What measures are being taken by the State on regarding essential public services in the Energy, Natural Resources and Waste sectors during the state of emergency?

Pursuant to the declaration of the state of emergency, Order no. 3547-A/2020, of 22 March, issued by the Minister for the Environment and Climate Action, set the conditions for the operation of some essential goods and services during the state of emergency, seeking  to safeguard the supply chains with regard to water supply for human consumption,  urban wastewater sanitation services, waste management (including medical waste), energy supply (electricity and natural gas), and liquid fuel and liquefied petroleum gas (LPG) supply.

In general terms, the measures foreseen in this Order seek to maintain, during the state of emergency, the stability, the continuous and undisrupted provision of the above identified public services and goods, setting out a number of services and infrastructure which shall be ensured by the relevant entities, foreseeing that the latter shall designate specific teams for the continuous operation and maintenance of the infrastructures, as well as teams securing response to urgent situations and remote costumer services (including in the event of breakdowns and incidents on the respective networks and infrastructures).

The abovementioned Order entered into force and became effective at midnight on 23 March 2020, all provisions foreseen therein being immediately enforceable.

 

Which infrastructures or public services are covered by the Order?

The measures set forth by the Ministry for the Environment and Climate Action cover the following essential public sectors:

  • water supply for human consumption
  • urban wastewater sanitation services
  • urban waste management and other waste (including hospital waste)
  • energy (electricity and natural gas)
  • liquid fuel and liquefied petroleum gas (LPG)

 

Which entities have become subject to the obligation to assign specific teams to ensure the continuous provision of essential goods and services?

The following shall assign teams to ensure the continuous provision of key goods and services deemed essential under their respective activity:

  • entities managing water supply for human consumption systems (including water abstraction, treatment and supply)
  • entities managing urban wastewater sanitation systems (including collection, treatment and discharge of effluents)
  • entities managing urban waste management systems
  • managing entities and concessionaires for natural gas distribution
  • managing entities for electricity transmission
  • entities managing natural gas transmission and storage and services related to LPG terminals
  • distribution system operators, municipalities and concessionaires for low-voltage electricity distribution

 

Which essential activities must be ensured by the entities operating in these sectors?

Water and Waste

Order no. 3547-A/2020 identifies the following as essential and as activities to be ensured in this sector:

  • the operation, maintenance and breakdown repairs of all systems’ infrastructure
  • the performance of quality control tests and effluents’ sample collection
  • the reinforcement of hygiene and disinfection of containers and the reinforcement of the frequency of collection of undifferentiated urban waste when deemed necessary, and
  • the provision of customer services remotely, for the report of breakdowns and in what concerns urban waste management, for any occurrences which may harm public health

The Order clarifies that the Portuguese Environment Agency (Agência Portuguesa do Ambiente, I.P. (APA)) together with the Directorate General for Health (Direção-Geral da Saúde – DGS) shall identify other waste deemed essential for the adequate protection of public health. In this sense, further provisions related to the management of other types of waste may be enacted aiming at seeking the continuous operation of such services, including by means of assigning specific teams and workers to the same.

Transmission and distribution grids of electricity and natural gas

In what concerns electricity and natural gas transmission, along with natural gas storage and services related to LPG terminals, the operation of the respective dispatch and operation centres, as well as local operations and response to breakdowns or incidents affecting the transmission infrastructure, underground storage and the LPG terminal in Sines, are deemed essential.

The managing entities and concessionaires of the natural gas grid shall be responsible for the management and operation of the national natural gas distribution grid through the dispatch centres, the solving and response to breakdowns and incidents occurring in the distribution infrastructure under concession regimes or local distribution licences, and to ensure the logistics of the supply of liquefied petroleum gas (LPG) so as to safeguard the continuous operation of each of the independent gas units (unidades autónomas de gás - UAGs), through the UAG Logistics Manager.

In what concerns electricity distribution, all necessary measures shall be taken by the relevant entities to ensure the regular management, operation and maintenance of the grids, the maintenance of power lines, transformation poles and ancillary facilities, including the management and operation of dispatch and infrastructure centres, in each case in high, medium and low voltage, and ensure the response to breakdowns (including the repair of widened public lightning breakdowns) and other incidents that may be identified.

In general terms, the abovementioned entities for both natural gas and electricity shall secure staff teams for the provision of technical assistance to breakdowns in their respective clients’ facilities, urgent reconnections and connections, and the performance of services as agreed upon with the respective consumers.

