Government announces ‘water scarcity’ tariff flag; extra fee on bills will be R$ 14.20 | water crisis

The National Electric Energy Agency (Aneel) announced this Tuesday (31) a new level of tariff flag for electricity bills across the country. The “water scarcity tariff flag” should come into effect this Wednesday (1st) and add BRL 14.20 to bills for every 100 kW/h consumed.

According to the text released by the agency, the forecast is that the new flag will remain in force until April 30, 2022. Until now, the flag system was revised month by month.

The new flag represents a high of 49.63% in relation to the Tier 2 red flag, which until now was the highest in the system and was in force in recent months.

“Thus, in view of the already existing collection deficit, exceeding R$ 5 billion, and the high costs verified, notably of thermoelectric generation, a determination was approved for ANEEL to implement the specific level of the Tariff Flag, entitled “Hydric Scarcity ”, in the amount of R$ 14.20 / kWh, effective from September 1, 2021 to April 30, 2022”, the government said in a note.

The reason is the worsening of the water crisis, which has required additional measures from the electricity sector so as not to run out of energy in October and November – the months that will be the most critical of the year. See details in the video below:

Government sets new red flag value for electricity bill until Tuesday (31)

Government sets new red flag value for electricity bill until Tuesday (31)

Also according to the government and Aneel, the “water scarcity” banner will cause an increase of 6.78% in the average electricity bill for regulated consumers (served by the distributors). Citizens who adhere to the social tariff will not be affected by the new flag.

The tariff flag system is an additional charge that signals and passes on the cost of energy production to the consumer. The Tier 2 red flag is the most expensive in the system.

The readjustment announced on Tuesday is the second of the year. At the end of June, Aneel readjusted the red tariff flag level 2 from R$ 6.24 to R$ 9.49 for every 100 kWh consumed – an increase of 52%. The new value started to take effect in July.

From January to April, the yellow flag was in effect, at a cost of R$ 1.343 for each 100 kWh. In May, the level 1 red flag became valid, at a cost of R$ 4,169 for every 100 kWh. The values ​​of these brands were also readjusted later.

With the worsening of water conditions, red flag level 2 was triggered in June, at a cost of R$ 6.243 for every 100 kWh. In July and August, the same banner was maintained, but at the readjusted amount of R$9.49.

According to the columnist of the G1 Ana Flor, the decision on the new value was taken last week, during a meeting between President Jair Bolsonaro and the ministers of the Chamber of Exceptional Rules for Hydroenergy Management (Creg), created in June to manage the water crisis.

The hammer was hit on Tuesday, after a new meeting of Creg ministers. The value defended by the economic team of the government prevailed, which is concerned with the advance of inflation. Aneel defended that the amount was higher and charged from September to December.

Normally, the readjustments of the tariff flags are decided only by the collegiate board of Aneel, in a public meeting, after consultation with the society.

Aneel even opened a public consultation in July to decide whether the red flag level 2 rate would remain at R$ 9.49 per 100 kWh or if it would increase to R$ 11.5 per 100 kWh.

Brazil is experiencing the worst water crisis in 91 years. The forecast is that the reservoirs of hydroelectric plants in the Southeast and Midwest will reach the end of September with 15.4% of capacity, a volume lower than that registered in the 2001 crisis, when Brazil underwent compulsory energy rationing.

To make matters worse, in August it rained less than expected. According to the National Electric System Operator (ONS), if there is no additional supply of energy as of September, it will not be possible to meet the demand in October and November, and the country runs the risk of occasional blackouts.

Tariff Flag System

The tariff flag system was created in 2015 to signal the cost of energy generation and immediately pass the value on to the consumer.

The flag is green when the level of the reservoirs is high and there is no need for extra activation of thermal power plants. In this case, there is no additional charge on the electricity bill.

With low reservoirs, the outlook is for high energy costs as it requires the activation of more thermal plants. Thus, the flag can change to yellow and red (level 1 or 2), for which there is an extra cost.

Before the flag system, the cost of activating the thermal plants was transferred late, only in the annual tariff adjustment, which resulted in the charging of interest, penalizing the consumer.