The Performance Assessment Framework for Economic Regulators
(PAFER) was developed by the OECD to help regulators assess their own
performance. The PAFER structures the drivers of performance along an
input-process-output-outcome framework. This chapter applies the
framework to the governance of Portugal’s Energy Services Regulatory Authority (ERSE) and reviews the existing features, the opportunities and challenges faced by ERSE.
The Energy Services Regulatory Authority (Entidade Reguladora dos Serviços Energéticos, ERSE) is Portugal’s regulatory authority for the electricity, natural gas and fuel sectors and the electric mobility network. It was created by Decree Law 187/95 as the Regulatory Entity of the Electric Sector in tandem with the liberalisation of the Portuguese electricity sector, and started its operations at the beginning of 1997. Its activity is most developed in the fields of electricity and natural gas regulation, given the breadth of European legislation that has been adopted for these sectors over the last 25 years.
ERSE’s mandate and objectives are defined in legislation under article 3 of Decree-Law No. 97/2002, of 12 April.1 Its main objectives are to:
Protect the rights and interests of consumers, in particular economically vulnerable consumers, in relation to prices, quality of service, information-sharing, clarification and training;
Guarantee conditions that enable economic and financial balance of the activities of regulated sectors carried out under a public service regime;
Contribute to the progressive improvement of the economic, qualitative, technical and environmental conditions of the regulated sectors, encouraging, in particular, the adoption of practices that promote energy efficiency and service quality;
Ensure compliance of regulated entities with public service obligations and other obligations established in the law and associated regulations;
Promote and ensure competition between market players;
Promote the resolution of disputes that may arise between regulated entities, through mediation and conciliation;
Promote arbitration between operators and consumers, in accordance with applicable legislation, with a view to resolving disputes.
ERSE defines its mission, vision and values in its strategic plan 2019-2022 (ERSE, 2019[1]).
The current vision is “to create value for society through an independent, transparent and sustainable regulation of the energy sector, by promoting the efficiency of the markets and by strengthening consumer confidence”.
The current mission statement is “to regulate electricity, natural gas, liquefied petroleum gas, oil derivatives fuels and biofuels sectors as well as manage the electric mobility network, in defence of the public interest and to protect the rights and interests of energy consumers”.
ERSE’s values were first set in 2002 and have remained fairly constant since. They are:
Excellence
Transparency
Independence
Co-operation
Sustainability
Since its establishment as the Electricity Sector Regulatory Authority in 1995, the law has expanded the regulator’s scope of activity several times. The regulator was renamed the Energy Services Regulatory Authority in 2002, accompanying an expansion of its mandate to the regulation of natural gas.2 In 2012, ERSE’s mandate was extended to certain responsibilities concerning the electric mobility grid3 and, in 2013, to manage the electric mobility network operations.4 In 2018, ERSE’s mandate expanded to include a purview in the fuels sector, spanning the liquefied petroleum gas (LPG) sector in all its forms (namely bottled, piped and in bulk), oil-derived fuels and biofuels.5
ERSE’s powers (defined in article 8 of the Decree Law 76/2019) include:
Regulatory functions, including binding decisions
Tariff-setting
Advisory functions
Mediation
Supervision
Sanctioning
ERSE prepares and approves codes and regulations that are necessary for the performance of its duties and that apply the legislation that governs the organisation and operation of the sectors that fall within its regulatory scope (Box 2.1).6 ERSE may approve other regulations in addition to those set out in Box 2.1. The ERSE Board of Directors approve all codes and regulations after consultation with the relevant ERSE advisory councils and the public.
Within the scope of the electricity sector, ERSE is responsible for the preparation and approval of the following regulations:
Regulation on access to networks and interconnections;
Regulation on commercial relations;
Tariff regulation;
Regulation on quality of service;
Regulation on network operations.
With regard to the natural gas sector, it is responsible for the preparation and approval of the following regulations:
Regulation on access to networks, infrastructures and interconnections;
Regulation on commercial relations;
Tariff regulation;
Regulation on quality of service;
Regulation on operation of infrastructures.
With regard to the fuels sector, ERSE is responsible for the preparation and approval of the following regulations:
Regulation of storage, collecting and exchanging LPG bottles;
Regulation on market operators’ compliance with the obligation to inform the consumer of petroleum fuels and LPG;
Regulation on Commercial Relations for piped LPG;
Regulation on Quality of Service for piped LPG;
Tariff Regulation for piped LPG;
Regulation on the Quality of Supply of Fuels.
Within the scope of the electric mobility sector, ERSE is responsible for the preparation and approval of the Electric Mobility Regulation.
Source: Information provided by ERSE, 2019.
Within its regulatory functions, ERSE has the power to guarantee third-party access to infrastructure. The regulator establishes the technical and commercial conditions for access to networks and interconnections in the electricity and gas sectors, as well as the remuneration to which entities are entitled for providing access to their networks. Access to piped LPG networks is foreseen in the National Petroleum System legislation and the regulatory powers are within ERSE’s competences.
ERSE implemented in the past years four pilot projects,7 as part of the process of advancing its strategic objective of “promoting clear, effective and dynamic regulation of natural monopolies”. A few other initiatives are in train to be developed and launched.
In the electricity and natural gas sectors, the regulator defines the methodologies and sets tariffs and the allowed revenues of market actors in monopoly activities, such as transmission, distribution and supplier of last resort. ERSE sets tariffs within the framework of the law and of tariff regulations and ensures their application. Tariff setting for piped LPG networks is foreseen in the National Petroleum System legislation and the regulatory powers are within ERSE’s competences.
The procedures for allocating costs by different activities are defined by the operators and approved by ERSE.
In addition, within its responsibilities to supervise compliance with unbundling provisions, ERSE establishes requirements on the granularity and disaggregation of the reported accounting information and evaluates the accounts reported by the companies.
ERSE contributes to the formulation and refinement of policies, laws and regulations. Its statutes set out its responsibility to provide advice and opinions on legislative initiatives or other initiatives in the energy sector to the parliament and the government.8 ERSE also provides non-binding opinions to other public authorities, such as the Competition Authority, the Directorate-General for Energy and Geology (DGEG), the Directorate-General for Consumer Affairs and the Securities Market Commission (CMVM), as well the courts, on issues in the sectors under its remit.9
ERSE is responsible for mediating disputes between regulated companies and between regulated companies and their customers. Several other bodies can also intervene to attempt to resolve disputes between regulated entities and their customers, including arbitration centres and private consumer associations (see section on Consumer protection for more detail).
ERSE monitors and supervises regulated agents’ practices and their compliance with relevant laws and regulations. To carry out its supervisory functions, ERSE has the power to:
issue orders, instructions and recommendations within the framework of the applicable law and regulations
grant authorisations and approvals
enforce laws and regulations and other applicable rules within the scope of its powers
request all the information it needs from regulated entities to exercise its powers and duties10
conduct investigations, enquiries or audits of regulated bodies, upon its own initiative or upon a request from the member of the government responsible for energy11
ERSE has sanctioning power over some but not all of the sectors that it regulates and different legal regimes cover the sanctioning power of ERSE in the sectors under its purview.12 ERSE is responsible for processing and sanctioning administrative infringements of legislation in the electricity and natural gas sectors under the Energy Sector Sanctions Framework. ERSE can impose a warning, a fine, accessory sanctions (prohibition of the exercise of any activity within the scope of the regulated sectors, prohibition of the exercise of an administrative or management position in entities intervening in the regulated sectors13 (see section on Enforcement for more detail).
The Energy Sector Sanctions Framework has not yet been updated to include the implementation of the EU Regulation on Wholesale Energy Market Integrity and Transparency (“REMIT”) which gives ERSE supervisory responsibilities to detect insider trading and market manipulation. Neither has it been updated to encompass the electric mobility sector; ERSE therefore does not have sanctioning powers over the electric mobility sector.
Fuels are subject to ERSE's sanctioning powers although this does not arise from the Energy Sector Sanctions Framework. Fuels, as well as the other sectors, are subject to other special regimes, e.g. the Complaint Book sanctioning regime and the Unfair Commercial Practices sanctioning regime (See section on Enforcement for more detail).14
ERSE co-ordinates with a large number of other public and private entities in the course of its duties (Table 2.1). Some degree of co-ordination is provided for in legislation. Notably, ERSE is required to issue opinions (usually non-binding) to other bodies of the public administration, especially the Competition Authority, the Directorate-General for Energy and Geology (DGEG), the Directorate-General for Consumer Affairs, and the financial regulator the Securities Market Commission (CMVM).15
There are no permanent sector-wide formal mechanisms for co-ordination between the different actors in the energy sector in Portugal. However, the government does on occasion establish ad hoc groups on specific topics, depending on need, which appear to work well. ERSE participates when invited to take part in such working groups.
Similarly, there are no formal mechanisms at the national level to identify gaps in the regulatory framework or to assess potential overlaps between regulatory agencies. In some areas of regulation, a lack of clarity in the law or conflicting legal provisions might create conflicts between the mandates of ERSE and other entities. For example, different pieces of legislation give both ERSE and the National Entity for the Energy Sector (ENSE, Entidade Nacional para o Setor Energético) responsibilities for inspections and consumer dispute handling in the energy sector.
New legislation introduced between 2016 and 2018 redistributed fuel sector tasks between the newly established ENSE (previously the ENMC, National Entity for Fuel Markets), DGEG and ERSE. Before this, ERSE had no responsibilities in this sector, and all duties were carried out by ENMC and DGEG. ENSE became the stockholding entity for strategic oil reserves (previous role of ENMC) and also gained new responsibilities in terms of supervising and monitoring the whole energy sector (including electricity and gas), and some duties for inspections that were previously carried out by DGEG. DGEG retained responsibility for licensing and safety issues, while ERSE became responsible for regulating the downstream markets and for providing opinions on all the licensing activities of the National Petroleum System’s infrastructures. ERSE ensures quality of service; promotes rules and the transparency of commercial relationships; promotes third party access to facilities declared of public interest and LPG piped networks and handles consumer complaints.16 Regulation in the oil products and biofuels sectors relies to a large extent on ex post regulation, with the Competition Authority playing a major role until 2018.
ERSE’s statutes enable the regulator to establish co-operation protocols with other regulatory authorities, universities, public or private research centres, as well as with institutions or general interest associations, such as municipalities or consumer associations. Taking advantage of this possibility, ERSE has established a number of (non-binding) agreements and protocols with entities with competences in the same sector as a mechanism of co-operation, to clarify the areas of intervention and to avoid duplication of activity.17 For example, the regulator has established a co-operation agreement with ENSE specifically for the fuels sector as there is a degree of overlap in responsibilities for ensuring quality of service, commercial relationships and promoting third party access, given ENSE’s previous responsibilities over this sector. The co-operation agreement seeks to resolve these overlaps for individual cases. In practice, this requires a case by case clarification.
In addition to co-ordination at the national level, ERSE carries out international regulatory co-operation and co-ordination. The regulator participates in the events and activities of the EU’s Agency for the Cooperation of Energy Regulators (ACER), the Ibero-American Association of Energy Regulators (ARIAE), the Council of European Energy Regulators (CEER), the Association of Mediterranean Energy Regulators (MEDREG) and the Association of Portuguese Speaking Energy Regulatory Entities (RELOP).
ERSE is part of the Board of Regulators of the Iberian Electricity Market (CR MIBEL), which was created by an international treaty between Spain and Portugal. CR MIBEL is composed of the Spanish regulatory authorities for the energy and securities markets (CNMC – Comisión Nacional de los Mercados y la Competencia [energy] and CNMV – Comisión Nacional del Mercado de Valores [securities]; and the corresponding entities in the Portugal: CMVM (Comissão do Mercado de Valores Mobiliários) and ERSE. Draft regulation for the functioning of MIBEL, to be approved in Portugal or in Spain, are subject to the mandatory issuance of a non-binding co-ordinated statement of opinions by the CR MIBEL. The rules regarding the functioning of spot market are approved by Spanish authorities while the rules for the functioning of the futures market are approved by Portuguese authorities.
1. (ERSE, 2019[2]), Protocols, https://www.erse.pt/en/institutional/cooperation/.
Source: Information provided by ERSE, 2019-20.
As noted in the section on Functions and powers, ERSE contributes to policy development through the provision of advice and (non-binding) opinions. This includes issuing formal opinions on legislative drafts, energy policy documents or other initiatives relevant to its mandate, at the request of the parliament or the government. Often, ERSE opinions include estimations of the economic impacts of measures, especially on regulated tariffs. Its opinions are made public via its website and in its annual report.
The government or the parliament can ask ERSE to present proposals or studies about the regulated sectors, in order to inform political decisions. Examples includes:
Cost benefit analysis studies on relevant projects for the National Petroleum System’s infrastructures, namely the pipelines for connecting the Sines Maritime Terminal of Liquid Bulks to the multiproduct pipeline between Sines and Aveiras de Cima, as well as a new storage facility for fuels and LPG in Sines, and the jet pipeline between Aveiras de Cima and the Lisbon Airport,
A report about incentives on security of supply in the electricity sector).