Infrastructure for fuel supply

In the context of the Rede Estratégica de Postos de Abastecimento (REPA) (Petrol Station Network) and as a way to ensure the management of emergency stockpile of Portugal, the following facilities and infrastructure shall remain operative:

  • the Sines refinery
  • the Matosinhos refinery
  • CLC — Aveiras de Cima (including the multiproduct pipeline)
  • discharge/storage/shipment points of liquids or gas in bulk
  • storage facilities for oil products (liquid fuel and LPG)
  • REPA (Petrol Station Network) petrol stations in mainland Portugal and in the Azores and Madeira regions
  • petrol stations for vessels in mainland Portugal and in the Azores and Madeira regions
  • storage, filling and distributions points of LPG bottles
  • liquid and gas fuels distribution companies
  • liquid and gas fuels transportation companies
  • international airports (Lisbon, Porto and Faro)
  • airport fuel supply centres–FOGs (Fuel Operations Groups) in Lisbon and Faro
  • aerodromes and heliports (propellant storage)

Order no. 3547-A/2020, of 22 March, establishes that the remaining petrol stations, i.e., those not included in the REPA, shall operate in accordance with their availability.
Notwithstanding, their operation shall be monitored by the National Entity for the Energy Sector(Entidade Nacional para o Sector Energético, E.P.E.), the latter being entitled to determine whether a station shall be reopened if deemed necessary.

 

How will the provisions of Order no. 3547-A/2020 correlate with the specific regulation of each sector?

The rules set out in this Order shall be effective without prejudice to the directives, recommendations and regulations issued by the Water and Waste Services Regulatory Authority (Entidade Reguladora dos Serviços de Águas e Resíduos)and by the Portuguese Environment Agency (Agência Portuguesa do Ambiente, I.P.), in what concerns entities acting in the water and waste sectors, and by the Energy Services Regulator (Entidade Reguladora dos Serviços Energéticos (ERSE)), the National Entity for the Energy Sector(Entidade Nacional para o Sector Energético (ENSE)) and by the Directorate General for Energy and Geology (Direção-Geral de Energia e Geologia), for entities acting in the energy sector, in each case, in accordance with the specific laws and regulations of each sector.

 

How will the provisions of Order no.3547-A/2020 correlate with those included in the concession agreement or the licenses applicable to each activity?

Order no. 3547-A/2020 clarifies that all entities in the energy sector shall comply with the imposed measures regardless of the nature of such entities, of the concession agreement or the applicable licenses.

 

Being an entity covered by the measures set out in Order no. 3547-A/2020, how can the measures to be implemented affect my relationship with third parties?

The order foresees that, in order to ensure the provisions of the services under the terms set forth therein, the relevant entities shall keep in force and in effect the contracts or agreements, namely supply and services agreement, entered into with third parties as required or necessary for the fulfilment of their obligations.

 

Have any other measures been approved in the context of the state of emergency in relation to the possibility of interruption or suspension of water, electricity or natural gas supply as essential services?

Yes. Law no. 7/2020, published on 10 April 2020, prohibited the interruption or suspension of supply of the following essential goods or services: water, electricity, natural gas, and electronic communications, for as long as the state of emergency will last and for the month immediately subsequent to the end of the state of emergency period. Law no. 18/2020, of 29 May, subsequently extended this timeframe, determining that interruption or suspension of supply of such essential goods and services would be prohibited until 30 September 2020 in relation to all consumers who are either unemployed, have had a reduction in income equal to or higher than 20%, or have been infected with COVID-19. This reduction in income equal to or higher than 20% should be claimed by the interest parties as a sworn statement, without prejudice to the service provider being entitled to request additional documentation to attest such reduction. The relevant calculations shall be made in accordance with the criteria published in Order no. 149/2020, of 22 June.

The same Law also foresees that, whenever any amounts are owed and outstanding in relation to the provision of such services, there shall be payment plans which may be agreed upon between the supplier and the customer, applying as from the second month after 30 September 2020.  

 

Other than these legal and regulatory provisions, are there any other new regulations applicable to the entities of the energy sector during the state of emergency period?

Yes. Other than the laws and regulations which continue to be applicable to these entities, and Order no. 3547-A/2020, of 22 March, issued by the Minister for the Environment and Climate Action, the Energy Services Regulator (Entidade Reguladora dos Serviços Energéticos (ERSE))and theDirectorate General for Energy and Geology (Direção-Geral da Energia e Geologia – (DGEG)) have also published exception provisions to be enforced during the state of emergency period caused by COVID-19, with particular impact on the commercial relations with consumers and in relation to licensing procedures before DGEG.

