Government advances in structural reform of the sector in order to improve cost-benefit to consumers
The Official Gazette of this Tuesday (26.Jul.2022) brings a historical fact to the process of opening up the electricity market in Brazil. The Ministry of Mines and Energy (MME) published an ordinance determining the opening of a public consultation to grant the right to choose the energy supplier for all consumers connected to the high voltage grid as of January 2024.
Two months after taking over the MME, Minister Adolfo Sachsida finally signals that the Executive Branch intends to break the barrier of 500 kW of minimum demand for access to the free energy market. It advances 24 years in 2 months, as the last effective regulatory advance in terms of opening was with Law 9,648/1998, which amended Law 9,427/1996 and created the special free consumer with a load greater than or equal to 500 kW. Both the minister and the MME team should be congratulated on this important step in the structural reform of the electricity sector.
Once implemented, the measure will benefit an additional group of just over 100,000 consumers, with electricity bills above R$10,000 per month, and will have the potential to inject R$2.6 billion per year into the economy, as a result of the reduction of the electricity bill of these consumers.
It’s an economy that makes all the difference. On average, the free market offers savings of 30% in electricity costs, which will also apply to consumers connected to the high voltage grid, such as smaller industries and commerce, responsible for creating millions of jobs in the country. With the migration of these consumers, the free energy market may become responsible for meeting 48% of national electricity consumption, against 36% currently.
The expansion of access to the free electricity market by ministerial decree has legal support. Law 9,074/1995 authorizes the MME to proceed with the opening process by ordinance, which is corroborated by Conjur-MME in a 2018 opinion.
With this support, in 2019, the MME published Ordinance 465/2019, demanding from Aneel (National Electric Energy Agency) and CCEE (Electric Energy Commercialization Chamber) studies to subsidize the universalization of access to the free market – a stage that was fulfilled in January of this year with conclusions favorable to the opening.
The favorable view of the two institutions is echoed in the market. A mapping of the contributions offered in Aneel’s subsidy-taking process, on the complete opening of the electricity market, showed unanimity: no agent opined to the contrary and there was convergence for the opening of the high voltage market in January 2024, in line with the schedule proposed by Abraceel (Brazilian Association of Energy Traders) and now by the MME.
The recent decision by the MME is in accordance with PL 414 (full – 191 KB), which proposes measures to structurally modernize the electricity sector. In the bill, it is stipulated that all consumers must have the right to choose the energy supplier within 42 months of the enactment of the law, and the MME will be responsible for determining an intermediate schedule. The National Congress discusses the maximum period for opening, the Executive Branch determines the intermediate steps.
With this move by the MME, PL 414 gains strength, which seeks to benefit 89 million consumers. This is because the complete opening of the electric energy market in Brazil has the potential to, by 2035, reduce R$ 210 billion in electric energy expenses, create 642 thousand jobs and result in an average discount of 27% in the purchase of energy, which , consequently, will allow an average reduction of 15% in the electricity bill. Such benefits will contribute to decelerate the IPCA (Broad Consumer Price Index) by 0.61 percentage point.
In addition, it is important to emphasize that the expansion of the free energy market is a driving force for new investments, mainly in renewable sources. Of the total of 45 GW of centralized electricity that are under construction to start operating by 2026, 83% are being made possible by the free market, which represents more than R$ 150 billion of investments in the next 5 years.
As Minister Adolfo Sachsida said in a recent speech, “every journey starts with the 1st step”. The complete opening of the energy market, which is now gaining momentum, signals Brazil as a safe haven for investments, especially in renewable energy, and increasingly places the consumer as a protagonist in the sector, with more decision-making power and freedom to decide. their own directions. This is the structural reform that will bring cheaper and more competitive energy to the country.