The requests may be made by email, at a working level, but are generally made via a formal letter. The time that ERSE has to comply with requests varies, depending on the stage of the work of the government or parliament when they send the request. Inputs required by legislation usually specify deadlines of two to six months for ERSE to respond. Formal requests made by letter tend to have deadlines of two weeks to one month, and are not made public, but ERSE’s response is made public. Informal requests made by e-mail have shorter deadlines (urgent or with about 15 days) and neither the request nor the answer are made public. These tend to be fairly specific requests, such as data simulation. The regulator reports that although the requests are manageable, they can become burdensome if several requests are made at the same time.
ERSE also issues studies and proposals of its own initiative, when it identifies market failures, with the goal of providing information and options to the legislator or the government (e.g. a proposal for the government to set maximum prices on bottled LPG during the State of Emergency declared due to COVID19 and a study by the Council of Regulators of MIBEL on the integration of renewable generation in the market).
ERSE may also participate in ad hoc working groups or expert groups established by the Ministry of the Environment and Climate Action (MAAC) to address specific policy issues. Examples include:
Group to prepare the Roadmap for Carbon Neutrality 2050
Group to accompany the Clean Energy Package legislative process
Group to prepare the legislation on self-consumption of energy
Participation in the jury for renewable (solar) auctions
Group reviewing the legislation on the organisation of the natural gas sector
Depending on the working relations with the ministry, ERSE has been asked to provide technical views on international agreements and activities related to the energy sector, via the DGEG or directly to the ministry.
ERSE estimates that contributing to the formulation and refinement of policies, laws and regulations consumes about 10% to 15% of its total resources, mostly staff time.
ERSE develops four-year strategic plans. In 2019, ERSE established a new strategic plan (ERSE, 2019[1]) for the period 2019-2022 that sets five strategic objectives. Under each strategic objective, ERSE has defined between five and six strategic priorities.
Strategic objective 1: Fostering knowledge and the active participation of society in energy regulation and ensuring protection of the interests of present and future consumers
Priorities:
To combat energy illiteracy by promoting the training and information to consumers and other stakeholders regarding the energy sector;
To ensure consumer protection in an environment of innovation and development of new services;
To foster ERSE's external communication and adapt the contents according to the recipient;
To innovate in the provision of relevant sector information;
To strengthen public participation in regulatory decision-making.
Strategic objective 2: Promoting efficient regulation of natural monopolies, in a context of decentralisation and innovation
Priorities:
To assess impacts and strengthen the rationale of regulatory decisions
To promote the establishment of access to networks and infrastructure in a transparent, non-discriminatory way inducing overall efficiency (technical and commercial)
To promote the setting of allowed revenues based on the economic sustainability of infrastructure and on the creation of added value for consumers, in a context of decentralisation and innovation
To promote economically efficient smart grids and related services, placing digitalisation at the disposal of consumers and society
To promote an efficient tariff structure in a context of decentralisation and innovation
To discuss methodologies for the regulation of natural monopolies with a view of their improvement in a context of decentralisation and innovation.
Strategic objective 3: Improving the functioning of wholesale and retail energy markets, reinforcing trust and enabling consumer involvement
Priorities:
To contribute to the harmonisation and integration of Iberian, regional and European energy markets
To promote clear and unambiguous regulation (better regulatory definition)
To ensure a continuing supervision of the markets and the monitoring of regulatory obligations and consolidate sanctioning actions
To promote the efficiency of the markets and implement a risk management culture (guarantees) in the regulated sectors
To foster consumers’ active participation and demand management
Strategic objective 4: Promoting clear, effective and dynamic regulation of natural monopolies, facilitating the energy transition
Priorities:
To monitor compliance with legal and regulatory provisions, improving relations with consumers and companies and their processes of reporting to ERSE
To promote a transparent, integrated and harmonised regulatory framework that ensures the complementarity of regulated sectors and a dynamic regulation through the development of pilot projects
To promote energy efficiency in all types of energy
To identify, foresee and influence new trends and developments in the energy sector
To envisage sanctioning actions in a context of energy transition and incorporate those challenges in our work
Strategic objective 5: Affirming ERSE’s excellence
Priorities:
To improve internal communications and knowledge exchange
To promote ERSE's co-operation with similar entities and other national and international institutions
To ensure the development of human resources, by promoting training and adaptation to new challenges
Orientation towards a culture of planning and management, adopting control and monitoring tools for the activities carried out at ERSE
Orientation towards a culture of information security and personal data protection
Affirming ERSE's social concerns, namely in the involvement in social causes and in environmental sustainability
The strategic objectives for the period 2019-2022 arose from a process between the Board of Directors and all ERSE staff. This process kicked-off with a two-day workshop led by an external facilitator in which all the directors brainstormed about ERSE’s strategic objectives. These objectives were then presented, discussed and approved by the Board. After this first event, each division organised internal meetings to discuss and set the priorities for each strategic objective.
Meetings were then held with the directors in order to collect contributions from all divisions and define ERSE’s priorities. The main issues were identified and regrouped by themes and areas. The Advisory Council and the Sole Auditor delivered their opinions on the strategic plan. At the end of this process, ERSE’s priorities for 2019-2022 were established and adopted by the Board.
ERSE is in the process of defining key performance indicators (KPIs) for the first time. KPIs are being defined by strategic objective or priority and ERSE will use the indicators to evaluate the implementation of the strategic plan. The process started with a request to divisions to define relevant KPIs. The divisions collectively produced around 300 indicators, and the Support to the Board (GACA) division will now merge and reduce the number. The division will also appoint a person to monitor the KPIs. The definition of KPIs was not imposed by legislation or agreements.
ERSE’s independence is enshrined in its statutes (Article 58) and under the Framework Law of Independent Administrative Entities. All regulatory entities in Portugal are legal persons of public law18 having the nature of independent administrative entities that, in order to carry out their duties independently, must comply with the following requirements:
Have administrative and financial autonomy
Have management autonomy
Have organic, functional and technical independence
Have its own bodies, services, personnel and assets
Have powers to issue regulations, regulate, supervise, and sanction infringements
Ensure the protection of the rights and interests of consumers
Without prejudice to its functional independence, ERSE must keep the government informed of its regulatory activity. ERSE should report in particular on recommendations, legislative proposals and draft external regulations which it intends to adopt, as well as on instruments in the framework of the government’s general policy for regulated sectors.19 ERSE informs in writing the member of the government responsible for energy of the launch of public consultations, of the submission of the tariff proposal to the respective Tariff Councils, as well as of the approval of the tariff regulation and tariff decisions. Similarly, ERSE informs the member of the government responsible for energy of ERSE's opinions on legislative proposals it receives for an opinion.
The government defines broad energy policy guidelines which ERSE must take into account, in particular on issues related to security of supply, protection of consumer rights, negotiation and conclusion of international agreements in the field of energy, energy efficiency, environmental sustainability and sustainability of regulated sectors.
Some of ERSE’s activities are subject to ministerial approval by law and according to its statutes. The following documents are subject to approval by government (first the Ministry of Environment and Climate Action followed by the Ministry of Finance):
Annual budget and the respective multiannual plan
Balance sheet
Annual reports and accounts
Due to the legacy of austerity measures, ERSE – like all Portuguese public entities including all sector regulators – is subject to controls on human resources and budget (see Inputs section for more detail). In practice, these controls may limit ERSE’s management autonomy and reduce its agility.
Several measures are in place to foster a culture of independence internally. Article 10 of ERSE’s internal code of ethics provides that its staff are bound by the principle of independence, and must respect ERSE’s instructions and guidelines. Articles 29 and 54(5) of ERSE’s statutes deal with incompatibilities and conflicts of interests. For instance, every year all staff members must sign a document to declare that they are not involved in a situation that could imply a potential conflict of interest. Should there be a potential conflict of interest, the employee must declare the information in writing to their supervisor.
In addition, the ERSE Plan for the Prevention of Risks of Corruption and Related Infractions,20 in place since February 2015, requires an assessment of corruption risks in the context of the activities performed by the divisions and the adoption of relevant measures to mitigate the identified risks.
Press coverage shows that ERSE’s independence has occasionally been questioned, including by parliamentary groups. For example, high energy costs became the subject of public and political debate in 2018. In response, Parliament convened a parliamentary inquiry committee. Over the course of a year, the committee heard from all of the ERSE presidents (past and present), ministers and secretaries of state (past and present), policymakers, competition regulators, presidents of the largest energy companies, presidents of industry associations and energy specialists.
The vast majority – 95% – of ERSE’s income comes from contributions (fees) paid by concession holders of the electricity and gas transmission networks,21 which are included in the network access tariffs paid by consumers (Table 2.2). ERSE sets the level of the fees according to criteria that are defined in legislation.22
Since the expansion of the regulator’s responsibilities in 2018, ERSE also receives revenue from operators in the fuels sector.23 This contribution is based on the quantities of oil, gasoline and liquefied petroleum gases (LPG) introduced in the national market, which is determined on a quarterly basis and transferred to ERSE by the operators. In 2019, ERSE received four months’ worth of revenues, which amounted to around EUR 240 000. For 2020, a complete year, the fuels contribution was forecast to represent about 10% of ERSE's budget. However, due to the decrease in fuels consumption during the COVID19 crisis, this percentage may not be reached.
The regulator also receives minimal revenues from fines (ERSE retains 40% of the fines from regulated entities). This amount has averaged EUR 189 000 per year over the last four years, although it can fluctuate significantly year to year. ERSE does not receive any income from the central government budget. However, ERSE’s budget is integrated in the overall annual state budget that is approved by the Ministry of Finance and presented to parliament.
Source: Information provided by ERSE, 2020.
Once ERSE's budget has been approved, its fees are shared between the concession holders of the electricity and gas transmission networks, which has an impact on the tariffs that are fixed annually and borne by electricity and gas consumers. The calculation takes into account the number of customers and energy consumption in each of the networks (electricity and gas, respectively) from the previous year.
Unlike ERSE’s financial independence in defining the contributions fees for electricity and gas, in the fuels sector the fee is determined annually by the government, on the basis of a formula established by Ordinance for 2019 and 2020, which ERSE then invoices to the relevant operators on a quarterly basis, as outlined above. The fees for the fuels sector are in practice subject to double approval by the government: in the first instance, the annual budget prepared by ERSE is approved by the Ministry of Finance and the member of the government responsible for energy; in a second instance, the two ministries issue the Ordinance setting the fee and formula for the fuels contributions for 2019-2020.The total contribution derived from the formula in the Ordinance in 2019 was significantly below that foreseen in ERSE’s budget. ERSE does not yet know how future fuels contributions will be calculated, from 2021 onwards, placing a degree of uncertainty on its regulatory and financial autonomy for these activities.
ERSE sets fines in the electricity, natural gas and fuels sectors.24 When determining the value of the fines, the regulator takes into account the financial situation of the regulated entity, the duration of the infringements, the regulated entity’s compliance record and its degree of co-operation in the proceedings. Different processes apply according to the sector, which fall under different pieces of legislation:
In the electricity and natural gas sectors, fines can be up to 10% of a company’s volume of business in the case of very serious administrative infractions.
In the fuels sector, ERSE has the power to impose penalties according to the Complaint Book sanctioning regime25 and the Unfair Commercial Practices sanctioning regime26 under the General Regime of Administrative Offences.27 Under this legislation, fines may be up to EUR 44 891.81.
ERSE’s budgetary autonomy is enshrined in its statutes.28 ERSE’s statutes further specify that public accounting rules and the system of autonomous funds that apply to Portuguese public entities (including provisions on spending commitments, the carry-over and use of funds between financial years, and controls on budget disbursements) shall not apply to ERSE.
Despite this, subsequent legislation has curtailed ERSE’s autonomy in managing its financial resources to a certain degree:
In recent years, in some cases, a portion of the approved budget has not been released and cannot be spent without prior authorisation from the Directorate-General of Budget due to provisions introduced in the annual state budget. This practice has been named “Cativações” or “blocking”. This practice also appears to be in contradiction with the Framework Law of Independent Administrative Entities29 as well as the ERSE statutes. Independent legal opinion from two law firms has stated that this “budget blocking” should not be applicable to ERSE.
According to ERSE’s statutes, any budget surplus should be refunded to electricity and natural gas consumers in the form of a reduction on the network access tariff. The refund of the budget surplus is subject to approval by the Ministry of Finance. This has resulted in situations where the government has sought to retain the surplus for the state budget. The government recently took three former ERSE board members to court following their refusal to pass the surplus to the national treasury. In 2017, the former board members were convicted, after initially being absolved, to each pay a fine of EUR 2 550 and, jointly, to restore EUR 2 446 554 plus interest to the treasury.30 ERSE complied with the decision.
In accordance with ERSE’s statutes and legislative provisions,31 ERSE’s expenditure is not allowed to exceed the approved budget. If additional funds are needed in exceptional circumstances, ERSE increase its income through charging fees or use of previous surplus, with the approval of the Government, or through developing an additional budget following the same approval process as for the annual budget.