 

1.       Commercial relations with consumers 

As an energy supplier, can I interrupt supply for reasons attributable to the client?

ERSE Regulation published on 16 March, effective as of 13 March 2020, introduced exceptional rules applicable during the state of emergency period (extended in the meantime until 30 June 2020), seeking to avoid energy supply interruptions and chiefly to protect domestic consumers of low voltage electricity and low-pressure natural gas:

  • An additional 30-day deadline is granted to all consumers of low voltage electricity and low-pressure natural gas with an annual consumption equal to or less than 10 000 m3 (n), which shall be added to the 20-day deadline set forth in the applicable regulations, before supply can be interrupted for reasons attributable to the consumer (for instance, payment default). Such deadline can be further extended by ERSE in light of the evolving circumstances
  • The same shall apply to the supply of piped LPG intended for domestic use
  • The new rules shall not prevent interruptions aimed at safeguarding people and goods

 

How will the outstanding amounts arising during the period during which the supplier is unable to interrupt energy supply be handled?

The payment of outstanding amounts exclusively incurred during the exception period foreseen in the ERSE Regulation may be split into and paid in instalments with no accrued default interest during the extra 30-day period, at the client’s request.
The ERSE Regulation no. 356-A/2020 further clarifies that this measure shall apply to all invoices issued between 13 March 2020 and 30 June 2020, and that the number of instalments shall range between 6 and 12 monthly instalments, or less if agreed between the parties, and for a minimum amount of 5 (five) euros. Under no circumstance may the payment of the first instalment be deferred in more than 60 days from the original payment date of the relevant invoice.

The payment of outstanding amounts exclusively incurred during such exception period shall be temporarily borne by the distribution grid operators and by the system management and technical system management operators, respectively.

 

What is the impact of this measure on the settlement of payments between suppliers and grid operators?

Suppliers shall also benefit from the right to reimbursement in instalments in relation to payments due to distribution grid operators, system management and technical system management operators, with no accrued default interest, during the same 30-day period, on the same terms applicable to the consumers.
ERSE Regulation no. 356-A/2020 has established, in this regard, a moratorium of up to 120 days in relation to the amounts owed by the distribution grid operator to the transmission grid operator, in the same proportion of the amounts borne by the grid operator as a result of the payment instalments of suppliers, free of interest and without taking the effect thereof into account in the tariffs.

In addition, suppliers which market share does not exceed 5% (with reference to 31 December 2019) and which verify that, in the period when the extraordinary measures implemented by ERSE remain in effect, there is a decrease in the amounts invoiced for grid access equal to or in excess of 40% of the average amount for the 12-month period ending on 1 March 2020, may request to the grid operator an additional moratorium for the payment of their respective charges, for a maximum of 60 days from the date where this circumstance is verified.

In this situation, there shall also be a moratorium applicable over the amounts owed by the distribution grid operator to the transmission grid operator, for the same 60-day period and in the same proportion of the amounts borne by the grid operator as a result of the moratorium to the supplier.

 

My business has been closed down (lay-off regime), either in whole or in part. Can I change the terms and conditions for energy supply to my facilities?

Yes. Electricity supply and natural gas supply clients under the situation described in Decree-Law no- 10-G/2020, of 26 March, which facilities have been closed down (whether in whole or in part) shall have the right to request an amendment to the capacity charges and a revision of the power and energy terms, in what concerns electricity clients, and the fixed tariff term, in what concerns natural gas clients, without prejudice to favouring invoicing in accordance with actual metered data (as determined with recourse to telemetering or, whenever not possible, metering estimates subject to monthly metering reporting by the client).

 

Are there rules on priority applicable to energy supply?

Yes. ERSE Regulation dated 16 March expressly provides that grid operators shall prioritize the supply to priority facilities (hospitals and other healthcare facilities, including facilities exceptionally mobilised for such effect, as well as public safety and civil protection facilities).

 

What measures shall be implemented with regard to contact with consumers by grid operators and suppliers?

Save in situation of verified urgency and with respect to priority consumers, for instance for the reestablishment of energy supply, grid operators and suppliers (including the last resort supplier) shall avoid all actions involving displacements or contacts with consumers in their respective domicile.

For this purpose, all available means of distance communication shall be reinforced to allow meter readings, query handling and instalment payments.

 

Were there amendments to any other deadlines?

