and its main infrastructures. From 2006 onwards, activities linked to the electricity marked, such as the electricity production and supply, started to be more liberalized. This liberalized market opened the doors for several other private companies and investors.

Most recently, Decree-Law 15/2022, of 14 January (“Electricity Law“), implemented Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018, on the promotion of the use of energy from renewable sources, and Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019, that establishes the common rules for the internal market for electricity.

The Electricity Law sets a framework to the National Electrical System (Sistema Elétrico Nacional - “SEN”). Some of its most distinctive features are the creation of three Technological Free Zones (regulatory sandboxes), the creation of the Electro-Intensive Customer Statute and the creation of an electricity aggregator, responsible for connecting the consumption flexibility and storage electricity, purchasing or selling through electricity markets and/or though bilateral agreements.

In this paper, we travel through all Market Participants and their respective functions and obligations as defined in the Electricity Law.

 

The Portuguese Electricity market Participants 

Electricity Producers 

Electricity Producers, ruled by articles 11, 39, 97 and Annex I of the Electricity Law, are responsible for generating and providing electricity to the Portuguese electricity grids. Electricity producers can:?

  • Install the power station or the storage facility;?
  • Sell energy in organized markets or through bilateral agreements; and
  • Purchase energy until the limit of the injection capacity established in the production license.

To operate, producers shall obtain from the Portuguese Directorate of Energy (Direção Geral de Energia e Geologia – “DGEG”) a prior registration certificate or a production license (as pursuant to the installed capacity) in relation to each production unit.

The procedure to obtain an electricity production license is subject to the prior assignment of a public electricity grid (Rede Elétrica de Serviço Público – “RESP”) injection capacity reserve title (Electricity Law, article 18/1). This request must be submitted through the DGEG electronic platform.

 

Storage Companies 

Electricity storage (regulated in article 2/60 of Directive (EU) 2019/944 and in articles 11 et seq., 79, 80 and 97 of  the Electricity Law) is defined as the process by which previously produced energy is stored through its conversion into another form of energy to be used in a different time. In Portugal, hydroelectric pumping is the most common energy storage method. Other common energy storage technologies in use are lithium batteries and flywheels.

Autonomous storage activity is subject to a prior control procedure by DGEG in case installed capacity:

  • is above 1 MW or subject to an environmental impact assessment, it requires a production and operation license. 
  • is above 30 KW but less than 1 MW a prior registration and an operating certificate issuance by DGEG will suffice.

Integrated storage activity with the production of electricity shall follow the prior control procedure applicable to production covering, in such case, all activities simultaneously.

 

SEN Global Manager

The Global Manager of the National Electrical System (Sistema Elétrico Nacional - “SEN”) is responsible for SEN management. 

It is also responsible for ensuring SEN’s harmonized operation, security and electricity supply stability in the short, medium, and long term. 

This includes ensuring that the system is operated safely and efficiently, as well as coordinating with other European countries a stable and secure electricity supply.

The Electricity Law establishes the Global Manager of the National Electrical System rules and the technical management of the National Electricity System in its articles 3 jj) and 103 to 106.

Article 104 of the Eletricity Law establishes that the technical management of the National Electricity System is assigned to Redes Energéticas Nacionais SGPS, S.A. (“REN”) in its capacity of TSO - National Electricity Transportation Grid (Rede Nacional de Transportes - “RNT”) operator. 

 

Integrated DSO

The Distribution Grids Integrated Operator (“Integrated DSO”) holds the technical management of the electricity distribution grids in high, medium, and low voltage and is responsible for the technical management of the distribution grids in articulation with the Global Manager of the National Electrical System.

The Integrated DSO rules are set in articles 108, 109 and 166/2 of the Electricity Law.

This includes managing the electricity flows in the distribution grids and ensuring their interoperability with the grids to which they are connected. According to article 108 of the Electricity Law:

  • The technical management of the high voltage and medium voltage distribution grids is committed to DSO - National Electricity Distribution Grid operator. 
  • The technical management of the low voltage distribution grids is entrusted to concessionaires.