The annual state budget has occasionally imposed restrictions on public procurement, stipulating that spending on contracted services must have been foreseen as a budget item in the previous year.32 These public procurement restrictions apply to all regulators and public sector bodies in Portugal. If ERSE wishes to foresee spending on procurement not foreseen in the previous year, it must seek approval from the Ministers responsible for Energy and Finance. Such budget line limitations could limit ERSE’s discretion to implement new activities foreseen in its work plan or which arise in the course of the year.
ERSE prepares its annual budget through the following process:
Each year the Board approves the schedule for the preparation of the budget.
Budget sheets and standard templates33 are made available, along with underlying assumptions, through the ERSE internal portal.
Each division makes a budget proposal that should reflect the activities agreed in the activity plan. The activity plan should already reflect the objectives set in the 4 year Strategic Plan.
After collecting the proposals from each division, the General Administration Division prepares the consolidated document that is sent to the Board for approval. The board can change or reallocate budget but in practice this happens very rarely.
The budget (and where applicable the multiannual plan) must be submitted for the opinion of the ERSE Advisory Council and the sole auditor.34
The annual budget, the related multi-annual plan and the opinions of the Advisory Council and the sole auditor are submitted to the Ministry of Environment and Climate Action and the Ministry of Finance for approval within 60 days. The annual budget can only be rejected in very specific circumstances, such as unlawfulness or negative opinion by the Advisory Council.
Internally, the execution of the budget is monitored by the General Administration Division (DAG). Monthly budget execution is monitored using a dashboard which analyses the revenue by sector and the expenditure according to headings (e.g. personnel expenses, acquisition of services, IT investment etc.). The execution rate of the budget lines for each division is compared to the approved budget for the year. Each quarter, the DAG reports on the budget execution by each budget division. The reports are available to the Board and the heads of each internal division via ERSE’s internal portal.
ERSE’s expenditure is reviewed by the sole auditor on a quarterly basis. All receipts are subject to verification and any inconsistencies require a justification from ERSE.
Since the 2019 State Budget,35 ERSE must comply with national accounting rules that are applicable to all public bodies in Portugal.
2016-19
Source: Information provided by ERSE, 2020.
Excluding its three board members, ERSE employs 95 staff, 80% of which are professional staff (Internally, the execution of the budget is monitored by the General Administration Division (DAG). Monthly budget execution is monitored using a dashboard which analyses the revenue by sector and the expenditure according to headings (e.g. personnel expenses, acquisition of services, IT investment etc.). The execution rate of the budget lines for each division is compared to the approved budget for the year. Each quarter, the DAG reports on the budget execution by each budget division. The reports are available to the Board and the heads of each internal division via ERSE’s internal portal.
ERSE’s expenditure is reviewed by the sole auditor on a quarterly basis. All receipts are subject to verification and any inconsistencies require a justification from ERSE. Since the 2019 State Budget, ERSE must comply with national accounting rules that are applicable to all public bodies in Portugal (Table 2.3).36 The total workforce increased by over 20% between 2016 and 2019 as ERSE took on new responsibilities, for example in the fuels sector. Women make up 60% of all ERSE staff and one third of senior management roles (Table 2.4). Overall, turnover averaged 4% between 2016 and 2019, slightly higher than the turnover rate of government employees in Portugal which was under 1% in 2016-17.37 Turnover at senior management levels was higher at over 11% on average between 2016 and 2019 (Table 2.5).
Source: Information provided by ERSE, 2020.
Source: information provided by ERSE, 2020.
Source: information provided by ERSE, 2020.
ERSE makes use of contractors or external consultants for some functions. The use of contractors varies year to year, but in 2018 the share was around 20%. ERSE typically uses contractors for certain IT services linked to market monitoring, audits and external legal representation.
As regards academic qualifications, the most represented fields in ERSE are engineering (24%), law (22%) and economics (22%), assuming a variety of tasks in different divisions. Other qualifications include management, finance, international relations, etc. In the context of developments in technology, the extension of responsibilities and expansion of EU level obligations where ERSE has important functions, directors stressed the need to strengthen the following areas and capabilities:
knowledge about emerging concepts such as sector coupling and energy communities, circular economy and innovation, decarbonisation, the role of final consumers in market design and operation
communication and support to market actors (especially in the context of new types of market actors/energy consumers entering the scene)
behavioural science
data management, big data analysis.
Source: information provided by ERSE, 2020.
Recruitment is carried out through open public competition in line with the Code of Administrative Procedure, ERSE’s statutes,38 and ERSE’s internal regulation on recruitment (Regulamento de Recrutamento de Pessoal da ERSE). All job openings are advertised in a national newspaper, on the ERSE website and in the Portuguese civil service job portal. There is no legal restriction on ERSE’s ability to recruit from the regulated industry for staff below Board member level. Since 2013, ERSE must secure government authorisation to increase the number of staff.39 The approval process can be lengthy, taking from around six months to a year to create some posts. Job titles and profiles, however, remain at ERSE’s full discretion.
To open a position, divisions must make a request to the General Administration Division (DAG). Together the DAG and the division define the job description, ideal candidate profile (CV requirements, etc.), interview questions and recruitment timelines. An internal jury is established for each recruitment process and the selected candidate is proposed to the Board for approval. The evaluation criteria are not standardised, but adapted to the specificities of each job opening. Once the chosen candidate has been confirmed, the final decision is not publicised beyond ERSE.
All staff are hired on a direct employment contract (i.e. not a public servant contract). Contracts are governed by ERSE’s internal regulations and by the Portuguese Labour Code. The use of temporary or fixed term contracts is marginal (currently only one case), although ERSE does have a trainee programme for recent graduates whose contracts cannot be extended beyond one year. In addition, ERSE offers the possibility of “curricular” traineeships, for university studies who are completing a degree.
Directors and heads of division are appointed for a three-year period, automatically renewable for an equal period, unless one party advises the other party of their non-renewal. When the appointment ceases, the director/head of division can return to the career category they held at the time of appointment.
ERSE can also receive staff on secondment from the public administration, typically from ministries, and as at June 2020 it has 17 staff in this category. A legal framework for public administration secondments governs these arrangements. Although ERSE staff are not civil servants, regulatory authorities are able to apply the legal framework and receive staff from the public administration. However, secondments between regulatory authorities (e.g. water, telecoms, etc.) are not possible as staff in regulators are not civil servants according to the framework. Seconded staff retain their career progression in the public administration, and are entitled to choose between their original salary arrangements or the salary that corresponds to the tasks performed at ERSE. Secondments can be renewed or revoked at any time (with a notice period), with the individual returning to their home administration. There has not been any formal assessment of the arrangements but generally speaking it is seen to work well. Some staff have been seconded to ERSE for many years.
Salaries are not linked to public servant bands but are set independently by ERSE. The flexibility in setting salary bands depends on the job function, professional experience and the academic background of the candidate. Some minor benefits, such as mobile phones and parking spots, are available to some positions. Otherwise, all staff benefit from the same employment package in terms of pension, healthcare, lunch vouchers, etc.
However from 2009, ERSE (along with all of the public administration and regulatory authorities) was subject to a national austerity policy that saw career progressions frozen and salaries cut. These measures began to ease from 2016:
From 2016-2019 the regulator was able to gradually return salaries to their 2009 levels.
In 2018, the Annual State Budget law allowed careers to be unfrozen, so that automatic progressions, promotions and recognition of years of service were again reactivated. ERSE has undertaken these corrections and updates for all staff. The 2019 Annual State Budget law nevertheless required government authorisation for promotions and performance-based bonuses. In 2020, this requirement was removed (via the 2020 State Budget). Promotions are thus possible and ERSE has accordingly proceeded to promote several of its staff, some of whom had not been promoted in over 15 years.
Salary increases of 0.3% for the public administration were announced in 2020. Although not tied directly to public levels, ERSE approved a similar salary increase for its staff. The previous increase took place in ERSE in 2009 (1.2%). Prior to the austerity period, such reviews and increases took place annually.
Since March 2017, the maximum salary for Board members of all regulatory bodies is set by law at around EUR 8 300 per month plus representation expenses, leading to a significant reduction in the ERSE Board members’ salaries. By comparison to the 2016 salaries, the reduction amounts to 31% in the case of the Board president, and 23% for the other two Board members. In theory, Board salaries cannot be lower than the most senior management position in the regulatory body, but in practice the upper salary level foreseen for the Director-General for Regulation (position currently vacant) would exceed that of the Board members.
Regarding the levels of remuneration relative to the energy sector, ERSE does not systematically review data on salaries.
ERSE has an annual training plan for its staff. Training is divided into several categories: strategic, relating to ERSE’s regulatory activities (e.g. training on the regulation of energy utilities, the regulation and integration of renewable energy;…); operational, relating to staff functions (e.g. data analysis, econometrics, IT tools;…); or transversal, relating to general professional development (e.g. project management, communication, foreign languages, etc.). According to the ERSE training plan, in 2019, most of the training time was dedicated to transversal (>5 000 hours), followed by operational (~2 400 hours) and strategic (~1 200 hours).
Each division assesses its own training needs and submits requests to the General Administration Division (DAG). The DAG merges the requests, identifies efficiencies and priorities, and defines the annual training plan and budget in line with the overall available budget. The plan and budget are then sent to the Board for approval. The plan prioritises training for staff who have not had any training during the previous three years, in order to comply with the legal minimum set in the Labour Code of 40 hours per year per employee.40 Each division is allocated the same budget for training, regardless of team size, requiring each division to prioritise accordingly. Training can also be offered to staff to award good performance.
The system for performance evaluation, in place since 2008, aims to ensure that the objectives of all staff are aligned with the goals of the organisation. A guide to the system is set out in a manual that is available to staff on the intranet (Manual do Modelo de Gestão de Desempenho, June 2018).
Managers evaluate an individual’s performance on an annual basis according to two components: goals and competences. Goals are set in a top-down fashion and linked to ERSE’s strategic objectives. Competences are set by each division. Staff members can also give feedback on their head of division anonymously through a dedicated platform.
Career progression is linked more closely to length of service than to performance. As mentioned above, in practice, however, austerity measures imposed by law froze career progression between 2009 and 2018. Following their relaxation, since 2019 ERSE has applied the regime of automatic progressions and remuneration adjustments according to the legal provisions.
In parallel to automatic career progressions, ERSE leadership state that a lack of management tools to recognise good performance and promote meritocracy is a challenge. During 2019, the requirement of government authorisation for promotions and performance-based bonuses was a particular constraint, although this obligation was removed in 2020.
ERSE is headed by a three-person Board of Directors composed of a president and two members. The Board is responsible for defining, guiding and monitoring ERSE’s activities and services, as well as representing ERSE and ensuring the performance of activities.41 Its main duties are to:
Set the strategic direction of the organisation and develop policy
Monitor performance of the regulator
Ensure compliance with the law, the organisation’s statutes and policies
Approve codes and other decisions that enforce regulation
Take sanctioning decisions, including decisions related to the application of fines and additional sanctions
Deliver formal opinions requested by other public bodies
Deliver strategic plans, annual and multi-annual activity plans, the annual budget, annual accounts and activity reports
Approve internal regulations
Collect and manage revenues and authorise expenses
Define ERSE’s internal organisation and charts of the respective staff, undertake the recruitment thereof
Exercise staff direction, management and discipline powers
Administer contracts
Represent the organisation with respect to national and international institutions, (e.g. EU) and/or appoint ERSE’s representatives to other bodies or institutions
Delegate
The President co-ordinates the activity of the Board and has responsibility to:42
Convene its meetings and set the respective agenda
Chair meetings, guide the work and ensure compliance with deliberations of the Board of Directors
Represent ERSE in and out of court
Secure ERSE’s relations with parliament, the government and other public or private bodies
Request opinions from the Sole Auditor, the Advisory Council, the Tariff Council and the Fuels Council
Exercise the tasks delegated by the Board of Directors
The President can delegate the performance of part of their tasks to other members of the Board.
1. Maria Cristina Portugal was appointed ERSE President in May 2017, for the remainder of her 6-year mandate, having been appointed as member of the board in June 2016.
Source: ERSE, 2020.
There is a division of labour between the Board whereby each member oversees the work of particular divisions. Board members are highly involved in the work of their assigned divisions and meet weekly with the heads of division and teams.
Legislation establishes that board members must have adequate qualifications, recognised independence, and technical and professional competence in the regulated activities. In addition, women and men must be represented at all times, with a minimum of one third representation each.
Board members are appointed by the Council of Ministers, following their nomination by the member of government responsible for energy and opinions from the Public Administration Recruitment and Selection Committee (CRESAP) and the parliament. CRESAP is an independent committee created in 2012 to review candidates for high level positions in central public administration bodies or equivalent. CRESAP issues a formal opinion on the basis of a candidate’s curriculum vitae, their experience and the fulfilment of any incompatibility requirements. The candidate is then heard by the relevant parliamentary commission, which issues a non-binding opinion. The Council of Ministers then makes the final decision. Although the opinion of the parliamentary commission is non-binding, in practice, the appointment of a candidate to the ERSE Board was once rejected following a negative opinion from the parliament.