Yes. The deadlines set forth in regulations applicable to distribution grid operators, suppliers and last resort supplier as regard commercial relations with consumers shall be deemed extended by half of the respective deadline, save in situation of verified urgency and with respect to priority consumers.

Certain deadlines applicable to reporting obligations before ERSE in accordance with the Service Quality Handbook (Manual de Procedimentos da Qualidade do Serviço) are also extended, namely the deadlines for publishing service quality reports of electricity and natural gas suppliers for the year 2019, which has been extended until 31 August 2020.

Furthermore, 1 October 2020 has been determined as the date for the start of operations for switching suppliers in the electricity sector through the platform implemented and operated by the Logistics Operator for Switching Suppliers.

 

I want to register an entity as a Market Operator under REMIT. How is this done during the state of emergency period?

For as long as the extraordinary measures foreseen in the ERSE Regulations continue to be in effect, Market Operators under REMIT shall be registered by delivery to ERSE of all necessary documentation and information required for this purpose, in digital form and through the European registration platform (CEREMP), without prejudice to the same documentation being delivered to ERSE by mail as soon as such measures cease to be in force.

 

Until when will the extraordinary measures approved by ERSE in its Regulations no. 255-A/2020 and 356-A/2020 be in effect?

ERSE Regulation no. 356-A/2020 has clarified that the extraordinary measures shall be in effect until 30 June 2020, though this date can be further extended by ERSE.

 

Has there been any change to electricity or gas prices?

Yes. ERSE has approved an update to the electricity tariffs with a reduction of 5 euros per MWh, with effect as from 7 April 2020, applicable to the transitory tariffs to end clients and social tariffs to end clients in the regulated market in all mainland Portugal, and to the tariffs for end clients and social tariffs applicable in the autonomous regions of Madeira and Azores.

In what concerns gas prices, Dispatch no. 4698-A/2020, issued on 16 April by the Minister of State, Economy and Digital Transition and the Minister of Environment and Climate Action, sets out price caps for the sale of bottled LPG in mainland Portugal until the end of the state of emergency period. For this purpose, the same Dispatch sets out a formula to determine the maximum applicable price for each month for bottled LPG (types T3 and T5) in standard steel tare weights, as well as price caps (after taxes) to apply in April 2020.

It is also foreseen that, in the event of a relevant change in LPG price quotations in the international markets as assessed by ERSE, revised regulated prices may be determined by dispatch of the member of the Government in charge of energy matters.

 

2.       Licensing

Were the deadlines applicable to procedures to be performed before DGEG suspended?

Yes. DGEG Order no. 27/2020 clarifies that all deadlines for procedures and formalities to be performed before DGEG, including those foreseen in the context of tender procedures, are suspended with effect from the date when the DGEG facilities were closed to the public, i.e., on 16 March.

Any procedural deadlines expiring during the suspension period shall deemed to be extended by a period equal to the number of business days accounted for between the beginning of the suspension and the deadline for the performance of the procedure or formality, foreseen in the law, regulation or administrative act establishing the same, beginning on the first business day following the date of the statement from DGEG announcing the reopening of the facilities, to be published on DGEG’s website, or on a date to be set by the decree-law declaring the end of the state of emergency, whichever occurs first.

DGEG Order no. 33/2020 has determined that said suspension shall be in effect until the earliest of 1 June 2020 or the enactment of legislation lifting the suspension.

 

Is it possible to submit new requests for capacity or initiate new licensing procedures before DGEG?

No. The submission of new requests for the attribution of titles or for agreements for the attribution of injection capacity, as well as new requests for the registration of small-scale generation units (UPPs) or self-consumption generation units (UPACs), production licenses and establishment licenses for grid infrastructure, is suspended until the end of April, as determined by DGEG Order no. 27/2020.

DGEG Order no. 33/2020 has further determined that such suspension shall continue to be in effect until the end of May, save in what concerns requests for the registration of small-scale generation units (UPPs) for projects with conceptual demonstration or of an experimental nature in maritime areas or inland waters, and for the registration or prior notice of self-consumption generation units (UPACs), or production licences for such UPACs provided that no electricity is injected into the public grid.

Licenses for the establishment of grid infrastructure may however continue to be submitted in case of public service infrastructure, or private infrastructure in situation of emergency on the grounds of public health or similar reasons as determined by DGEG.

 

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This information is being updated on a regular basis.

All information contained herein and all opinions expressed are of a general nature and are not intended to substitute recourse to expert legal advice for the resolution of real cases.