E-REDES, S.A. is the only company in Portugal that operates in the distribution system at high, medium, and low voltage.

 

Transmission System Operator 

The Transmission System Operator (“TSO”) is the entity in charge of the electricity transmission activity, and it is responsible for the construction, operation, and maintenance of the transportation grid, ensuring the grid capacity in the long term.

TSO main rules can be found in articles 2/35, 6, 40 to 42  and 47 to 56 of Directive (EU) 2019/944, in articles 3/zz), 105, 106, 227 and in Annex II of the Electricity Law.

Electricity transmission is carried out by REN, which is responsible for, among other things:

  • The electricity transmission, ensuring the operation, planning, and development; and
  • The electricity transmission from its production to the transmission grids or to consumer who receive electricity at very high voltage.

Annex II set the bases of RNT 50 years concession for mainland Portugal. REN holds the concession of RNT until 2057 and is subject to the control by DGEG and to the supervision of the energy services regulatory authority ERSEEntidade Reguladora dos Serviços Energéticos

 

Medium and High Distribution System Operator 

The Distribution System Operator ("DSO") rules are found in articles 2/39 and 35 of Directive (EU) 2019/944 and in articles 3/xx), 8/1 and in Annex III of the Electricity Law that sets the bases for the medium and high-voltage electricity distribution grids concessions.

DSO activity is granted by a 30-year concession subject to a public tender procedure.

DSO of medium and high voltage is responsible for:

  • The construction, operation, and maintenance of the distribution grids;
  • The management, operation, and maintenance of the energy system;
  • The expansion to new locations; 
  • The network maintenance ensuring the quality of the service provided; and
  • Making the electricity connection to all consumers who request it.

E-REDES holds the DSO concession until 2044. 

 

Low Distribution System Operators 

The Low Voltage System Operators (“LDSO”) rules are set out in articles 2/39 and 35 of Directive (EU) 2019/944 and in articles 3/xx), 8/1, 115, 116, 268, 285 and in Annex IV of the Energy Law.

According to Annex IV, low voltage electricity distribution in Portugal is a municipality activity, which may be granted by a 20-year concession contract under a public tender procedure.

Article 118 establishes that the low voltage distribution concession is a remunerated activity. The remuneration is based on the size of each municipality and the number of customers. There is also a solidarity factor that benefits the municipalities with a lower population.

Besides its technical assignments - which include the relationship with DSO - LDSO also has commercial duties, such as: metering reading, making the reading metering reading data available to suppliers and the invoicing and collection of the grid access tariffs from suppliers.

There are currently 11 LDSO, with E-REDES accounting for around 99.5% of consumers. The existing municipal concessions have mismatched periods, with most expiring in 2022.

 

Closed Distribution System Operators 

Closed Distribution System Operators are entities responsible for ensuring the capacity of the closed distribution system. A closed distribution system is a system that is part of areas or infrastructures excluded from the scope of electricity distribution concessions.

The Closed Distribution System Operator and the Closed Distribution System are regulated in articles 38 of Directive (EU) 2019/944 (EU) and in articles 3/yy) and 120 and onwards of the Electricity Law.

The Closed Distribution System Operator is responsible for:

  • Interrupt the electricity supply within the closed distribution grids, provided it is duly justified and reported to ERSE or to DGEG;
  • Know the consumption demand and the energy produced by Closed Distribution Systems; and
  • Enter in to transparent and non-discriminatory agreements with the Closed Distribution System consumers/users.

 

Electricity Suppliers 

Electricity Suppliers are responsible for providing freely commercial offers, purchasing electricity from electricity producers in the market and sell it to customers.

Electricity Suppliers are regulated by article 5 of Directive (EU) 2019/944 and in articles 134 et seq. of the Electricity Law.

