I GOVERNMENTAL ORDER NO. 268-B/2016, 13 OCTOBER 2 II LEGISLATION 3 III CASE LAW 7 NEWSLETTER I PUBLIC LAW WWW.CUATRECASAS.COM NEWSLETTER I PUBLIC LAW 2/7 PUBLIC LAW NEWSLETTER I GOVERNMENTAL ORDER NO. 268-B/2016, 13 OCTOBER Governmental Order no. 268-B/2016, 13 October (the “Governmental Order”) entered into force on 14 October with the objective of reducing the price of electricity and the tariff deficit in order to attain the sustainability of the National Electric System. The Governmental Order is based on a “study” carried out by the Direção-Geral de Energia e Geologia (“DGEG”), which concluded that some renewable energy producers benefited from a duplication of incentives: on the one hand, the guaranteed feed-in tariff for supplying energy to the national electric system, and on the other the public incentives for the promotion and development of power plants for generating energy from renewable sources.1 According to the same, this duplication of incentives was not foreseen and is inconsistent with the economic calculations underlying the compensation received via feedin tariff. Bearing this in mind, the Governmental Order sets forth the obligation of the Last Resort Supplier to deduct the duplicated amounts from the payments to be made to the power plants that cumulatively benefited or are benefitting from feed-in tariff and public incentives. In addition, it is established that the Last Resort Supplier must deduct said overpaid amounts from the producers as soon as possible and that 50% of the same shall be used to reduce the tariff deficit. A) Scope: At this stage, due to the lack of transparency and coherence regarding its implementation, it is still uncertain exactly whom the Governmental Order will affect. In in principle, all renewable producers that receive or received special regime remuneration and benefit or have benefited from public incentives to implement their projects could be affected. Nonetheless, it appears, at least on practical terms, that not all the producers that would in principle fall within the scope of the government’s criteria will indeed be notified. In this path, in case of notification by the DGEG, it is expected that producers shall confirm the amounts received by virtue of the granting of the production license and provide, within a 1 Notably, under Decree-Law no. 189/88, of 27 May and Decree-Law 23/2010, of 25 March, as subsequentely amended, and that of the Programa de Incentivos à Modernização da Exonomia (“Prime”) and the Medida de Apoio ao Aproveitamento do Potencial Energético e Racionalização de Consumos (“MAPE”) – Order no. 394/2005 under which several power plants were implemented. WWW.CUATRECASAS.COM NEWSLETTER I PUBLIC LAW 3/7 short period, information in order to demonstrate the amounts of the investment and operating and maintenance costs. B) Impact of the measures The Governmental Order anticipates an estimated amount of EUR 140.000.000,00 (a hundred and forty thousand million euros) to be recovered from the producers, in favor of the National Electric System. However, the grounds based on which said estimation was carried out and the exact repercussions of the measure on each individual producer are yet to be fully determined. At first glance, however, it is understood that this measure is highly detrimental to producers and, depending on its implementation, may eventually compromise the sustainability of some projects. II NATIONAL LEGISLATION AND ADMINISTRATIVE DECISIONS State Budget and Public Finances Law 42/2016, of December 28 Approves the State Budget for 2017. i) Article 175 of the Portuguese State Budget for 2017 states that the GPL sector will became under supervision of ERSE. Therefore, some doubts arise regarding the constitutional compliance of this rule, as this market is not subject to concession agreements but to private and inter pares regulation. The increase regulation relates only to the ERSE and its powers, as the GPL was already subject to the regulations of Decree-Law no. 31/2006, of February 15. ii) Article 68 stipulates that the limit provided for in no. 1 of article 52 of Law no. 73/2013 of 3 September (establishing the financial regime for local authorities and entities) may exceptionally be exceeded by the contraction of a loan intended exclusively for financing resulting from compliance with a final judicial or arbitration decision, relating to a concession contract for the concession and operation of municipal public water supply and wastewater treatment services, urban concessions or the concession contract for the exploration and management of those services, which determines the extinction of all responsibilities of the municipality to the concessionaire. iii) Article 112 stipulates that the Government is authorized to grant guarantees by the State up to the limit, in terms of annual net flows, of € 6 000 000 000 (contrary to the € 3 000 000 000 figure established for 2016). WWW.CUATRECASAS.COM NEWSLETTER I PUBLIC LAW 4/7 iv) Paragraph 1 of article 45 provides that the growth of the indebtedness of public companies, considering the remunerated financing adjusted by the paidin capital, is limited to 3%. v) Article 42 sets forth that, during 2017, independent legal persons governed by public law, namely those referred to in Law no. 67/2013 of August 28, and no. 3 of article 48 of the Framework Law of Public Institutes, approved by Law no. 3/2004, of January 15 can only recruit workers for the establishment of employment relationships of indefinite duration or term duration, in justified situations. The hiring of workers carried out in breach of the preceding are null. vi) In Article 174, the ENMC, E. P. E., established by Decree-Law no. 165/2013, of December 16, is hereby terminated, including among its attributions: a) The competences of the petroleum products unit and the biofuels unit in ERSE; b) The competences of the oil reserves unit and the exploration, exploration and exploitation unit of petroleum resources in the DGEG. Decree Law n.