Dynamic tariffs

The aim of the pilot projects is to test new tariff schemes and new locations of the time periods proposed by ERSE, further to studies carried out involving the analysis of information on consumption and production in the period 2013-2016, for each of E-REDES’s six grid areas.

The prices and time periods to be applied during the pilot projects were approved by ERSE through Directive 2/2018.

Two pilot projects, each of which lasting 12 months, will be carried out and started on 1 June 2018.

Pilot project 1 aims to test a proposal to improve the current tariff structure, which is based on price differentiation in peak periods and the definition of new time periods.

Pilot project 2 aims to test the introduction of a dynamic tariff for grid access that will allow the activation of critical periods with short notice and notification periods. The dynamic tariff to be tested is to give the consumers concerned at least 48 hour’s notice, 24 hours of which must be on business days, of the occurrence of critical periods on the grids, to which higher prices will be applied, and to encourage them to shift their consumption to periods with lower prices. 

As set out in ERSE Directive 2/2018, the activation of critical periods lies with the HV and MV distribution grid operator (ORD) which should be preceded by a coordinated decision with the transmission grid operator.

During the implementation of pilot project 2, a minimum of 16 and a maximum of 20 critical days may be activated, corresponding to an aggregate duration of critical hours of between 80 and 100 hours.

Participation in pilot projects could take two forms:

a) The first is to integrate one of the aforementioned pilot projects;

b) The second form of participation is to be integrated into one of the control groups (of each pilot project), which will allow a comparative analysis of the consumer behaviour adopted by participants in the pilot projects.

Electricity consumers from mainland Portugal, supplied at Very High, High and Medium Voltages (VHV/HV/MV) may take part in the pilot projects.

Consumers wishing to participate shall be included in one of the pilot projects to which they apply, or in one of the two control groups, up to a total of 100 consumers per pilot project or control group, subject to the following representativeness rule:

• Consumers supplied in VHV- 1 to 5 participants;

• Consumers supplied in HV- 20 to 30 participants;

• Consumers supplied in MV- 70 to 90 participants.

The selection process for participants in the pilot projects shall begin by electricity consumers demonstrating their interest in participating to the supplier, indicating by order of preference in which of the pilot projects they intend to participate, accepting that they may be selected for only one of the projects.

Subsequently, the electricity suppliers shall send E-REDES a list of their customers who have shown an interest in joining the pilot projects.

On the basis of the lists provided by the suppliers, E-REDES will make the final selection of the suppliers, using the criteria defined by ERSE in Directive 2/2018.

Consumers who show an interest in participating in the pilot projects will be tacitly agreeing to integrate control groups if they are not selected to integrate the pilot projects.

Any participant who has not been selected to integrate the pilot projects may, if it so wishes, complain to E-REDES, which shall explain the reasons for its non-selection to ERSE.

The selection process will be the subject of a report to be released by E-REDES.

In accordance with Directive 2/2018, the selection of customers participating in the pilot projects shall consider the following criteria:

a) The customer’s geographical area;  

b) Economic activity sectors; 

c) The consumption characteristics associated, namely, with the profile and annual electricity consumption; 

d) The hiring of different suppliers; 

e) The distribution of customers amongst the voltage levels covered.

Yes. Electricity consumers who are selected to be part of the pilot projects must sign a participation agreement which, besides themselves, will have as signatories E-REDES and the electricity supplier with which they have a supply agreement. In the case of VHV customers, the participation agreement is also expected to be signed by REN.

This agreement shall set out the rights and obligations of the parties during the implementation of the pilot projects.

Yes. E-REDES will make available an Internet portal for monitoring the pilot projects, consisting of two different areas:

• Public area- general information on pilot projects;

• Participant area- specific information about the participation of each customer to allow monitoring of their performance in the pilot project.

The load diagrams of the installations of the customers participating in the pilot projects since the beginning of 2016 will be made available at the Internet portal whenever possible.

The load diagrams of the participants' installations during the pilot projects will be made available at the D+2 portal after collection.

The portal will also serve to communicate critical periods to participants, in addition to other means of communication to be used.

Customers interested in participating in the pilot projects should contact their suppliers, who may inform them about the applicable rules and other relevant aspects to be taken into account during the pilot projects.

Support from suppliers is essential in the selection process of customers participating in the pilot projects and during the duration of the projects, in particular to clarify any possible relationship issues which may arise at said stage.

Yes. If the customer chooses to stop taking part, he shall notify his intention to cease participation to the ORD for high voltage and medium voltage and its supplier. Billing in the participation period will be carried out according to the new time periods defined for the pilot and the prices defined by ERSE in the annual tariff decision-making process (prices applicable to customers not participating in the pilot projects).

Grid access over the 12 months of the pilot project shall be billed in accordance with the tariff structure and the prices approved by ERSE in the Directive approving tariffs and prices each year (prices applicable to customers not participating in the pilot projects).

At the end of the pilot project each participant may choose one of the following billing alternatives:

a) To be billed within 12 months in accordance with the schedules and prices approved by the ERSE pricing and tariffs’ directive each year, i.e. that which the customer paid during the 12 months of the pilot is not subject to any change;

b) To request that the billing of the 12 months of the pilot project be adjusted for the new pilot time periods, with the application of the prices defined annually by ERSE in the tariffs and pricing directive;

c) To request that the billing of the 12 months of the pilot should be adjusted for the time periods and prices that are defined for the pilot project in which the customer participated.

The following table summarises the three options that will exist for billing the customer during the pilot project:

There is, however, a limit on the savings that the customer may have. If the customer goes for option c), with the periods and pricing of the pilot project, their billing may not be less than 90% of the billing that would be applied to them under option b).

The following example, provided by ERSE in the document justifying Directive 2/2018 on pilot projects, illustrates the alternatives that will be available to the customer:

The customer will pay, over the 12 months of the pilot project, the amounts corresponding to option A. At the end of the pilot project, however, they may choose an adjustment according to options B and C.

Example 1- Customer chooses to maintain billing with the current times and prices;

Example 2- The customer prefers the application of the time periods of the pilot and the current prices, thus being entitled to a transfer of €110 - €80 = €30.

Example 3- The best option is to choose the new time periods and pricing applicable to the pilot project. However, since option C must be at least 90% of option B, the customer will be billed €90. As he paid €110 during the pilot, he is entitled to receive €110- €90 = €20.

In pilot project 1, the customer will be billed according to:

• Contracted power- maximum power taken in a 15-minute period within the last 12 months, including the month of billing;

• Active energy;

• Reactive energy;

• Average power in super-peak hours- average active power, which corresponds to the active energy quotient at the metering point in super-peak hours by the number of super-peak hours applied to the total of the twelve months of the pilot project;

• Average power in normal peak hours- average active power, which corresponds to the active energy quotient at the metering point in normal peak hours by the number of normal peak hours applied to the total 12 months of the pilot project.

In pilot project 2, the customer will be billed according to:

• Contracted power- maximum power taken in a 15-minute period within the last 12 months, including the month of billing;

• Active energy;

• Reactive energy;

• Average power in peak hours- average active power, which corresponds to the active energy quotient at the metering point at critical peak and non-critical peak hours, by the total number of critical peak and non-critical peak hours applied to the 12-month total of the pilot project;

• Additional power (or to be discounted) in critical peak hours compared with non-critical peak- difference between the average active power in critical peak hours and the average active power in non-critical peak hours.

No. The change in supplier by the participating customers during the implementation of the pilot project does not prevent the continuation in the pilot project.

This information is contained in ERSE Directive 2/2018 which, together with the supporting document, can be found at the ERSE website.