MP who uses funds from Eletrobras to reduce electricity bills extends subsidy of R$6 billion per year

MP who uses funds from Eletrobras to reduce electricity bills extends subsidy of R$6 billion per year
MP who uses funds from Eletrobras to reduce electricity bills extends subsidy of R$6 billion per year
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BRASÍLIA – The Provisional Measure (MP) that anticipates resources from the privatization of Eletrobraswith the objective of reducing electricity bills by 3.5% in 2024, also extends subsidies that burden the end consumer.

The draft text, prepared by the Ministry of Mines and Energy and under analysis at the Civil House, predicts that the government will use advance payments from Eletrobras to pay off two billion-dollar loans contracted by distributors over the last few years: the “Covid account” (made in 2020, during the pandemic) and the “water scarcity account ” (from 2022, amid the water crisis).

These are expenses that were classified by the Minister of Mines and Energy, Alexandre Silveira, like “delayed effect bombs” – launched by the then Minister of Economy, Paulo Guedes, during the Jair Bolsonaro government. According to Silveira, the The price of energy is today one of President Luiz Inácio Lula da Silva’s obsessions, alongside food and fuel.

Minister Alexandre Silveira says that the previous government left ‘delayed effect bombs’ on the electricity bill. Photo: Mark Felix /AFP

The same MP, however, extends by 36 months the deadline for entry into operation of renewable source projects that have discounts on transmission (Tust) and distribution (Tusd) tariffs – benefiting, mainly, the Northeast region.

In November last year, Abrace, an association that represents large energy consumers, estimated an impact of R$6 billion per year with the extension of the benefit. This means an average increase of 2.4% in the energy tariff.

When contacted, the entity said that it will only comment again on the issue when the MP is published by the government.

This billion-dollar cost will be included in the Energy Development Account (CDE), which combines electricity bill subsidies and is paid by all consumers. In 2023, the CDE totaled R$40.3 billion, with incentivized sources responsible for R$10.8 billion. This year, the expectation is that the CDE will total R$37.2 billion.

According to the National Electric Energy Agency (Aneel), subsidies currently represent 13.1% of the tariff for residential consumers.

Subsidy for wind and solar energy

The draft MP, obtained by the Estadão, states that there is a stock of around 145 GW in projects, mainly wind and solar, concentrated in the Northeast. And that, of this amount, 88 GW have been granted authorization, but the works have not started.

Not surprisingly, the extension of the subsidy had the support of the governors of the Northeast, who since 2023 had been meeting with ministers Silveira (Mines and Energy) and Fernando Haddad (Farm) to address the issue.

This Monday, 1st, Silveira and Haddad met with Lula at Palácio do Planalto to discuss the matter. Upon leaving, Haddad stated that the objective is to make the renewable energy generation schedule compatible with investments in transmission.

“Some deadlines were not met due to the fact that there was no tender for the transmission lines. As this process has now been completed, you can open a deadline to see if there is an expression of interest”, said the head of the economic team, highlighting that the MP will not have an impact on public accounts.

According to Silveira, “there is unanimity on the importance of this MP”, as it can enable R$250 billion in investments in generation and a further R$60 billion in energy transmission.

In the National Congress, the election gained the support of deputy Danilo Forte (União), who is from Ceará. Asked about the impact of the measure on the electricity bill, the parliamentarian claims that “there is no new subsidy” and reinforces the need to align the schedules.

“What there is is a compatibility in the execution schedule of transmission and renewable generation works in the Northeast. As it stands, generation works would wait two to three years for transmission, and this has a cost. Who will bear this cost?” says Forte to Estadão.

He says that this compatibility will ensure investments and around 160 thousand jobs in the region. “At a time when we talk so much about energy transition, we cannot go back: we have to cut the subsidy to fossil energy”, he says.

Anticipation of resources from Eletrobras

The government, through the MP, intends to anticipate two types of resources provided for in the Eletrobras privatization law. The first concerns transfers planned to the CDE: R$32 billion that will be allocated to the subsidy account, over 25 years, to mitigate tariff adjustments.

Of this total, R$5 billion was paid in 2022. Now, the government wants to bring forward another slice to settle the “Covid account” and the “water scarcity account”. The discharge would reduce the impact of the tariff adjustments planned for this year – which should be, on average, 4.67%, according to estimates by TR Soluções, a technology company specializing in energy tariffs.

The amount to be advanced has not yet been finalized and is not included in the draft MP, but Silveira, last week, mentioned the figure of R$26 billion.

According to the minister, the anticipation of Eletrobrás’ grant resources does not require the company’s consent, since it is a financial operation (securitization) of sale of future receivables on the market.

The text of the MP also provides for advancing part of the amounts that would be allocated by the company to the so-called “regional funds”. The focus is the State of Amapá, whose tariff adjustment could reach 44% this year. Silveira and the head of the Civil House, Rui Costa, criticized the increase and say they work against the initiative.

Amapá is the home state of senator Davi Alcolumbre (União), an ally of Silveira and tipped to succeed Rodrigo Pacheco (PSD-MG) as president of the Senate.

The issue already causes noise behind the scenes and can generate political conflicts, as resources from regional funds should be shared with other regions and used, as a priority, in environmental actions in river basins affected by large dams, as is the case of the Madeira and Tocantins rivers. and San Francisco.

“The deleterious impact of this adjustment on family budgets and the local economy demands that urgent countermeasures be adopted. Therefore, it is necessary to seek alternatives that fit the country’s reality, without compromising the legal security that underpins electricity distribution concessions”, says the MP’s text about the situation in Amapá.

Finally, the project also provides for a third source of resources to be used, but which is not related to Eletrobras. It would be the use of surplus resources destined for Aneel’s research and development programs, which would also be used to make the CDE cheaper.

The article is in Portuguese

Tags: funds Eletrobras reduce electricity bills extends subsidy billion year

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