º 85/2016 - Diário da República No. 243/2016, Series I of 2016-12-21, of the Government Amends the framework of the State financial administration and of Accounting Normalization System for the Public Administrations. Decree Law n.º 67/2016 - Diário da República No. 211/2016, Series I of 2016-11-03, of the Government Approves the special program for the reduction of the indebtedness to the State. Energy Ordinance n.º 11946-A/2016 - Diário da República No. 192/2016, 1st Supplement, Series II of 2016-10-06, of the Office of the Secretariat of State of Energy Sets out the discount to be applied in the electricity networks access charges, applicable from January 1, 2017. Ordinance n.º 268-B/2016 - Diário da República No. 197/2016, 1st Supplement, Series I of 2016-10-13, of the Ministry of Economy Approves the obligation imposed on the Last Resort Supplier of the National Electric System to deduct of the electrical energy produced in a special scheme which benefits from a fixed WWW.CUATRECASAS.COM NEWSLETTER I PUBLIC LAW 5/7 remuneration, of the amounts received by the renewable energy producers which benefited cumulatively from guaranteed feed-in tariff for supplying energy to the national electric system and public incentives for the promotion and development of power plants for generating energy from renewable sources. Resolution of the Council of Ministers n.º 81-A/2016 - Diário da República No. 235/2016, 1st Supplement, Series I de 2016-12-09, of the Presidency of the Council of Ministers Concludes the proceedings of installation of the maritime platform for the production of electricity off the coast of Viana do Castelo. Ordinance n.º 268-A/2016 - Diário da República n.º 197/2016, 1st Supplement, Series I of 2016-10-13, of the Ministry of Economy Makes an amendment to Ordinance n.º 592/2010, of July 29, with the amendments introduced by Ordinances n.os 1308/2010, of December 23, 71/2011, of February 10, 200/2012, of July 2, 215-A/2013, of July 1 e 221/2015, of July 24 and defines the eligibility criteria for the purposes of the remuneration of interruptability. Regulation n.º 1094/2016 - Diário da República No. 238/2016, Series II of 2016-12-14, of the National Entity for the Fuel Market, E.P.E. Provides for the general access conditions to the large oil plants declared to be of public interest, in the terms of article 34.º-A of Decree-law n.º 31/2006, of February 15, as amended and republished by Decree-Law n.º 244/2015, of October 19. Contracts Ordinance n.º 12837/2016 - Diário da República No. 205/2016, Series II of 2016-10-25, of the Cabinet of the Secretariat of State of Health Determines that all health units and establishments integrated in the Health National Service, which have not yet joined the National System of Public Procurement, shall do so through the execution of an adhesion agreement with the Entity of Shared Services of the Public Administration, I.P., until October 31, 2016. Public Institutes Decree-Law n.º 79/2016 - Diário da República No. 225/2016, Series I of 2016-11-23, of the Government Amends the structure of the “Instituto da Mobilidade e dos Transportes, I. P.”. WWW.CUATRECASAS.COM NEWSLETTER I PUBLIC LAW 6/7 Environment Decree Law n.º 72/2016 - Diário da República No. 212/2016, Series I of 2016-11-04, of the Government Makes the first amendment to Decree-Law n.º 92/2013, of July 11, providing for the creation of multi-municipal systems of water supply and wastewater sanitation by virtue of the multimunicipal systems arising from aggregations. Decree-Law n.º 76/2016 - Diário da República No. 215/2016, Series I of 2016-11-09, of the Government Approves the National Water Plan, in the terms of n.º 4 of article 28.º of the Law of Water, approved by Law n.º 58/2008, of May 31, and creates the Interministerial Commission of Water Coordination. Ordinance n.º 14413/2016 - Diário da República No. 229/2016, Series II of 2016-11-29, of the Directorate General of Energy and Geology Physical and chemical parameters, which the water operating license holders and the concessionaries of natural mineral water exploitation shall comply with annually to the imposed analytic control programs. Urbanism Ordinance n.º 12426/2016 - Diário da República n.º 199/2016, Series II of 2016-10-17, of the Cabinets of the Assistant Secretariat of State and for Administrative Modernization, of the Secretariats of State of Local Authorities, Assistant, for Treasury and Finance and for Tax Affairs and of the Secretariats of State for Justice and for Urban Planning and Nature Conservation Creates an interministerial Working Group for the creation of a specialized internet portal in public real estate, and defines its constitution. Resolution of the Council of Ministers n.º 84-O/2016 - Diário da República No. 250/2016, 2nd Supplement, Series I of 2016-12-30 Authorizes the launching of the financial proceedings for urban rehabilitation. Agriculture, Forests and Sea Ordinance n.º 344/2016 - Diário da República No. 250/2016, Series I of 2016-12-30, of the Minister of Finance and the Minister of the Sea Approves the Regulation of Management of the Blue Fund. WWW.CUATRECASAS.COM NEWSLETTER I PUBLIC LAW 7/7 III NACIONAL CASE LAW Constitutional Court Judgment n.º 436/2016 - Diário da República No. 197/2016, Series II de 2016-10-13 Declares unconstitutional the interpretation, derived from article 69.º, n.º 2, paragraph d), of the Law of Organization and Procedure of the Court of Auditors, in the sense that the voluntary payment of the fine, accepted and performed prior to the res judicata of a guilty verdict, determines the extinction of the proceedings for sanctioning liability and, consequently, the inadmissibility of the appeal filed by the Public Prosecution against said verdict.