Electricity Suppliers can trade electricity through organized markets or through bilateral agreements with other market agents (article 136 of the Electricity Law).

Electricity Supplier’s must start their activity within one year after their registration at DGEG and must (i) pay the tariffs to use the electricity grids systems and provide the contractual warranties legally established; (ii) keep an updated register of their customer’s complaints; (iii) provide transparent information on prices and tariffs and the standard conditions to use their services; (iv) provide its customers a diversified payment option and; (v) provide transparent access to the customers regarding their consumption data.

There are currently 38 electricity suppliers that operate in Portugal, each with their own tariffs and terms. 

 

Last Resort Suppliers 

Last resort suppliers are entities holding an electricity supply license for a maximum period of 20 years and are obliged to supply electricity subject to a regulated price defined by ERSE

The Last Resort Supplier regime is defined in recital 27 and in article 27 of Directive (EU) 2019/944, and in articles 138 et seq. of the Electricity Law.

The Last Resort Supplier is responsible to supply electricity:

  • In areas where there are no offers on the free market;
  • To economically vulnerable consumers; and
  • To customers whose free-market supplier has been prevented from exercising its activity.

The Last Resort Suppliers' activity is subject to a license to be awarded by DGEG. Article 139/1, establishes that the granting of a new Last Resort Supplier license is carried out through a public tender procedure. 

There are currently 11 last resort suppliers operating in specific areas of mainland Portugal and 2 others operating, respectively, in the Azores and Madeira islands.

 

Electricity Market Operator 

Electricity Market Operators are entities responsible for the market management and related activities. The main regulations in their regard are set out in articles 163 et seq. of the Electricity Law.

In the last stage of the electricity supply chain, the Electricity Market Operator (along with Electricity Suppliers) relates directly to consumers. Consumers can choose their supplier and change (free of charge) whenever they find better suited offers to their type of consumption.

The main duties of an Electricity Market Operator consist of:

  • Managing the electricity contracting markets; 
  • Disclosing information about the market in a transparent and non-discriminatory way, namely publishing information on prices and quantities traded; and
  • Establishing the rules for the prices settled in electricity supply agreements.

 

Guarantees Manager

The Guarantees Manager work is to ensure the management of the guarantees to be provided by suppliers or market agents, in accordance with articles 170 et seq. of the Electricity Law. 

Pursuant to Resolution 17/2009, of 23 March, OMIP S.A. is the managing entity that carry out the role of Guarantees Manager of SEN and that is responsible for minimising the risks arising from SEN market participants obligations.

The Guarantees Manager must comply with the following principles: 

  • Public interest, impartiality and independence;
  • Economic efficiency, guaranteeing that only necessary costs are generated for SEN; and
  • Transparency of decisions, through information and auditing mechanisms.

In addition, it shall also comply with report and regulatory control procedures laid down by ERSE or by the Securities Market Commission (Comissão do Mercado de Valores Mobiliários - “CMVM”).

 

Last Resort Aggregator 

In case there is no offer from electricity aggregators in the market or when the aggregators are unable to exercise its activity, the last resort aggregator shall acquire electricity from:?

  • Renewable electricity producers, excluding hydroelectric plants with a connection capacity higher than 10 MVA, remunerated at prices freely determined on organized markets; and?
  • Self-consumers who inject surplus energy into RESP.?

The Last Resort Aggregator is also obliged to acquire energy generated by Producers who benefit from guaranteed remuneration schemes.

The Last Resort Aggregator role is set out in articles 148 et seq. of the Electricity Law. The award of the last resort aggregator license - subject to a maximum term of 20 years - is carried out through a public tender procedure.

The procedure for the award of the last resort aggregator license has not yet been opened by the Portuguese Government. Until then the last resort aggregator competencies are entrusted to the last resort supplier.

