ANEEL formally announces its new regulatory regime for energy pricing.
Pundits say that it will prove to be a highly popular policy if it can deliver the promised results. A good part of the coverage of the local press coverage is mind-numbingly negative on those prospects.
During an extraordinary session held January 24, ANEEL approved new electricity pricing tables that will reduce the cost of electrical energy to users. The average savings to the end user will be 20.2%. Residential users will see their electricity bills reduced by at least 18% (see table, below). For industrial users of high tension lines, the discount will approach 32%. The new price structure is in effect as of today, January 25.
The reductions are the result of Law No. 12,783/2013 — it provides for the immediate renewal and renegotiation of transmission and generation concessions expiring in 2017 — as well as Provisional Measures 591/2012 and Decree 605/2013.
The two executive mandates create a special tax allocated to a reserve account — the Energy Development Account (CDE) —
created by Law 10,438/2002 with the objective of developing energy in the states and improving the competitive capacity of various alternative forms of energy, as well as to universalize the provision of electrical energy in Brazil.
The funds managed by the CDE flow from the annual payments by concessionaires for the use of public property, as well as fines assessed by ANEEL. Since 2003, the quota is paid by all energy resellers doing business with the end user. In other words, part of the CDE comes out of the taxpayer’s poakets.
The idea is that the refusal of most of the largest electricity generators and transmitters to take part in the plan is to be offset with funds from the CDE.
MP 605/2013 assigns the CDE two additional tasks. One is to compensate for discounts in usage rights to the distribution system and in cost to the end user. The other is to compensate for the refusal of some energy generation concessionaires to accept the deferral proposed in the Law of the Energy Sector in exchange for price reductions.
In a workmanlike overview of the situation, Globo noted:
In December 2012, Mines and Energy secretary Márcio Zimmermann went so far as to state that it would be imipossible to reduce rates as deeply as initially announced due to the refusal of certain energy companies to embrace the deal.
The Sign of Four
The terms of the deal were refused by Cesp (São Paulo), Cemig (Minas Gerais), Copel (Paraná) and Celg (Goiás). All four are state-owned firms in states governed by the opposition PSDB.
“It is surprising to see, last month, how many persons were … sustaining baseless disinformation over the level of our hyrdoelectric reserves and the entrely normal activation of the thermoelectric plants. As you would expect, these predictions failed to pan out. Brazil has not failed to produce a single kilowatt that it needed, and now, during the rainy season, the thermo plants will no longer have to bear the load,” said President Dilma.
The principal changes that will allow lower prices were:
- Reallocating the energy quotas of generators that renew concessions early, at an average price of R$ 32.81 MWh.
- Reduction of transmission costs.
- Reduction of the sector’s tax burden.
- Removal of subsidies from the price table, with direct support of the federal treasury
Reductions and adjustments
The effect of this reduction is structural in nature. That is to say, it will promote a permanent change in the price structure of the industry, in that it will permanently do away with figuring costs into the pricing tables in the past.
Different Rates. ANEEL will establish a different rate structure for every energy distributor, based on the specific characteristics of each. Lower energy prices should guarantee quality energy supply; it should also ensure that service providers receive sufficient revenues to cover their costs and to invest in the maintenance and expansion of the energy sytem.
Meet Your Meter Reader
Because meters are read at times that vary from one distributor to another, the full effect on the consumer’s monthly bill will not manifest itself until the first full billing cycle after the new price structures are implemented.
That is to say, during the first month under the new pricing scheme, depending on the expiration date of the previous contract, part of the user base will be billed under the old scheme and another part under the new,
With the new price table taking effect on January 24, for example, a customer whose bill is dated February 10 be billed half of the old price and half of the new. As of February 25, all users will see the benefits reflected in their bills.
Types of consumer. Other factors may lead to changes in energy prices, such as the terms of energy supply contracts. “Captive” residential and low-income consumers — those with no choice in the selection of a distributor — will all pay the single price negotiated by the concessionaire.
Variations in prices will also occur based on the level of tension provided to the end user, defined as the tension available in the distribution system, varying from 110V to more than 2,300 volts This variation divides consumers into two groups: Group A (≥ 2,300 volts) and Group B (≤ 2,300 volts). Group B comprises residential or low-income customers, among others.
Group A consumers pay predefined prices for energy and for peak and off-peak usage of the network. “Free market” consumers have different characteristics, in that they can trade for energy with other suppliers, under special conditions.
Learn more. ANEEL has published a a number of documents and content on its Web that explain how your energy bill is calculated, how the concessional renewals and price reviews work, as well as tips on the most economical way to use electricity.
The table below shows the savings to customers of the various low-tension service providers.