Member Firm News – Portugal: Payments due by wind farms to the Municipalities

Member Firm News – Portugal: Payments due by wind farms to the Municipalities

In the light of the current State Budget proposal for 2019, it maintains the obligation to pay 2.5% rent due by the wind farms to the Municipalities on the monthly payment made by the receiving entity of the electricity produced after the end of the guaranteed rate period.

To some extent, the maintenance of such contribution and its relation with the future transition to a market system might pave the way for a fertile field of competition concerns, on which we hereby shed some light. These concerns are mostly related to the impact on the competitive structure of the market and its inherent competitive pressure exerted over the wind farms, as the said contribution is solely reserved to them as compared to other players.

As a matter of fact, the Portuguese Competition Authority has already had the opportunity to highlight that both the production of electricity in special regime, as well as in ordinary regime are part of the same relevant market, since the two forms of production can be considered as substitutes. Therefore, there are grounds to believe that the companies producing electricity will be companies that are positioned in the same market as real competitors.

However, considering the maintenance of the contribution at stake, a certain inequality (effective or potential) in the competitive structure – likely to raise or, at least, boost a still blurred competitive disadvantage – and in the conditions of accessing and exiting the electricity production market cannot be set aside.

Daniela Cardoso