Appointments of board members must be staggered, with a minimum period of six months required between appointments. The term of office is six years, not renewable.
The criteria for dismissing board members from office are defined in law. Board members can only be dismissed before the end of their term in the following cases: permanent physical or psychological incapacity or with a predicted duration exceeding the date of expiry of the term of office; supervening incompatibility; conviction by a final and non-appealable sentence for a felony that calls into question their suitability to exercise the office; serving a prison sentence; the dissolution of the board, or the termination of ERSE.43
The dissolution of the Board and the dismissal of any of its members may only take place by means of a resolution of the Council of Ministers based on a justified reason, within a process led by an independent entity44 and after considering the opinions of ERSE’s Advisory Council and the parliament.45 A ‘justified reason’ is a serious misconduct of individual or collective responsibility, corresponding to:46
Unjustified failure to meet the ERSE aims for reasons attributable to the board or the member of the board;
An excessive gap between the approved budget and its implementation, when the costs incurred unwarrantedly exceed the budget by 15%;
Serious irregularities in the functioning of the body, considering as such the practice of serious or repeated breaches of the law or ERSE Statutes;
Serious or repeated failure to comply with the laws and regulations applicable to ERSE and its guidelines;
Failure to comply with the duty to exercise functions or serious or repeated breach of confidentiality.
Board members are subject to both pre- and post-employment restrictions. Pre-employment restrictions provide that board members cannot have been a member of any board or management body of any company directly intervening in the regulated sectors in the two years prior to their appointment. Furthermore, they cannot hold offices/appointments in the government or in the regulated industry while they are board members. However, they are allowed to have teaching and research duties.47 After their term of office, Board members can only accept jobs in the regulated sectors after a two-year cooling-off period. Board members are remunerated during this cooling-off period.
Board meetings take place once a week. The board uses a digital platform (“Portal do CA”) to manage the decision-making process.48 ERSE divisions submit relevant items for approval, information or review by the board via this portal. Submissions that require a board decision include a ‘suggested decision’ from the ERSE divisions, which the board can simply approve, or it may request further information or clarification from the relevant head of division before taking its decision. As such, the board relies greatly on the technical input from ERSE teams, and in particular the heads of division, in its decision-making.
All exchanges within the decision-making process (submissions, requests for further information/clarification, decisions) are recorded in the portal, although in practice board members will usually have discussed issues in person with the relevant head of division in the course of their regular meetings: the board holds a weekly co-ordination meeting with all heads of division and each member meets weekly with their assigned divisions.
Furthermore, the Support to the Board division is composed of a team of ten experts with different backgrounds, whose tasks include advising the board, co-ordinating cross-cutting activities (e.g. elaboration of strategic plan) and supporting the board on strategies and activities at the European and international level.
The board’s decision-making is also informed by three independent, external bodies: the Advisory Council, the Tariff Council and the Fuels Council (see section on Councils) – provide non-binding opinions on all proposed regulatory decisions, for consideration by the board before it takes its final decision. In addition, the sole auditor provides the Board with interim and annual assessments of ERSE’s financial and asset management from a legal compliance perspective, which also serve to inform the Board’s decisions.
Decisions are taken by majority or by unanimous decision of the three board members. The president has the blocking vote. When the board takes a decision, the relevant head of division/manager is notified automatically through the portal.
ERSE publishes the non-confidential versions of its decisions and sends them to its mailing list and may publish them on its website. The minutes of its meetings are not published.
ERSE is currently restructuring. Under the new structure, ERSE will create several new divisions and reallocate some tasks and functions between existing divisions. The four new divisions include: an Internal Management Office (GGI) an Innovation and Special Projects Development Office (IDEP), an International Relations Office (GRI),49 and the reinstatement of a Directorate General of Regulation. The position of Director General of Regulation, although appearing on the current organigram, has been vacant since 2017.
ERSE divisions are structured by function (e.g. tariff setting) rather than by sector, with the exception of a small team that was established when ERSE took on new responsibilities in the fuels sector. The organisation by function rather than sector will continue under the new structure.
All divisions and offices report to the Board.
Source: Information provided by ERSE, 2020.
Note: New organigram to be implemented during the restructuring.
Source: Information provided by ERSE, 2020.
Support to the board of directors (GACA, 13 staff): This team provides support to the Board of Directors by preparing documents, co-ordinating outputs across different divisions and representing ERSE at different forums. In addition to providing the secretariat support for the Board, the team advises the Board on national and international institutional relations with other entities. Under the new structure, the tasks of this division will be divided between different teams: tasks of co-ordinating outputs that span several divisions or that concern the organisation as a whole (e.g. preparation of the strategic plan) will be undertaken by the directorate-general for regulation. International relations work will be undertaken by a new unit dedicated to this portfolio.
Support to energy consumers (ACE, 8 staff): responsible for analysing consumer complaints and promoting consumer rights. It also deals with the requests for information from energy consumers, legislative and regulatory protection measures and the instruments necessary for effective safeguarding of the rights and interests of energy consumers, including training sessions for consumer organisations. In the new structure, these tasks will be absorbed into the new Energy Consumers Division.
Communication, image and institutional relations office (CIRI, 3 staff): designs strategies and instruments for internal and external institutional communication. It drafts press releases and manages relationships with the media, edits web content and ensures ERSE’s presence on social media/networks. This office will be maintained in the new structure.
Costs and revenues division (DCP, 10 staff): designs models for calculating allowed revenues of regulated activities. It defines adjustments for previous years, references costs and parameters associated with allowed revenues. It also analyses the evolution and economic and financial performance of regulated activities. It monitors the performance and economic sustainability of regulated sectors and companies, the economic and financial flows associated with fees, and the taxes or social support and investments and assets. Under the new structure, it will be renamed the Finance and Economics Division.
Infrastructure and network division (DIR, 8 staff): designs the methodologies for defining interconnection and infrastructure capacity, the capacity allocation and congestion management mechanisms, the access rules and transparency obligations for network and infrastructure operators and the technical rules for system operation, measurement, reading, processing and provision of energy data. In addition, it monitors the efficiency and the technical quality of service of regulated networks and infrastructures. It further ensures technical co-ordination between interconnected network operators and their interoperability, network and infrastructure investment projects and compliance with national and European network development plans. The division will be maintained in the new structure.
Markets and consumers division (DMC, 12 staff): designs supervisory mechanisms and monitors wholesale and retail markets. It also defines criteria and methodologies applicable to switching and energy labeling. It analyzes the level of competition in the wholesale and retail energy markets, the performance of agents and liberalisation processes, the evolution of the renewables sectors and green certificate markets. The division also monitors the application of regulatory provisions on switching and the evolution of supply and demand structure. In the new structure, the division will focus on markets and competition (as a renamed Markets and Competition Division), while the consumer issues will be absorbed into the new Energy Consumers Division.
Pricing and tariffs division (DTP, 10 staff): defines methodologies and models for the pricing of regulated activities, the price of connections and services provided by networks and infrastructures, the marginal and incremental costs, the definition of tariff structures and options, the billing variables and their rules. The division is also in charge of the regulatory incentives to promote energy efficiency. It analyses regulatory mechanisms and models for forecasting tariff and price developments and monitors prices by applying the principle of tariff additivity and the timeliness of regulated tariffs. The division will be renamed as Tariffs, Pricing and Energy Efficiency Division under the new structure.
General administration division (DAG, 20 staff): in charge of human resource management, financial management, logistics and procurement, IT systems management and document management. DAG is responsible for ensuring the execution of management and organisational actions in the mentioned areas, as well as promoting the application of norms and procedures of technical, administrative and technological modernisation. It will be maintained in the new structure.
Legal division (DSJ, 7 staff): The legal division ensures legal support for the elaboration of regulations, administrative activities and internal procedures. It also is responsible for certification, compliance, sanctioning and enforcement activities of ERSE. It ensures the representation of ERSE in court proceedings. It will be maintained in the new structure.
National Petroleum System Installation Commission (CISPN, 4 staff): an internal “founding committee” for the National Petroleum System, to implement ERSE’s new responsibilities regarding fuels and biofuels. This is the only sector-specific team in ERSE. In the re-organisation, the work performed by this Commission may be integrated into another division, or the team may continue as a sector-specific unit, given that the fuels sector has specificities that distinguish it from the electricity and natural gas sectors. Furthermore, the fuels sector does not have a European legislative framework that supports regulatory activity.
The Innovation and Special Projects Development Office (IDEP) will be responsible for contributing to the active representation of ERSE in entities, associations, conferences, forums, projects and think tanks, consolidating internal teams by strengthening training for innovation, encouraging national debate around the themes of energy and innovation in the regulated sectors, enhancing academic knowledge on energy regulation and bringing in new participants to the debate on the future of energy.
The Directorate-General for Regulation (DGR) will co-ordinate the preparation of strategic plans and reports, carry out cross-cutting activities, continuously analyse the effectiveness of regulation, monitor the statistical and aggregate treatment of regulatory information and advise the Board of Directors and institutional representation of ERSE.
The Internal Management Office (GGI) will be tasked with conceiving and implementing an internal system of control to promote a culture of compliance and risk-management involving all staff and accompanying the execution of strategic plans and reports, and cross-cutting issues.
The International Relations Office (GRI) (currently part of the Support to the Board unit) will be responsible for co-ordinating European and international activities, as well as providing technical support to the Board of Directors and ERSE services, in terms of strategic positions, European and international decisions, meetings and activities.
A Data Protection Officer will ensure compliance with the General Data Protection Regime (GDPR).
The work of the current Markets and Consumers Division will be split, to consolidate all work concerning energy consumers in one division (the Energy Consumers Division) and market monitoring activities in another division, the Markets and Competition Division. The Energy Consumers Division (DCE) will be responsible for designing indicators of commercial service quality, satisfaction assessment surveys and information or training actions for energy consumers; analysing the contracts proposed by suppliers to customers, complaints and requests for information from energy consumers, legislative and regulatory protection measures and the instruments necessary for an effective safeguarding of the rights and interests of energy consumers; monitoring compliance with commercial service quality indicators and technical support for handling complaints and requests for information from energy consumers. The current ACE will be placed within this division. The Markets and Competition Division (DMC) will be responsible for designing supervisory mechanisms and monitoring the wholesale, retail, CO2 emission license and green certificate markets, defining criteria and methodologies applicable to switching suppliers and energy labelling; analysing the level of competition in the wholesale and retail energy markets, the performance of agents and the liberalisation processes, the evolution of the renewables sectors and the green certificate markets; monitoring the application of regulatory provisions on switching suppliers and the evolution of the supply and demand structure.
No formal ex ante assessment is mandatory for ERSE activities, except in some areas where they are required under European regulation. Although ERSE does not undertake systematic ex ante assessment of costs and benefits, every ERSE decision must be subject to formal hearings (either public or for the stakeholders affected by the decision) and must be accompanied by a justification document. The justification document may include scenario analysis, impact evaluation, explanation of the regulation’s intention, its legal framework, etc. All ex ante analyses are publically available.
There is no explicit proportionality requirement that requires ERSE to tailor the level of the assessment to the potential impacts of a new regulation. Nevertheless, the level of detail used in the ex-ante analysis depends on the type of decision and its general impacts. If it is a decision on tariffs and regulated companies’ revenues (either on methodologies or on parameters), the economic analysis is detailed and data on costs and benefits are usually included. If the decision is about operational procedures, the analysis usually focuses more on technical requirements, service output performance and customer interaction (simplicity, easy access, time frames, etc.).
Cost-benefit analyses are performed depending on the legal framework or internal processes that apply. Currently, each head of division is responsible for determining whether a CBA is needed and for co-ordinating the analysis. The assessment is then submitted to the Board for consideration before a regulatory decision is taken. A new division (GGI) is currently being established in the context of ERSE’s restructuring that will review and develop internal processes and quality control procedures, including for CBAs. Examples of activities where ERSE performs CBAs are:
Introduction of new tariff structures
Ex ante analyses of regulatory methodologies in regulatory reviews and parameter setting that focus on the impact on allowed revenues for regulated activities
In the context of the network development and investment plans for natural gas, ERSE analyses the geographic coverage of natural gas networks using qualitative (e.g. universal access to natural gas) and quantitative criteria (e.g. economic rationality of expansion for municipalities not served by the networks)
In the context of the National Petroleum System, ERSE has been mandated by the government and by the parliament to perform CBA studies on relevant projects, namely the pipelines for connecting the Sines Maritime Terminal of Liquid Bulks to the multiproduct pipeline between Sines and Aveiras de Cima, a storage facility for fuels and LPG in Sines, and the jet pipeline between Aveiras de Cima and the Lisbon Airport.
In general, the benefits assessed in the CBAs amount to the costs avoided for the regulated sectors. The methodology does not tend to assess other types of costs and benefits, such as societal, environmental, etc. The types of costs include:
the impact on the system costs and income to be recovered by tariffs
the profitability of regulated activities
the stability of the level of revenues.
ERSE’s consultative councils have confirmed the public accessibility and clarity of ex ante assessments, including CBAs. They receive them together with relevant documentation whenever they are consulted on a proposed decision.