 

Electricity Aggregators 

Electricity aggregators activity comprise the purchasing of electricity in the free market and selling it to customers who enter into a Supply Agreement, subject to the terms and conditions agreed upon therein.

Electricity Aggregators are regulated in articles 143 et seq. of the Electricity Law. According to article 146, Electricity Aggregators have the same rights and obligations than Electricity Suppliers. Electricity Aggregators can: 

  • Trade electricity through organized markets or bilateral agreements with other market agents;
  • Have access to the energy systems to deliver electricity to their customers; and
  • Enter into electricity purchase and sale agreements with customers.

ENDESA ENERGIA, S.A. is currently the only electricity aggregator operating in Portugal.  

 

Self-Consumers

Self-Consumers’ activity is regulated in article 81 to 88 of the Electricity Law. Self-Consumers are those who generate their own electricity from renewable sources and consume it themselves, instead of selling it back to the grid. They can store or sell its electricity, although these activities cannot  constitute their main commercial or professional activity.

Self-Consumers may perform this activity in individual self-consumption in one electrical installation (“IU”)  or collective self-consumption in or two or more electrical installations. 

According to article 88/1, Self-Consumers may: (i) Install one or more Electrical Unit for Self-Production (Unidade de Produção para Autoconsumo – “UPAC”); (ii) Consume the electricity produced or stored in their facilities; and (iii) Trade the surplus energy produced through electricity markets directly or through third parties.

According to article 88/2 self-consumers must: (i) Bear the cost for connection of the electrical installations to RESP; (ii) Provide to the supervising entity all the requested information and technical data, namely the electricity produced by UPAC data; (iii) Ensure that the installed production equipment is certified; and (iv) Enable inspection entities to access UPAC.

Just like production, self-consumption activity is subject to the award of a production license (in case the installed capacity is  above 1 MW) or a prior registration certificate (above 30 KW but less than 1 MW).

The Electricity Law has introduced the Electro-Intensive Customer Statute, regulated by the Order 112/2022, bringing a set of benefits to consumer, including:

  • The reduction of energy policy, sustainability and general economic interest costs (“CIEG”) in the consumption from RESP (article 9 of Order 112/2022); and 
  • The reduction of CIEG in self-consumption (article 10 of Order 112/2022).

Can be eligible as electro-intensive customers: (i) customers with an annual electricity consumption equal to or greater than 20 GWh and an annual consumption equal to or greater than 40% of annual electricity consumption, in at least two of the last three years, and (ii) customers with an annual electro-intensity level equal to or greater than 1 kWh/EUR of gross added value, calculated as pursuant the criteria laid down in Order 112/2022. Customers must provide DGEG with information by June 15 of each year to maintain their eligibility.

 

Citizen Energy Communities 

Directive (EU) 2019/944 establishes that Citizen Energy Communities may engage in production, including energy from renewable sources, distribution and supply activities to its members. They are regulated by articles 16 et seq. of Directive (EU) 2019/944 and in article 191 of the Electricity Law.

Citizen Energy Communities are legal entities established through an open and voluntary membership by its members, partners, or shareholders, who may be natural persons or legal entities, including small and medium-sized businesses or municipalities aiming to provide environmental, economic, or social benefits to its members or to the local areas in which they operate.

Article 191/2 states that Citizen Energy Communities may:

  • Own, establish, purchase or lease closed distribution system and carry out their management; and
  • Produce, distribute, commercialize, consume, aggregate, and store energy regardless of whether the primary source is renewable or non-renewable.

 

Renewable Energy Communities

The Renewable Energy Communities (“REC”) are regulated in articles 2 and 22 of Directive (EU) 2018/2001 and in articles 189 et seq. of the Electricity Law. REC are legal entities established through an open and voluntary membership by its members, partners, or shareholders, including small and medium-sized businesses or municipalities, and which, cumulatively:

  • Have their members located near the renewable energy projects or developing activities related to the renewable energy projects of the respective energy community; and
  • Such projects are owned and developed by the Renewable Energy Community or a third party.

