Portuguese Government noticed the approval of the energy market liberalisation legal framework.

On 18 June 2003, Portuguese Government noticed the approval of the legal framework on the energy market liberalisation. This new legal framework sets, among other things, (i) the immediate access of those consumers connected to the National Grid (Grid) in Very High Voltage (VHV), High Voltage (HV) and Medium Voltage (MV); and (ii) the access of Special Low Voltage (SLV) consumers to the Grid beginning as from January 2004, and to the remaining Low Voltage (LV) consumers on July 2004.

1. Generation

The electricity generators currently integrated at the Public Electric System must sell all their production to the Grid under the terms and conditions set forth in the long-term power purchase agreements (Contrato de Aquisição de Energia - CAE).

This evolution toward a liberalized electricity market will involve the termination of these agreements, along with the relevant compensation to be paid (Costs of Contractual Balance Maintenance) as the expected revenues do not ensure the full coverage of the investments made in this context.

2. Trading

Electricity is currently distributed to final consumers by (i) EDP Distribuição using energy supplied by those generators bounded to the Public Electric System; (ii) EDP Distribuição using energy generated from renewable sources or in cogeneration installations, supplied by those generators bounded to Public Electric System; and (iii) independent generators, trough bilateral contracting.

The new legal framework creates a regulated market, the energy trader, and the external agent.

The regulated market will receive the energy supplied by bounded or independent generators, and through external agents. A market operator, to be integrated at the Portuguese pool of the Iberian Market Operator (IMO), in accordance to the Valencia summit conclusions, will manage this market.

The energy traders shall purchase electricity either directly to independent power generators or to the regulated market trough physical bilateral contracts, making it available to final consumers.

© Macedo Vitorino e Associados – June 2003

This information is provided for general purposes only and does not constitute professional advice. If you have any question on a matter of Portuguese law you should contact a lawyer registered to practice law in Portugal. If you are a client of Macedo Vitorino e Associados, you may contact us directly at or your usual contact partner