ERSE also analyses CBAs that are done by other actors. For example, ERSE analyses the methodology and the results of the CBAs that regulated companies include in their investment plans.
ERSE does not have a standard methodology for ex post reviews but most activities feature them. There are two cycles of ex post reviews:
Once a year, ex post reviews are performed within the tariff setting process.
In addition, ex post reviews take place every three to four years, whenever a regulatory period comes to an end. It enables ERSE to assess how the regulatory parameters and incentives have worked (vis-à-vis the market actors’ performance) and where changes might be needed for the subsequent period.50
Beside these cycles of ex post reviews, there is also the possibility of performing these evaluations on an ad hoc basis whenever necessary. The evaluations are co-ordinated by the respective heads of division, who then submit them to the Board.
The main quantitative criteria taken into account are the impact on system costs and revenues to be recovered from tariffs, the profitability of regulated activities and the stability of the level of revenues, as is the case in the context of ex ante evaluations. In the review process of regulatory methodologies, ex post and ex ante evaluations are interdependent. In general, the criteria are published by ERSE in its codes/regulations and supporting documents.
ERSE carries out inspections and audits as part of its supervisory duties, and to date has focused exclusively on the electricity and gas sectors. Audits are generally undertaken on the regulated companies (i.e. network operators and the Logistics Operator for Switching Suppliers, OLMC), while inspections are also applied for other energy actors, such as electricity and gas suppliers. However, audits and inspections are possible across all market actors (regulated or not). Regarding the fuels sector, the legal framework foresees the possibility for ERSE to do audits, but given the shared competence with ENSE and ENSE’s key function in this regard, ERSE is not planning any audits or inspections. Any potential for jurisdictional overlap, for example, with enforcement work by ENSE for the fuels sector or consumer protection by ASAE, is managed via Memoranda of Understanding (MoUs). At working level, ERSE has access to information on past and planned ENSE audits. Audits and inspections are also within ERSE remit for electric mobility,51 but in this early stage of the sector’s development, none have been envisaged so far.
ERSE divisions verify the compliance of regulated entities through inspections and audits according to their area of responsibility. If a division discovers any fact or suspicion of wrongdoing by a market agent or operator in the course of its supervisory activities, this information is sent to the Board, which in turn reports it to the legal affairs division.
The ERSE website lists the inspections and audits that have taken place in the electricity and natural gas sectors. The website makes available the reports on the outcomes of some but not all audits (ERSE, 2020[3]); it does not publish data or information on the outcomes of inspections.
ERSE inspects the entities subject to its regulation and supervision, namely network operators, other regulated infrastructures and energy traders (ERSE, 2020[3]). The Framework Law of Independent Administrative Entities establishes that regulatory bodies shall carry out inspections and audits on an ad hoc basis, in execution of previously approved inspection plans and/or whenever there are circumstances that indicate disturbances in the respective sector of activity. For example, an inspection may be triggered in order to investigate complaints that have been submitted. In the past, ERSE has had inspection plans but more recently has carried out inspections on a needs-based approach, based on the data analysis and monitoring of the regulated companies. The regulator can also decide to take action as a result of consumer complaints, if it is concerned that a company practice may be suspicious. Inspections are unannounced. ERSE carried out eight inspections between 2015 and 2019 (Table 2.9).
Source:ERSE, Enforcement, https://www.erse.pt/en/activities/enforcement/.
Inspections are carried out by ERSE’s regulatory divisions. The framework law lays out the rights and duties of employees mandated when they are carrying out an inspection or audit (article 42). ERSE’s legal division (the department with sanctioning powers) does not participate directly in the inspections.
The goal of inspections is to:
Ensure compliance with the legal and regulatory provisions that are applicable to operators
Ensure compliance with ERSE instructions and decisions
Ensure the recovery of regulated tariffs
Verify compliance by regulated sector agents with public service obligations
Verify compliance with quality of service standards
Act on a request of consumer complaints
Legislation does not require inspection and enforcement activities to be risk-based. In practice, ERSE inspection activities may result from:
The existence of a potential risk that the procedures defined by ERSE or other entities applicable to the case in question are not being followed
Overseeing the application of the rules and standards established by ERSE in its Tariffs Regulation
The need to ensure verification of the operating conditions of the national electricity and gas systems
The need to verify the degree or level of credibility or confidence regarding the compliance and reliability reported by the regulated entities
To fulfil its inspection role, ERSE has the duty and power to:
Identify the entities infringing the laws and regulations which ERSE is tasked with supervising
Obtain assistance of administrative or law-enforcement authorities when deemed necessary
Access the facilities, property, means of transportation and services of the regulated entities, and entities which co-operate with regulated entities, as well as access their documents, books, registries and information and communication systems
Obtain, by any means, copies of the documents mentioned above
Require that any legal representative, worker or staff of the regulated entities, answer questions pertaining to facts or documents related to the object and objective of the inspection, as well as registering their responses
ERSE makes use of two categories of audits: one-off or specialised audits after identifying potential situations of non-compliance and regular audits, generally on an annual basis, to certify or verify the information reporting and procedures compliance or to ensure that the records are accurate. In the case of entities that are regulated under the Tariff Regulation, ERSE approves an auditing and oversight plan containing the issues subject to periodic auditing. The plan does not include a calendar of planned audits. ERSE notifies regulated companies by letter well in advance that an audit is due to take place. ERSE carried out 13 audits between 2015 and 2019 (Table 2.10).
Source: ERSE, Enforcement, https://www.erse.pt/en/activities/enforcement/.
Audits follow the Portuguese Auditing Standards and Guidelines and are mostly performed by independent audit firms. For specialised audits, where ERSE can appoint the auditor, ERSE approves the content and terms of reference of the audit, and approves the auditor’s final report. ERSE may also request the entities subject to the Tariff Regulation to initiate additional audits, complementary to the financial auditing. These requests might come up in the context of the certification of the entities’ accounts at the end of each financial period.
ERSE can impose a wide range of sanctions.52 Available sanctions include warnings, fines, and accessory sanctions (prohibition of the exercise of any activity within the scope of the regulated sectors, banning of the exercise of an administrative or management position in entities intervening in the regulated sectors and publication in a newspaper with national coverage or on ERSE's website). Under specific criteria, and with the agreement of the agent, a case can be closed with a procedural transaction.53
The different legal frameworks that underpin ERSE’s sanctioning powers lead to different enforcement outcomes. Under the Energy Sector Sanctions Framework, the gradation of available sanctions is considered adequate to allow credible deterrence through the escalation of sanctions, given that:
Setting the amount of the fine can take into account relevant circumstances, including the duration and the consequences of the infringement, the benefits derived from the infringement, the financial situation of the offender, etc.
The legal framework sets the upper limit of the fine at 2%, 5% and 10% of total turnover depending on the seriousness of the administrative offence, when the infringer is a legal person, and at 5%, 20% and 30% of total annual remuneration earned in the exercise of professional functions, when the infringer is a natural person.
The maximum applicable fine is double for repeat offenders.
The Energy Sector Sanctions Framework applies to the electricity and natural gas sectors but does not cover fuels, electric mobility or the REMIT Regulation. Other laws beyond the Energy Sector Sanctions Framework, notably other special penalty regimes, confer fragmented sanctioning powers to ERSE in respect to the other sectors. The sanctions provided under the special penalty regimes54 (e.g. the complaints book and the unfair commercial practices legislation) may not be adequate to allow credible deterrence. For a violation of the complaints book rules,55 fines are set at a minimum of EUR 150 and a maximum of EUR 15 000 for each infringement depending on the offence, the offender (natural or legal person) and the level of guilt. Regarding unfair commercial practices,56 fines are set at a minimum of EUR 250 and a maximum of EUR 44 891.81 for each infringement, depending on the offence, the offender (natural or legal person) and the level of guilt. Several cases of repeat offenders indicate that the sanctions under these special penalty regimes are not a credible deterrent.
After the initiation of proceedings, all procedures are public and searchable on request.
In the context of its consumer protection responsibilities, ERSE has a specific service for informing and supporting energy consumers. It publishes useful information for consumers in a dedicated area on its website, disseminates “Bad Practice Alerts” highlighting unfair commercial practices carried out by energy suppliers, and responds to individual requests for information. In addition to publishing information on its website, ERSE’s consumer engagement efforts include publication of short videos, brochures and flyers, public service messages on the radio and television appearances to explain energy issues. ERSE also hosts and manages three online comparison tools for consumers (for example, to compare prices of providers or to know the energy mix and CO2 emissions of their energy consumption).
ERSE provides telephone assistance through a dedicated consumer line, available every working day from 3:00 p.m. to 6:00 p.m, and a face-to-face service, by prior appointment. This specific service for consumers is also responsible for organising and promoting an annual training programme, aimed mainly at consumer associations and arbitration centres for consumer disputes, and participates in events organised by other entities.
ERSE also handles consumer complaints. In 2019, ERSE received 21 358 complaints and requests for information (32% less than in the previous year, 31 421 requests). The sector with the most complaints is electricity. 6 056 complaints or requests related to billing and 2 575 related to energy contracts. ERSE is one of several organisations to whom consumers can direct their complaints in the energy sector. Others include DECO (a private consumer rights organisation), the Directorate-General for Consumer Affairs, arbitration centres, ENSE and ASAE.
Complaints can reach ERSE through several avenues:
consumers can contact ERSE directly via phone, email or its website;
complaints from the complaints book that have not been dealt with in time by operators are directed to ERSE automatically; or
third parties that may have received the complaint in error can redirect it to ERSE (e.g. ENSE, which only deals with complaints in the fuels sector, not the electricity or gas sectors).
Through its Support to Energy Consumers (ACE) team, ERSE tries to resolve complaints and mediate between operators and consumers. After analysing the complaint, ERSE can collect additional elements from consumers or market agents. Unlike other organisations that may receive consumer complaints such as DECO, suppliers/operators are obliged to respond to ERSE’s requests for information. For comparison, DECO receives about half the number of complaints or information requests on the energy sector compared to ERSE (11 056 in 2019 and 16 981 in 2018; the main issues concerned billing; contracts and switching suppliers; and unfair commercial practices, including misleading or aggressive sales).57
In cases where ACE cannot resolve the complaint and mediation fails, ERSE recommends the use of arbitration as an Alternative Dispute Resolution (ADR) mechanism. If the consumer is an individual person (domestic user) and they decide to submit the dispute to arbitration, the market agent is obliged to accept the arbitration decision. As a characteristic of the Portuguese system, arbitration centres are multi‑disciplinary and cover a suite of economic sectors, thus not all are not specialised on energy legislation and regulation. In addition, there are limits on the type of consumers who can access ADR mechanisms (only individual household consumers are covered), as well as an upper monetary amount which can be disputed (EUR 5 000). Users not covered by these characteristics can seek redress against a market agent though the court system.
Recently, ERSE signed co-operation agreements with seven out of the nine arbitration centres for consumer disputes. Within the scope of each protocol, ERSE provides technical and financial support to the arbitration centre, including training. The exceptions are Centro de Arbitragem da Universidade Autónoma de Lisboa that functions within a private university and is privately funded and Centro de Arbitragem de Conflitos de Consumo da Região Autónoma da Madeira, established by regional authorities. Although they are authorised and recognised by the government, they are not integrated into the national network of arbitration centres.
In cases where a serious infringement is suspected, it is referred to ERSE’s legal division for possible enforcement action. Complainants can also file reports of suspected infringement on ERSE’s website that are transmitted directly to the legal division. ERSE analyses complaints according to the applicable sanctioning framework. Following this, it can open administrative infraction proceedings, after which ERSE carries out the necessary investigation in order to sanction the natural or legal person or close the case.
According to the Energy Sector Sanctions Framework, if there are not sufficient grounds to follow up on a complaint, ERSE must inform the complainant of the reasons for this assessment. At this point, the complainant can submit their observations in writing within a given timeframe. After receiving these observations, ERSE can open an administrative infraction proceeding or declare the complaint to be unfounded or not a priority for treatment.
ERSE consults key stakeholders on its various decisions through three independent advisory bodies that deliver non-binding opinions: the Advisory Council, the Tariff Council and, since 2019, the Fuels Council.
The councils are collegiate bodies, composed of members defined under the law. They are composed of industry, consumer representatives, representatives from other regulatory entities or public bodies and, in the case of the Advisory Council, government representatives from both national and regional level. Industry and consumer representatives must be represented in equal numbers. Members serve a renewable term of three years; many members have been on the councils for several terms. They are not remunerated for their participation. However, in order to facilitate the participation of household consumer representatives, ERSE allocates a per diem to these members. Each council is chaired by a president, a person of recognised standing and independence appointed by the member of the government responsible for energy. No representatives from ERSE sit on any of the councils, although councils may request that ERSE staff attend meetings to present and explain the proposed decisions under discussion. The President of the Board of ERSE also interacts regularly and directly with the presidents of each council.