REC’s goal is to provide environmental, economic, and social benefits to the members or localities where the community operates.

The main differences between Citizen Energy Communities and REC are that REC are near renewables electricity production centers and are and are subject to a limited membership scheme.

 

Guarantees of Origin Authority

The Guarantees of Origin Issuing Authority is regulated in article 294 of the Electricity Law. 

The Guarantees of Origin Issuing Authority activity is subject to a license to be awarded under a public tender procedure. Currently, the activity  is entrusted to REN for the electricity generated from renewable energy sources.

A Guarantee of Origin is an electronic document that proves to the final electricity purchaser that a given percentage of the electricity supplied comes from 'green' sources. 

There are currently three versions of these documents, which certify the following types of energy:

  • Electricity produced from renewable energy sources;
  • Heating and cooling energy produced from renewable energy sources; and
  • Electricity produced in cogeneration facilities.

 

Collective Self-Consumption Management 

Collective Self-Consumption Management Entity (“EGAC”) is the entity responsible for the management and communication with the self-consumption and renewable energy community's platform (Electricity Law, article 3 paragraph gg). 

EGAC are responsible for connecting the self-consumers to RESP. They are also in charge of the commercial relationship to be adopted for the surplus energy produced by self-consumers.

EGAC represent the collective self-consumption to operators and administrative entities, ensuring:

  • The relationship with the grid operator for the purpose of paying the grid access tariffs for self-consumption through the public grid; and 
  • The relationship with the aggregator of the surplus production for sale on the market.

 

Logistics Operator for switching suppliers and aggregators

The activity of the Electricity Switching Logistics Operator is ruled by Decree-Law 38/2017, of 31 March and articles 152 and onwards of the Electricity Law.

According to article 152, the activity of the Logistics Operator for Switching Suppliers and Aggregators consists in the procedure to help consumers to change their electricity supplier and to electricity producers to change their aggregator.

The award of the Logistics Operator for Switching Suppliers and Aggregators license is carried out through a public tender procedure and is limited to a period of 10 years, according to article 153/1. Logistics Operator for Switching Suppliers and Aggregators can, among other things:

  • Exercise the licensed activity; and
  • Be remunerated for the service provided.

The Logistics Operator for Switching Suppliers and Aggregators roles are, among others:

  • Operate the change of supplier and aggregator on the electricity markets; and
  • Provide personalized information to consumers, electricity producers, and self-consumers.

In addition, it must promote transparency in the electricity market and provide to consumers easy access to any information to which they are entitled.

The Logistics Operator for Switching Suppliers and Aggregators activity covers the whole national territory and is exercised by an operator that is independent of the other parties involved in the National Electrical System.

 

Electricity Consumers 

Electricity consumers are typically residential and commercial customers. The residential customer sector includes single-family homes, apartments, and mobile homes. The commercial sector includes small businesses, factories, and office buildings. 

The legal framework of Energy Consumers are established in articles 10 to 14 of Directive (EU) 2019/944 and in articles 180 to 188 of the Electricity Law.  Energy Consumers must:

  • Perform the relevant monthly payments;
  • Contribute to the development of environmental protection;
  • Contribute to the development of energy efficiency;
  • Keep their equipment in safe conditions, under the terms of the applicable legal and regulatory provisions; and
  • Provide all information strictly necessary for the electricity supply.

Between the electricity supplier and its customers there is a relationship with specific characteristics ruled by the Commercial Relations Regulation (Regulamento de Relações Comerciais - "RRC"), approved by ERSE.

RRC has specific rules regarding (i) the possible contracting modalities; (ii) the choice and the change of supplier; (iii) invoicing and payment; and (iv) the resolution of conflicts arising from the commercial and contractual relationship. 

The customers' right to effectiveness and quality of service dictates the possibility of complaining to suppliers whenever they feel their rights have not been duly safeguarded. 

