Government wants to reduce electricity bills by 3.5% in 2024 by paying loans from distributors; understand | Economy

The government intends reduce electricity bills by 3.5% this year with the payment of loans made by distributors due to the pandemic and the 2021 water crisis. The information is contained in a draft provisional measure obtained by the g1.

To achieve this effect of reducing the bill, the government wants to advance payments provided for in the Eletrobras privatization law and allocate them to pay the “Covid account” and the “water scarcity account”.

These bills are the result of emergency transactions for distributors to deal with additional costs caused by the pandemic – which generated an economic crisis and an increase in defaults – and water scarcity between 2020 and 2021, when the lack of rain forced companies to contract more expensive energy.

Now, the cost of these loans has been a portion of the tariff adjustments, with effects on the electricity bill.

The provisional measure also aims to resolve the increase in Amapá’s energy tariff, which has become a political problem for the government of Luiz Inácio Lula da Silva (PT) (understand below).

According to government interlocutors, the text has been finalized and is awaiting publication in the Official Gazette of the Union.

Understand the proposal in three questions and answers:

Understand your electricity bill

To reduce tariffs, the government intends to transfer resources from three sources:

• Eletrobras regional funds

These funds were created by the law that allowed the privatization of Eletrobras, published in 2021. The text establishes that the company will allocate resources to the recovery of river basins affected by its activities.

With the measure that the government intends to publish, the Union will be able to transfer part of these amounts to energy tariffs.

The values ​​will be proposed by the Ministry of Mines and Energy within 30 days after the publication of the measure and approved by the fund management committees.

• R$350 million per year over 10 years, transferred by Eletrobras plants in the São Francisco River basin;
• R$295 million per year over 10 years, transferred by Eletronorte;
• R$230 million per year over 10 years, transferred by the Furnas plants.

According to the government, this money will be used to mitigate the impact of adjustments in energy tariffs for consumers who purchase from the local distributor, the so-called “regulated” or “captive” market.

• anticipation of transfers from Eletrobras to the subsidy account

Also due to its privatization, Eletrobras must transfer around R$32 billion to the Energy Development Account (CDE) over 25 years. The CDE adds subsidies to the electricity bill and is one of the factors that has contributed most to the increase in tariffs.

In 2022, the company made an initial transfer of R$5 billion. The remaining deposits would be annual, worth around R$1 billion.

Now, the government wants to bring forward these transfers again. However, the value is not yet finalized.

The text to which the g1 had access, it only says that the Electricity Trading Chamber (CCEE) is authorized to negotiate the anticipation, “following guidelines” from the government.

Understand how the privatization of Eletrobras impacts the electricity bill

• mandatory investments in research, development and energy efficiency

Distributors must allocate part of their net operating revenue to research, development and energy efficiency projects.

The government’s proposal is to use a portion of the resources that have not been allocated to projects contracted or initiated by September 1, 2020, or that have not begun execution.

The amounts from Eletrobras’ regional funds can only be applied to reduce tariffs in states located in the area of ​​influence of each fund. That is, the states of the North, Northeast and Southeast.

The advance of Eletrobras’ deposits in the subsidy account, the CDE, will be used to reduce tariffs. The priority will be the early repayment of loans from the Covid account and the water scarcity account, the impact of which should be 3.5% on the electricity bill in 2024.

The resources from mandatory investments, in turn, will be allocated to energy tariffs or the CDE. The definition will be made by the Ministry of Mines and Energy.

Last year, the National Electric Energy Agency (Aneel) even put up for public consultation a proposal for an average adjustment of 44% in Amapá’s energy — an increase that would take the state to the top of the list of the highest tariffs in the country.

Faced with the political repercussion, the Lula government’s response is to use the Northern regional fund to reduce Amapá’s tariff.

However, the text to which the g1 had access does not clarify whether this will be done exclusively through the payment of loans or whether there will be a greater contribution to Amapá. The intention is to reduce the bill to a level similar to other states in the region.