Each council sets its own rules of procedure and decides how often to meet. In general, the councils meet several times per month and sometimes, several times a week. Meetings are held at ERSE’s premises. Members who are not based in Lisbon are expected to travel to all meetings. The councils may meet extraordinarily if convened at the initiative of the president or at the initiative of at least two-thirds of its members (Advisory Council) or of at least one third of its members (Tariff and Fuels Councils). All opinions of the councils are approved by majority vote, although if members do not agree with all or parts of the opinion of the council they can state this in the submission to ERSE.
The opinions of the councils are made public and published on the ERSE website (ERSE, 2020[4]). If the opinions of the councils do not lead to a change in ERSE’s proposed decision, the regulator must justify why it is not making the suggested changes.
ERSE has provided training on energy regulation and related subjects to consumer representatives that sit on the councils in order to build their capacity (which tends to be weaker than that of industry representatives) and thereby enable more meaningful input to council deliberations.
The Advisory Council can meet in plenary or in specific groups pertaining to different sectors: electricity and natural gas. In addition to its president, the council brings together 54 representatives from a wide range of interests, including from government, the environment agency, local and regional governments, regulators, regulated industry, consumer associations, automobile and non-electrified road transport interests, agricultural interests, and LPG-consuming economic activities interests (see Annex 2.A for more information on the composition of the Advisory Council).
The Advisory Council provides a forum for consultation on the definition of ERSE’s broad lines of action and deliberations taken by the Board of Directors. In its plenary sessions, it issues opinions on:
ERSE activity plan and budget
ERSE annual reports and accounts
The tariff regulations, whose proposals to this effect are submitted to it by the Board of Directors.58
Other matters common to the electricity and natural gas sectors, including those of a regulatory nature that are submitted by the Board of Directors, excluding those within the remit of the Tariff Council.
The Advisory Council meeting in sections can issue an opinion on the following:
Proposals concerning the approval or amendment of regulations that ERSE is responsible for issuing, relating to the electricity and natural gas sectors, with the exception of tariff regulations.
Proposals relating to opinions that ERSE is responsible for issuing and which the Board of Directors submits for its analysis.
Other matters related to the electricity sector or with the natural gas sector submitted by the Board of Directors for its analysis, except those matters under the jurisdiction of the Tariff Council.
The Tariff Council provides a specific forum for consultation on tasks assigned to ERSE in the scope of tariffs and prices. The Tariff Council delivers opinions on the approval and review of tariff regulations, as well as on the establishment of tariffs and prices. As with the other councils, industry and consumer representatives must be represented in equal numbers (See Annex 2.B for more information on the constitution of the Tariff Council).
ERSE consults with the Fuels Council within the scope of its duties for the sectors of liquefied petroleum gas (LPG) in all its categories, namely bottled, piped or bulk LPG, as well as of petroleum-derived fuels and biofuels. (See Annex 2.C for more information on the composition of the Fuels Council). The council has two sections representing different sectors: i) oil-based fuels and biofuels, and ii) liquefied petroleum gas. Each section decides upon the following matters:
Proposals for agreement or amendment of the regulations issued by ERSE
Proposals for opinions within ERSE's competence and that the Board of Directors intend to submit to it.
There is no consultative council for the electric mobility sector. ERSE faced the challenge of identifying relevant stakeholders to consult when it launched a public consultation pertaining to this sector. Some issues relating to electric mobility were however discussed in the Tariff and Advisory councils. Furthermore, the Infrastructure and Networks Division has established informal stakeholder groups with which to interact on this subject. The division meets with all the interested stakeholders that contact ERSE about this topic and aims to disseminate information to the target consumers. As a relatively new sector within ERSE, there was not standardised approach, but some stakeholders were already members of ERSE’s councils while others were identified by responding to public consultations.
According to its statutes, and in addition to the work of the councils, all decisions on codes and regulations must be preceded by a public consultation. A mandatory consultation process applies to all its regulatory decisions across all the sectors within its purview. Decisions must be put to public consultation for at least 30 working days or, for urgent cases and sub-regulations, at least 8 consecutive days (although this express process is rarely used). During this period, the councils are also consulted. ERSE conducted 13 public consultations in 2019 and seven in 2018 (Box 2.2).59
In 2019, ERSE held 13 public consultations:
Smart Electricity Grids
Regulatory Review of Natural Gas
Parameters for the conditions for connection to the electricity grid
Directive that establishes the regulatory framework for the mechanism for contracting electricity in order to satisfy the consumption of customers of the supplier of last resort
Five-year Network Development Plan for electricity distribution
Designation and characteristics of the members of the Advisory Council, the Fuels Council and the Tariff Council
Process for storage, collection and exchange of Liquefied Petroleum Gas (LPG) bottles
Pre-consultation on the rules of the Energy Efficiency Promotion Plan
Electric Mobility Regulation
Regulation on the fulfilment of consumer information obligations by petroleum-based fuels and liquefied petroleum gas (LPG) traders
Risk and Guarantee Management scheme for the national electricity system
Self-consumption
Merging the Electricity and Natural Gas Commercial Relations Regulations
In 2018, ERSE held seven public consultations:
Review of the gas Tariff Regulation and Commercial Relations Regulation
Ten Year Network Development Plan for electricity transmission
Proposals on the terms and conditions of the new concession contracts for low voltage electricity distribution
Implementation of the EU Gas Transmission Tariff Network Code
Rules for the pilot project on demand participation in the electricity balancing market
Review of the electricity Tariff Regulation
Five Year Network Development Plan for gas distribution
Source: (ERSE, 2020[5]), Concluídas, https://www.erse.pt/atividade/consultas-publicas/concluidas/.
ERSE must notify the member of the government responsible for energy, DGEG and all stakeholders of the regulated sectors registered for consultation, including concession holders, licensees, traders and consumer associations, and provide them with access to the relevant documents through the ERSE website. Registration for public consultations can be made using forms provided on the ERSE website. All stakeholders registered for public consultations receive the documents at the same time as they are published on the ERSE website (ERSE, 2020[4]).
Data and information provided to stakeholders during the consultation process, include:
The draft regulation and supporting documents justifying the proposals. Sometimes this can include impact assessments and/or a discussion of alternative options
Q&As and supporting documents written in plain language when the audience is non expert
For tariff decisions, all assumptions and regulatory data supporting the proposal.
All comments received during the public consultation are published unless the respondent requests confidentiality. ERSE then prepares a document where it addresses all the topics raised in the consultation and justifies why the proposed changes were or were not accepted.
For tariff decisions specifically – i.e. applying the current tariff regulation and determining the prices for tariffs and the allowed revenues of the operators – ERSE issues a proposal for the prices and all the supporting information to the Tariff Council and to the regulated companies only. This proposal is confidential. Within one month, the Tariff Council gives its formal opinion. ERSE then considers that opinion and takes the final tariff decision which is made public via the ERSE website and in Portugal’s Official Bulletin.
For particularly complex or sensitive issues, ERSE may conduct pre-consultations with stakeholders through the same public consultation platform. The purpose is to ensure open discussions on topics before the presentation of the regulation proposal, in order to identify and understand the main concerns of the stakeholders and potentially guide the drafting of the regulation proposal. This process is then followed by a regular consultation process.
For the majority of its regulatory reviews, ERSE organises a public hearing for stakeholders, during the consultation period, in order to promote a more dynamic and interactive discussion on the proposals. For example, ERSE presented its project to merge the Electricity and Natural Gas Industry Relations Regulations; more than 180 participants registered.
Additionally, ERSE can hold meetings with stakeholders to hear from specific perspectives outside the broader public consultation process. ERSE does not publish a list of these meetings or their minutes.
Separately, ERSE may have meetings with formal “support groups” composed of stakeholders, for which the documentation and minutes is kept for legal and administrative purposes. This information is not published, but can be accessed upon request (e.g. freedom of information provisions and right of recourse of administrative procedures).
The following legislative requirements are in place to enhance the transparency of ERSE’s activities (with confidential and commercially sensitive information appropriately removed if needed):
Public consultation on relevant activities
Publication of all decisions, resolutions and agreements
Publication of all comments received during the public consultation (unless the respondent requires confidentiality) and of a document where it addresses all the topics raised in the consultation and justifies why the proposed changes were or were not accepted
The formal opinions of the councils are also made public. When their opinion is not followed, ERSE must justify why
Publication of a forward-looking action plan
Mechanisms to reach out to stakeholders and explain the rationale for its decisions once the decisions have been taken include:
Use of the website to communicate and explain decisions
For issues with big impact in society, ERSE has organised workshops and training sessions across the country. For example, regarding the annual tariffs decision ERSE usually holds a session open to all consumers and consumer associations for explain the changes in the electricity and gas prices.
Source: ERSE, 2020.
The decisions taken by ERSE within the scope of its sanctioning powers (see Enforcement) may be appealed to the Competition, Regulation and Supervision Court within a period of 20 or 30 working days.
The appeal must be submitted to ERSE, with allegations and conclusions.
ERSE must send the case file to the Public Prosecutor's Office with all the relevant elements and evidence.
If relevant, the Public Prosecutor's Office may forward the case to the judge or drop the indictment, after hearing ERSE.
The court may decide to hold a trial hearing or reach a verdict immediately, in which case ERSE, the Public Prosecutor's Office and the stakeholder may oppose the waiver of the hearing.
The court shall issue a decision to close the case, acquit or sanction the person and then inform ERSE.
The decisions of the Competition, Regulation and Supervision Court may be appealed to the competent Court of Appeal, which will decide at the last resort, without prejudice to the jurisdiction of the Portuguese Constitutional Court.
In addition, regulations or administrative acts issued by ERSE (e.g. the annual decision regarding tariffs) may also be appealed before the competent Administrative Court at any time, in case of null acts, or within a period of three months, in case of voidable acts.
The initial application must be sent directly to the competent court.
ERSE is summoned to challenge and the Public Prosecutor's Office is notified to pronounce.
The court may decide immediately or order a pre-trial hearing, for the purpose of attempting to conciliate or define the subsequent terms of the process. If the attempt at conciliation unsuccessful, the court determines to hold a trial hearing, where the evidence is presented.
The court can acquit or convict, and must inform the parties and the Public Prosecutor's Office.
ERSE must publish the results of all legal appeals.
1 Considers only tariff decisions as well as decisions regarding sanctions. A tariff decision may be appealed by different stakeholders in different parts.
Source: ERSE, 2020.
Moreover, ERSE is subject to the jurisdiction and powers of financial control of the Court of Auditors, namely with regard to the verification of accounts, the supervision of acts and contracts that generate expenses for the entity, the assessment of the legality, economy, effectiveness and efficiency of the entity's financial management, the supervision of its resources and the allocation of financial resources from the European Union, among others.
ERSE regulations require regulated entities to submit a large amount of data at differing frequencies depending on the type of information (Box 2.4). Each division defines the data reporting requirements for market agents through the regulations and codes that they develop in their respective areas of work, and all regulations and codes are then approved by the Board. Data reporting requirements are generally defined for a regulatory period (three years for the electricity sector and four years for the natural gas sector), which provides some stability and predictability for regulated entities. ERSE has the right nevertheless to request additional information whenever it deems necessary.
Each division requests data from regulated entities based on the requirements in the approved regulations and codes. Some tools are in place to co-ordinate the different data requests. For example, divisions have access to a shared email account from which the data requests are sent to regulated entities. This system avoids regulated entities receiving messages from several different contact points within ERSE. Divisions also rely on informal communications between staff to keep informed about what data is being requested from which companies.
ERSE regulations require all regulated operators to report annually on regulated accounts, which includes information on expenditure, income, assets, liabilities and equity and all other economic and physical information necessary for the regulatory process. The nature and level of the breakdown of economic, financial and operational information is defined for each sector. In particular, the tariff code requires a deep and systematised accounting breakdown of regulated activities. Thus, companies are required to report highly disaggregated data regarding the different nature of expenses, income, assets and liabilities.
ERSE regulations also require regulated entities to submit the following data periodically:
In the context of commercial quality of service, on a quarterly basis: waiting time in customer centres, phone call waiting time, responses to customer requests and complaints, frequency of meter reading, time of response to emergency situations, scheduling availability for activation/deactivation of supply, reconnection timing after failure, etc.
In the context of energy measurement, every six months: number of meters installed, verification of meters, meter reading, process of making consumption data available to suppliers, etc.
In the context of the offers on the retail market to domestic consumers, every six months: loyalty and penalty clauses, means of payment, additional services and price indexation.
In the context of wholesale market monitoring, on a daily basis: information on day-ahead, intraday and system operation markets from the electricity market operator and from the electricity TSO.
In the context of supplier switching, the Logistics Operator for Switching Suppliers (OLMC) provides, on a monthly basis: the number of clients (and consumption) that changed supplier, the number of clients and consumption per supplier, number of new contracts per supplier, etc.
In the context of supplier of last resort acquisitions of renewable and CHP electricity benefiting from feed-in-tariffs, the supplier of last resort sends to ERSE, every month: the energy amounts, prices value of acquisitions, disaggregated by technology.