Electricity suppliers must provide updated information, namely on their websites, on several matters, such as (i) supply agreements; (ii) available services; (iii) options and prices, and (iv) billing frequency. 

Suppliers are also obliged to ensure fast, effective, and complete service to their customers and thus the Quality-of-Service Regulation (Regulamento da Qualidade do Serviço) establishes that suppliers must maintain the following three different types of attendance: (i) face-to-face; (ii) telephone, and (iii) written. 

Within the scope of customer service, suppliers are bound to provide information on supply agreements, tariff options, quality of service standards and dispute resolution. 

 

If you wish to learn more, you may download our PDF down below. 

 

2022-07-06

Labor compliance standards and principles

Corporate social responsibility (CSR) and labor compliance pursue going beyond legal compliance issues. The purpose of both is not simply to fulfil legal expectations, but making the environment and relations with stakeholders beyond mere compliance with the Law.

Although CSR is not a plain concept, CSR is whereby business entities voluntarily incorporate social, environmental and ethical standards into their operations.

CSR is built on three pillars: (i) PROFIT (economic), (ii) PEOPLE (social) and (iii) PLANET (environmental area) – the triple “P”. Labor compliance is included in the PEOPLE, social pillar of CSR.

Labor compliance’s purpose is keeping a safe and healthy work environment and giving all employees a fair treatment by labor control mechanisms:

  • For employees, by providing for additional control over the employer’s actions, fair compensation, equal opportunities for recruitment and protection against abuse of office and discrimination; and
  • For employers, by enabling them to hire qualified employees and to require employees to carry out their duties with due diligence.

Successful organizations have in common a commitment to conduct businesses according to high international standards and principles and to build a corporate culture in line with these standards.

Anglo-Saxon systems often distinguish hard law from soft law. ‘Hard law’ generally refers to legal obligations that are binding to the parties involved and which can be legally enforced before a court. The term ‘soft law’ is used to denote agreements, principles and declarations, which are quasi-legal instruments, but do not have any legally binding force, or whose binding force is somewhat weaker than the binding force of traditional law, also referred to as hard law. Labor compliance preferably results from the interaction between hard and soft law instruments.

In Portugal, mandatory obligations and instruments of labor compliance may vary according to the entity type. For instance, State-owned companies or stock exchange listed companies are subject to stricter requirements. This does not, however, mean that other entities may not follow the same compliance standards or even different standards voluntarily applied according to their ethical culture practices.

Some of the mandatory rules are:

  • Record-keeping of employees' working hours;
  • Record-keeping of overtime work;
  • Record-keeping of disciplinary sanctions; and
  • Preparation and display of employees' holiday schedule.

Detailed attention to labor compliance matters on non-discrimination, equal pay, anti-harassment, close the gap for women and minorities, fight against corruption and related offences, have been growing with major changes brought by local laws.

To follow these changes, employers are compelled to apply a set of policies, procedures, and actions, of which:

  • Code of Ethics and Conduct;
  • Anti-Harassment Policy;
  • Gender Equality Plan;
  • Gender Pay Gap Report;
  • Employees’ Training Plan; and
  • Corruption Risk Management Plan.

Some labor compliace tips that your company may follow are:

  • Create a code of ethics and conduct with plain and clear language;
  •  Implement strong policies and plans, e.g., on gender equality, non-harassement, pay gap;
  • Promote awareness amonsgt employees about the importance of complying with the standards;
  • Create internal reporting channels;
  • Regularly monitor compliance programs to review labor-related risks;
  • Remind your employees that the example comes from the top management; and
  • Make it clear that the company is not involved in ehtically doubtful practices.

If you want to read more, please click on the link to our PDF down below. 

2022-06-30

Following the merger between CP, the Railway Owned State Company of Portugal, and EMEF, the Railway Maintenance Owned State Company, that took place in 2020, and after two years of intensive collective bargaining, it was published the new CP Single-Undertaking Agreement and Career Regulation.

