Energy MP will extend the deadline for projects that will come into operation to have discounts on transmission and distribution tariffs
The MP (provisional measure) that will be published by the Luiz Inácio Lula da Silva (PT) government to reduce electricity tariffs will include the extension of subsidies for renewable sources. The text will expand access to discounts on tariffs for using the network for new generators, increasing the period that was 48 months, for another 36 months.
The previous deadline had been set by law 14,120 of 2021. According to the legislation, discounts can be granted to projects that requested a grant until March 2022. According to the government, the majority of projects have not yet come to fruition due to the lack of flow capacity, that is, transmission lines.
The draft MP, obtained by the Power360establishes that these enterprises will be able to request a 36-month extension of the deadline for starting the operation of all their generating units, maintaining the right to percentage reductions in tariffs for the use of transmission and distribution systems.
These discounts are mainly aimed at wind and solar plants, expanding especially in the Northeast region. They are subsidized and paid for by consumers’ electricity bills.
In return for the benefit, these plants must transfer an amount as a “guarantee of faithful compliance” within 90 days, worth 5% of the project. The resource will be allocated to Aneel (National Electric Energy Agency). The MP will also require these projects to begin construction within 18 months, counting from the publication of the text.
According to data from Aneel, there is a stock of renewable generation projects of 145 GW. Of this amount, 88 GW has been granted authorization, but works have not started. The biggest problem, according to generators, is the lack of transmission lines.
The Ministry of Mines and Energy’s proposal estimates that the extension of discounts will enable around R$165 billion in investments and create 400,000 jobs. Minister Alexandre Silveira had already anticipated the central idea of the measure in an interview on Wednesday (27 March 2024).
“We need to resolve transmission compatibility. Unfortunately, the previous government failed to act on this issue. We will make the transmission deadline compatible with the investments received in renewable energy in the Northeast. It is important that there is a new deadline for these investments to be received in the system to provide security to the investor. We want to provide more predictability for receiving investments,” he said.
The idea of extending the benefits to renewable sources had been pregnant by the government since November 2023, as shown by the Power360. At the time, entities warned that the cost could reach R$6 billion per year to consumers.
According to the Power360, the text prepared by the Ministry of Mines and Energy is already at the Civil House and should be published in the next few days. The initial idea was to send two MPs, one just on renewable sources and the other on consumer tariffs.
However, after conversations between Minister Alexandre Silveira with the Senate and the Chamber throughout Wednesday (27 March 2024), it was decided to forward a single text to facilitate the process.
REDUCTION OF RATES
The other part of the MP aims to reduce the electricity bill by 3.5% this year with the energy MP (provisional measure). This will be done using resources that Eletrobras has to pay, according to the law that authorized the privatization of the company, to regional funds and to the CDE (Energy Development Account).
The resources will be used to pay off 2 loans taken out by the electricity sector in the financial market in recent years. The payment of both bills is supported by consumers’ electricity bills and has been causing an increase in tariffs. Are they:
- The Covid accountan emergency loan made in 2020 to help energy distributors during the pandemic, when defaults increased;
- and the Water Scarcity Accountcontracted in 2022 due to the low level of hydroelectric reservoirs, which required the contracting of more expensive energy.
The resources obtained will be used exclusively for early repayment of loans. It is estimated that the savings for consumers, even in 2024, would be in the order of R$7 billion.
The text lists 3 sources of resources for this:
- Eletrobras regional funds;
- Anticipation of resources owed by Eletrobras to CDE;
- Leftover unrealized research investments.