In the context of electricity labelling, suppliers must send to ERSE every three months: the total number of clients and associated consumption, the total number of clients and associated consumption disaggregated by commercial offer, acquisition and cancelling of guarantees of origin and bilateral contracts as well as information necessary to calculate the national energy mix.
In the context of electricity connections, the TSOs and DSOs shall send every year, with a disaggregation by semester of number and capacity of new connections, number of requests to increase capacity, amounts in EUR supported by the client requesting the connection.
For the process of the storage, collection and exchange of Liquefied Petroleum Gas (LPG) bottles, the operators of the LPG botted storage facilities must report monthly to ERSE the LPG bottles recovered by the companies as well as the remaining stocks and the compulsory withdrawal notices issued by them.
In the context of the fees applied to gas networks for using public land, every year the DSOs must send the costs borne from these fees, the amounts of the fees transferred to suppliers and the debt to be recovered in the following years (difference between the total costs borne and the total amount transferred to suppliers), disaggregated by municipality. Every year suppliers must send the amounts of these fees transferred to customers, also disaggregated by municipality.
Regarding its activity of monitoring the retail energy prices, electricity and gas suppliers, ERSE requires the following information:
Total consumption (quarter and year): total value of electricity and natural gas consumption for the period of consumption under analysis, for the different time periods.
Total contracted power (quarter and year): total value of contracted power or capacity for the period of consumption under analysis.
Number of customers (quarter and year): average number of customers for the consumption period under analysis.
Average prices (quarter and year): average value invoiced (with and without taxes), for the consumption period under analysis.
Regarding ERSE’s activity of supervising and monitoring the logistics and the retail market of fuels and LPG, the National Petroleum System undertakings should report on the “Balcão Unico” platform the following data:
The daily prices of fuels and LPG on the retail market
The monthly quantities of fuels and LPG produced by the refineries, handled in the logistic infrastructures and marketed in service stations or commercialised in the LPG sales facilities
The quantities of petroleum products introduced in the national market, at the wholesale level, for the purposes of tax, strategic reserves and ERSE’s contribution.
Prices and commercial conditions for electricity offers (low voltage level) from energy suppliers.
Prices and commercial conditions for gas offers (low pressure level) from energy suppliers.
Prices and commercial conditions for dual offers (low voltage and low pressure levels) from energy suppliers.
Number of electricity vulnerable customers, with social electricity tariffs (quarterly).
Number of gas vulnerable customers, with social gas tariffs (quarterly).
Source: ERSE, 2020.
Although there is no scheduled periodic review of reporting requirements, in practice ERSE often reviews reporting obligations in terms of their usefulness in order to adapt to changes in the market or regulation (regulatory changes or regulatory period changes). If the need does arise to adjust the reporting requirements, a formal process is launched and new rules are published. For example, the requirements of the information presented in the regulated accounts for calculating allowed revenues are defined by the complementary rules and methodologies as set out in the tariff regulation. In 2019, ERSE revised and published new complementary standards for both the electricity and natural gas sectors.
Currently, there is no central portal for actors to submit data. Given the volume of data required by the regulatory process and, especially, supervision activities, ERSE has been implementing a strategy for using and structuring data using business intelligence tools and IT systems (Box 2.5). ERSE tends to rely on specialised external service providers in combination with its internal technical support teams and the regulatory teams to develop these systems. In autumn 2019, ERSE launched an internal working group to review and map the various data and communication tools used by the divisions, with a view to developing a strategy for their efficiency, interoperability and modernisation. In addition, ERSE is investing in IT systems that will enable the establishment of more complete databases that can support new uses and data processing. In addition, several projects are underway to make various data collection obligations “smarter” and more automated.
ERSE uses the Market Information System (SIMER), a market intelligence analysis system to ensure structured data processing and knowledge production with the information gathered through the supervision process.
ERSE uses “power bi” and other tools in order to improve its performance, for example for the online comparison tools.
ERSE uses the “Balcão Unico” system, a joint platform shared by ERSE, ENSE, LNEG and DGEG, hosted by ENSE, for supervising and monitoring the petroleum products and biofuels sectors.
ERSE developed, together with an external service provider, a new application to support the calculations of allowed revenues of the activities of electric sector, which includes a structured database to gather and store data, functionalities to deal with the recurrent calculations and a tool to analyse the financial sustainability of the electric sector.
ERSE uses several econometric software programmes, such as E-Views and STATA, to perform econometric analyses (for example, frontier efficiency analysis econometric models, multiple regression models with sectional data and panel data, and Data Envelopment Analysis – DEA).
One of the tools available to energy consumers to submit complaints or requests for information is the Livro de Reclamações Eletrónico (Online Complaints Book), with a direct link to ERSE's complaints management system. ERSE receives a copy of the complaints addressed to the companies and the corresponding response to the consumer, for review and possible intervention. Requests for information are only received and answered by ERSE.
Source: ERSE, 2020.
The main challenges associated with data collection are:
An increasing number of (non-traditional) players in the energy sector who may not be used to receiving such data requests.60
Obtaining information in the appropriate disaggregation/detail, e.g. segmented by activity or function when they are performed by the same operator, as resources are sometimes common to various activities or functions.
Certification of the information by an independent entity (audit of accounts and other regulatory data). Regulated sectors have very complex specificities that are not found in most companies. In this sense, certification will only be accurate if the independent entity is aware of these specificities.
The existence of different accounting options or standards that impact the reporting of economic and financial information.
Obtaining comparable economic, financial and physical information from regulated operators to allow benchmarking analysis. This exercise is particularly complex when regulated sectors are characterised by natural monopolies.
Generally speaking, ERSE makes public the information it receives and aggregates from regulated entities through structured reports to the general public and in the documents it prepares for public or stakeholder consultation. However, much of the data that ERSE handles is commercially sensitive or confidential and therefore not published.
ERSE monitors specific indicators in order to assess the performance of regulated entities:
In terms of commercial quality of service: waiting time in customer centres, waiting times on phone calls, answers to customers complaints and requests of information, scheduling availability, meter reading frequency, timely answer to emergency situations and reconnection.
In terms of technical quality of service: indicators on continuity of supply (frequency and duration of interruptions) and compliance with quality standards, both for gas and electricity.
In terms of metering and consumption data: meters installation, parametrisation and verification, meter readings (frequency, extraordinary readings, remote readings), consumer data availability delays and fraud detection.
Regarding the direct outcome of regulatory decisions, ERSE’s legal division manages the enforcement and fines processes, including the publication of its decisions as well as a summary of the fines that have been issued. This latter list is included in ERSE’s annual report. This activity, together with the monitoring of the performance of the markets and of the market agents and periodic inspections/audits of the companies, allows ERSE to assess compliance with and the outcomes of its decisions.
Regarding wider outcomes, ERSE’s monitoring efforts focus in particular on the performance of the wholesale and retail markets and on consumer welfare, including through the analysis of the consumer complaints it receives.
ERSE’s reporting on the performance of the sectors includes:
Reports on the industry and market performance of the regulated sector, e.g. Annual quality of service report61
Reports on the economic performance of the regulated sector, e.g. Investment monitoring of gas networks62
Report of the performance evaluation of regulated activities in the natural gas sector and the electricity sector: this report briefly presents the evolution of several economic and financial indicators for assessing the performance of companies or regulated activities and the effectiveness of regulatory methodologies
Quarterly electronic newsletters on a number of other issues
An annual report for the European Commission presenting the main developments in the electricity and natural gas markets in Portugal, including competition (both in the wholesale and retail markets), security of supply and consumer protection
Legislation requires ERSE to publish a report on its activities on a regular basis.63 The Board prepares an annual report (including annual accounts) which is submitted to the Statutory Auditor and the Advisory Council for their opinions. These documents must be sent to the government and to the parliament, along with the opinion of the Advisory Council, for approval within 60 days.
The annual report is a detailed and comprehensive report (~165 pages) of ERSE’s activities that lists, among other things, the regulations and codes issued by ERSE and all the formal opinions published by ERSE in the course of the year. Parts of the report can be fairly technical in nature.
Every year, ERSE’s president presents the annual budget to the parliament. The president is also invited on different occasions to present to the parliament. During these hearings, ERSE may be asked about its performance, the development of the market, the impact of policies and other issues.
In addition, ERSE reports annually to the European Commission and the Agency for the Cooperation of Energy Regulators (ACER) on its activities and the developments in the Portuguese electricity and natural gas markets.
Currently, the regulator does not report against a comprehensive set of performance indicators. However, ERSE is defining key performance indicators (KPIs) for the first time in the context of its strategic plan 2019-2022. ERSE is in the process of defining the KPIs for each division, with the expectation that they will be approved in 2020. ERSE is defining its KPIs independently, not in consultation with the government or the parliament.
In order to gain greater insight into consumer satisfaction and perception regarding its activity, ERSE launched a survey in 2019. Preliminary results released in mid-2020 show that ERSE is regarded by the industry as showing impartiality, professionalism, rigour and credibility. The report identified areas for improvement, including: the visibility of ERSE to final consumers (including ERSE’s role in the process of resolving disputes between consumers and market operators), the need to anticipate regulation in the context of a rapidly-changing market, and the visibility of sanctions.
[5] ERSE (2020), Concluídas, https://www.erse.pt/atividade/consultas-publicas/concluidas/ (accessed on 16 December 2020).
[3] ERSE (2020), Enforcement, https://www.erse.pt/en/activities/enforcement/ (accessed on 16 December 2020).
[4] ERSE (2020), Parecer sobre “Regulamentação do Regime de Autoconsumo” 82a Consulta Pública, https://www.erse.pt/media/vxske2ez/cp82_parecerconselhoconsultivo.pdf.
[1] ERSE (2019), Plano Estratégico e Financeiro Plurianual 2019-2022, https://www.erse.pt/media/x23cbptt/plano-estrat%C3%A9gico-e-financeiro-plurianual-2019-2022.pdf.
[2] ERSE (2019), Protocols, https://www.erse.pt/en/institutional/cooperation/ (accessed on 16 December 2020).
The Advisory Council is a collegiate body, composed of the members provided for in article 41 of ERSE’s Statutes (representatives of regulated companies, market suppliers, several consumer associations, the Competition Authority and municipalities), appointed in accordance with the rules established in Regulation 628/2019, of 9 August, for a renewable period of three years.
The electricity section is composed of the representatives indicated in a) to s) below, as well as the representatives of the regional governments, electricity sector companies and consumers of the Autonomous Regions.
The natural gas section is composed of the representatives identified in a) to j), p) and t) to z) below.
The Advisory Council is composed as follows:
a) President: personality of recognised merit and independence to be appointed by the Government member responsible for energy
b) One representative of the Government member responsible for finance
c) One representative of the Government member responsible for the environment
d) One representative of the Government member responsible for energy
e) One representative of the National Association of Portuguese Municipalities
f) One representative of the Directorate-General for Energy and Geology
g) One representative of the Directorate-General for Consumer Affairs
h) One representative of the Competition Authority
i) One representative of the Portuguese Environment Agency, IPA
j) Three representatives of consumer protection associations that represent consumers in general, pursuant to Law No. 24/1996 of 31 July, as currently worded.
k) One representative of the entities holding binding electricity generation licenses under the ordinary regime
l) One representative of the associations of Portuguese producers of electricity from renewable energy sources
m) One representative of the concession holder of the National Electricity Transmission Grid
n) One representative of the concession holder of the National Electricity Distribution Grid
o) One representative of the concession holders of electricity distribution at low voltage (LV)
p) One representative of the logistic operator of switching supplier of electricity and natural gas
q) One representative of the supplier of last resort for electricity who operates in that capacity throughout the continent
r) One representative of suppliers of electricity subject to free trade
s) One representative of the associations whose members are consumers of electricity at medium voltage (MV), high voltage (HV) and very high voltage (EHV)
t) One representative of the concession holder of the National Natural Gas Transmission Grid
u) One representative of the concession holders of the activities of reception, storage and re-gasification of liquefied natural gas (LNG)
v) One representative of the entities holding concessions for the regional natural gas distribution networks
w) One representative of the holders of public service natural gas distribution licences
x) One representative of supplier of last resort for natural gas
y) One representative of suppliers of natural gas subject to free trade
z) One representative of the associations whose members are natural gas customers with annual consumption exceeding 10 000 m3.
The following are also members of the Advisory Council:
a) One representative of the Regional Government of the Azores
b) One representative of the Regional Government of Madeira
c) One representative of consumers of the Autonomous Region of the Azores
d) One representative of consumers of the Autonomous Region of Madeira
e) One representative of the electricity system companies of the Autonomous Region of the Azores
f) One representative of the electricity system companies of the Autonomous Region of Madeira.
The Tariff Council is a collegiate body, composed of the members provided for in article 46 of ERSE’s Statutes (representatives of regulated companies, market suppliers, several consumer associations, the Competition Authority and municipalities), appointed in accordance with the rules established in Regulation 628/2019, of 9 August, for a renewable period of three years.
The Tariff Council has two sections: one for the electricity sector and one for the natural gas sector.
The electricity section is composed by the representatives indicated in a) to k) and u) to y) below. The natural gas section is composed by the representatives indicated in a) to e) and l) to u) below.