The new Single Undertaking Agreement allows the integration of former EMEF employees at CP and provides new working conditions.

The new agreements were signed with 11 of the 14 trade unions representing CP and former EMEF employees: (i) SNAQ; (ii) ASCEF; (iii) SINFB; (iv) SINFA; (v) SINAFE; (vi) SINDEFER; (vii) FE; (viii) STMEFE; (ix) SIFA; (x) FENTCOP and (x) SIOFA.

In summary, the new Company Agreement enshrines the following changes:

(i)   Salary increase, retroactive to 1 January 2022, for all employees;

(ii)  Elimination of an index at the base for all categories except for Senior Technicians and Specialists;

(iii) Elimination of an additional index at the base of the Commercial Assistant, Revision Operator and Sales Operator categories;

(iv) Increase of one index at the top for all categories except for Senior Technicians and Specialists;

(v)  Creation of minimum tenure for index change, with a maximum of four years;

(vi) Elimination of overlapping indices between professional categories and their managers;

(vii) Uniformization of the meal allowance to €7.74;

(viii) Increase in the fixed percentage of the daily revision premium from EUR 0.6 to EUR 0.8;

(ix)  Increase in the allowance for absences at fixed sales points by EUR 6 in each step;

(x)   Integration of former EMEF employees with retroactive effect as of 1 January 2022;

(xi) Application of the rules on work organization, allowances, and variables, mostly enshrined in the former CP AE to the former EMEF employees; and

(xii) Reinstatement of the transportation allowance existing in the EMEF AE for those workers currently covered by the new AE who, at the time of the merger, were receiving it and are not covered by the transportation/availability allowance of the new AE.

The new EA contains a globally more favorable regime for all workers and some new productivity measures.

The new Company Agreement covers workers affiliated to the signatory unions, as well as workers not affiliated to a signatory union who adhere to it within three months.

The signing of the new Company Agreements falls under the principle of collective autonomy and the right to collective bargaining, enshrined among workers' rights, freedoms and guarantees in article 56, no. 3 of the Constitution of the Portuguese Republic.

© MACEDO VITORINO

2022-06-29

The Parliament approved the State Budget Law for 2022 ("LOE 2022"), which entered into force yesterday.The main changes regarding labour issues are the following:

SALARY AND BONUSES

  • Performance bonuses in the Public Administration may be awarded up to the legally established amount and the equivalent to up to one employee's basic monthly remuneration, without prejudice to the provisions of the collective labour regulation instruments (IRCT).
  • The granting of performance bonuses to employees from the Sate-Owned Sector shall comply with the IRCT and other legal or contractual instruments in force, or in their absence, with the provisions of the decree-law that develops the State Budget Law.
  • The payment of special management bonuses to managers of public companies is possible if they have an approved business plan and budget for 2022, and that there is an improvement in the ratio of external supplies and services to turnover in relation to the previous year.
  • Special management bonuses for managers of public companies are endorsed by order of the member of the Government responsible for the area of finance and have as a maximum limit an average monthly remuneration.
NEW HIRINGS
  • Companies in the public business sector may recruit workers for open-ended employment contracts or fixed-term contracts, under terms to be defined in the decree-law that develops the State Budget Law.
  • Any hiring carried out in breach of the applicable regulations shall be considered null and void.
SUPPLEMENTARY SOCIAL PROTECTION FOR WORKERS
  • The contracting of the personal accident and sickness insurance by public entities to whose employees the individual employment contract regime applies is possible, provided that it is intended for all employees in general. The same applies to other insurance policies that are compulsory by law or provided for in a collective bargaining agreement.
EXTRAORDINARY RETIREMENT PENSION UPDATE
  • Pensions will be updated by €10.00 per pensioner whose total amount of pension is equal to or less than 2.55 times the value of the IAS. The updates will take effect on 1 January 2022.