The Tariff Council is composed as follows:
a) President: personality of recognised merit and independence to be appointed by the Government member responsible for energy.
b) A personality of recognised merit and independence to be appointed by the Government member responsible for environmental department.
c) One representative of the National Association of Portuguese Municipalities.
d) Three representatives of consumer protection associations that represent consumers in general, pursuant to Law No. 24/96 of 31 July, as currently worded.
e) One representative of the Directorate-General for Consumer Affairs.
f) One representative of the associations whose members are consumers of electricity at medium voltage (MV), high voltage (HV) and very high voltage (EHV).
g) One representative of the concession holder of the National Electricity Transmission Grid.
h) One representative of the concession holder of the National Electricity Distribution Grid.
i) One representative of the concession holders of electricity distribution in low voltage (LV).
j) One representative of supplier of last resort for electricity who operates in that capacity throughout the continent.
k) One representative of suppliers of electricity subject to free trade.
l) One representative of the concession holder of the National Natural Gas Transmission Grid.
m) One representative of the concession holders of the activities of reception, storage and re‑gasification of liquefied natural gas (LNG).
n) One representative of the concession holders of the underground storage of natural gas.
o) One representative of the entities holding concessions for the regional natural gas distribution networks.
p) One representative of the holders of public service natural gas distribution licenses.
q) One representative of the supplier of last resort for natural gas (retail).
r) One representative of the supplier of last resort supplier of natural gas (wholesale).
s) One representative of suppliers of natural gas subject to free trade.
t) One representative of the associations whose members are natural gas customers with annual consumption exceeding 10 000 m3.
u) One representative of small energy traders.
v) One representative of consumers of the Autonomous Region of the Azores.
w) One representative of consumers of the Autonomous Region of Madeira.
x) One representative of the electricity system companies of the Autonomous Region of the Azores.
y) One representative of the electricity system companies of the Autonomous Region of Madeira.
The Fuels Council is a collegiate body, composed of the members provided for in article 44-B of ERSE’s Statutes, appointed in accordance with the rules established in Regulation 628/2019 of 9 August, for a renewable three-year term of office.
The Fuels Council has two sections: one for petroleum-derived fuel sector and one for biofuels sector. The petroleum-derived fuel section is composed by the representatives indicated in a) to k) below. The biofuels section is composed by the representatives indicated in a) and l) to t) below.
President: Person of recognised standing and independence appointed by the member of the Government responsible for energy
Representative of Associação Portuguesa de Empresas Petrolíferas (APETRO – the Portuguese Association of Oil Companies) – section of the petroleum-derived fuel and biofuel sectors
Representative of Associação Portuguesa de Produtores de Biocombustíveis (APPB – the Portuguese Association of Biofuel Producers)
Representative of Associação Nacional dos Revendedores de Combustíveis (ANAREC – the Portuguese Association of Fuel Retailers) – section of the petroleum-derived fuel and biofuel sectors
Representative of Associação de Empresas Distribuidoras de Produtos Petrolíferos (EDIP – the Portuguese Association of Petroleum Product Distributors) – section of the petroleum-derived fuel and biofuel sectors
Representative of Associação Portuguesa das Empresas de Distribuição (APED – the Portuguese Association of Distribution Companies) – section of the petroleum-derived fuel and biofuel sectors
Representative of general interest consumer associations (DECO) – section of the petroleum-derived fuel and biofuel sectors
Representative of Automóvel Clube de Portugal (ACP – the Portuguese Automobile Club) – section of the petroleum-derived fuel and biofuel sectors
Representative of national associations of the sector of road transport powered by petroleum products – section of the petroleum-derived fuel and biofuel sectors
Representative of Confederação da Indústria Portuguesa (CIP – the Portuguese Industry Confederation) – section of the petroleum-derived fuel and biofuel sectors
Representative of Confederação dos Agricultores Portugueses (CAP – the Portuguese Farmers Confederation) – section of the petroleum-derived fuel and biofuel sectors
Representative of Associação Portuguesa de Empresas Petrolíferas (APETRO) – section of the liquefied petroleum gas sector
Representative of Associação Nacional dos Revendedores de Combustíveis (ANAREC) – section of the liquefied petroleum gas sector
Representative of Associação de Empresas Distribuidoras de Produtos Petrolíferos (EDIP) – section of the liquefied petroleum gas sector
Representative of Associação Portuguesa das Empresas de Distribuição (APED) – section of the liquefied petroleum gas sector
Representative of piped propane gas distribution operators – section of the liquefied petroleum gas sector
Representative of general interest consumer associations (UGC) – section of the liquefied petroleum gas sector
Two representatives of associations representing LPG-consuming economic activities – section of the liquefied petroleum gas sector
Representative of Automóvel Clube de Portugal (ACP) [the Portuguese Automobile Club] – section of the liquefied petroleum gas sector
Representative of Confederação da Indústria Portuguesa (CIP) – section of the liquefied petroleum gas sector.
← 1. As amended by Decree-Laws No. 200/2002, of 25 September, 212/2012, of 25 September 84/2013, of 25 June, 57-A/2018, of 13 July and 76/2019, of 3 June.
← 2. Mandate extended to the regulation of natural gas by Decree Law nº 97/2002, of 12 April, within the context of the 1998 EU Directive on the natural gas market. See OECD (2010), Better Regulation in Europe: Portugal, http://www.oecd.org/gov/regulatory-policy/44830175.pdf.
← 3. Decree-Law No. 212/2012, of 25 September.
← 4. The Decree-Law No. 84/2013, of 25 June, completing the transposition of Directives 2009/72/EC and 2009/73/EC, of the European Parliament and of the Council, of 13 July 2009, that establish the common rules for the internal electricity and natural gas market.
← 5. Decree-Law No. 57-A/2018, of 13 July.
← 6. Articles 9 and 10 of the Decree Law No. 97/2002, of 12 April.
← 7. Pilot Project 2020 “use of technical quality of service data from smart meters”.
Pilot project 2020 “vehicle to grid in the Azores”.
Pilot project 2019 "Participation of the Demand Response in the Portuguese Balancing Market”.
Pilot project 2018/2019 on “Dynamic Access Tariffs”.
← 8. Articles 3, No. 4, al. a) and 16 of ERSE’s Statutes.
← 9. Articles 15 and 17 of ERSE’s Statutes.
← 10. Articles 11 No. , al. d) and 13, No. 1, al. e) of ERSE’s Statutes.
← 11. Article 14 of ERSE Statutes.
← 12. Article 19 of ERSE’s Statutes. Articles 2 of the Energy Sector Sanctions Framework, Law No. 9/2013, of 28 January. General Regime of Administrative Offences, approved by Decree-Law No. 433/82, of 27 October.
← 13. Articles 21, 32 and 35 of Energy Sector Sanctions Framework.
← 14. See Decree-Law No. 156/2005, of 15 September, regarding complaint books, and Decree-Law No. 57/2008, of 26 March, that sanctions unfair commercial practices.
← 15. Article 15 of ERSE’s Statues.
← 16. This competence was transferred to ERSE by the amendment of Decree-Law 31/2006 of 15 February set out by Article 7 of the Decree-Law 69/2019 of 27 August.
← 17. Leeway for co-operation agreements is enabled through the ERSE’s Statutes, on Article 57, No. 2. See https://www.erse.pt/en/institutional/cooperation/.
← 18. Article 3 of Law No. 67/2013, of 28 August, which sets the framework law for independent administrative entities with functions to regulate the economic activity of the private, public and cooperative sectors.
← 19. See Articles 3, No. 4, al. a), 10, 16, 59 of ERSE Statutes.
Article 59: Co-operation with the Government and Assembleia da República
1. Without prejudice to its operational and decision-making independence, ERSE shall keep the Government properly informed about its regulatory activity, through the member of the Government responsible for energy, reporting in particular on recommendations, legislative proposals and draft external regulations which ERSE intends to adopt, as well as on instruments in the framework of the Government’s general policy for regulated sectors. 2. ERSE shall also be required to provide in a timely manner all information requested by the member of the Government responsible for energy that is related to the implementation of annual and multiannual activity plans, the budget and respective
← 20. This Plan is mandatory for Public Entities and was also adopted by ERSE.
← 21. Redes Energéticas Nacionais (REN) is the current concession holder of both the national electricity transmission grid and the national natural gas transportation grid.
← 22. Indicators on Governance of Sector Regulators survey 2018.
← 23. Pursuant to Ordinance No. 343-A/2019, of 16 May.
← 24. ERSE does not have the power to impose fines in the electric mobility sector (see section on sanctioning powers).
← 25. Decree-Law No. 156/2005, of 15 September.
← 26. Decree-Law No. 57/2008, of 26 March.
← 27. General Regime of Administrative Offences, approved by Decree Law nº 433/82, of 27 October.
← 28. Article 49-A of ERSE’s Statutes.
← 29. Article 33, No. 2 of the Framework Law of Independent Administrative Entities states that budget blocks are not applicable to funds whose source is outside the State Budget.
← 30. The court decision is available here: www.tcontas.pt/pt-pt/ProdutosTC/acordaos/3s/Documents/2017/ac021-2017-3s.pdf.
← 31. Law No. 8/2012, of 21 February.
← 32. This provision was set in the 2019 State Budget Law, and has been included on occasion in previous state budgets. The State Budget Law 2020 foresees the same provision.
← 33. Standard templates are provided by the Directorate-General for Budget for all public entities and which detail the budget lines that need to be included, such as general expenditure, human resources and so on.
← 34. The sole auditor is an independent, external auditor that is appointed by the Ministry of Finance from a list of accredited firms for a four-year period.
← 35. Law No. 71/2018 of December 31, which approved the State Budget for 2019, changed article 38.1 of the Framework Law of Independent Administrative Entities which had stated that regulators were exempt from the national accounting rules that apply to public sector bodies.
← 36. All personnel numbers as of 31 December 2019.
← 37. European Commission (2018), “A comparative overview of public administration characteristics and performance in EU28”. Turnover rate based on evidence that was collected by an EC research project between end 2016 and April 2017. https://ec.europa.eu/social/main.jsp?catId=738&langId=en&pubId=8072
← 38. Article 54 of ERSE’s Statutes.
← 39. Provisions included in the annual State Budget Laws.
← 40. Article 131.º, No. 2, of Labour Code.
← 41. Article 31.º of ERSE’s Statutes .
← 42. Article 33.º of ERSE’s Statutes.
← 43. Article 30º, No. s 1 and 2 of ERSE's Statutes.
← 44. However, the law does not specify which independent entity and there is no precedent.
← 45. Article 30º, No. s 3 and 4 of the ERSE’s Statutes.
← 46. Article 30º, No. s 4 and 5 of ERSE’s Statutes.
← 47. Article 29, No. 2, al. a) of ERSE’s Statutes.
← 48. The internal procedures for board meetings are currently being updated to reflect de facto practice, as the current document pre-dates the existence of the board’s digital platform.
← 49. This team is currently housed within the Support to the Board of Directors unit.
← 50. The latest reports for the gas (2019) and electricity (2017) sectors respectively: https://www.erse.pt/media/vjagvksn/analise-de-desempenho.pdf and https://www.erse.pt/media/rl0p2ppk/an%C3%A1lise-de-desempenho-se.pdf.
← 51. In line with Decree-Law 90/2014.
← 52. See The Energy Sector Sanctions Framework, approved by Law No. 9/2013, of 28 January.
← 53. Articles 14, 15, 19 and 20 of Energy Sector Sanctions Framework.
← 54. Decree-Law nº 156/2005, of 15 September, regarding complaint books, and Decree-Law nº 57/2008, of 26 March, that sanctions unfair commercial practices.
← 55. Under article 9 of Decree-Law No. 156/2005, of 15 September.
← 56. According to article 21 of Decree-Law No. 57/2008, of 26 March.
← 57. Information received from DECO, March 2020.
← 58. According to article 43º, No. 1, al. c) of ERSE Statues. Article 43.4(c) however also establishes that the Advisory Council can examine other issues – except those under the Tariff Council’s remit. In practice, the Advisory Council does not provide an opinion on tariffs, given the specific responsibility of the Tariffs Council in this regard. The interpretation applied is that they could provide an opinion if called upon to do so by the Board of Directors.
← 59. ERSE public consultations webpage, https://www.erse.pt/atividade/consultas-publicas/ .
← 60. As an example, the first Portuguese auction of solar energy injection capacity held in 2019 included a company related to the poultry production sector, which took one of the lots. This situation adds to the challenge of obtaining detailed and disaggregated information with an adequate level of reliability about the activity carried out by operators. This challenge increases in the case of information from market operators who, in certain cases, are not required to make this information available or are not subject to the sanctioning power of ERSE. And even in the case of making information available, it does not respect the requirements defined for the companies or regulated entities.
← 61. Electricity quality of service assessment, https://www.erse.pt/eletricidade/qualidade-de-servico/ .
← 62. Natural gas quality of service assessment, https://www.erse.pt/gas-natural/qualidade-de-servico/ .
← 63. Article 7-A of ERSE’s Statutes.