Brazil leads the ranking of the weight of the electricity bill on consumer budgets

Brazil is at the top of a ranking that assesses the impact of electricity bills on consumers’ budgets in comparison with 33 nations in the OECD (Organization for Economic Cooperation and Development), the so-called “rich club”. According to a survey carried out by Abrace (Brazilian Association of Large Energy Consumers and Free Consumers), Brazilians commit, on average, 4.54% of their annual wealth generation to paying the residential tariff, the highest value among countries analyzed.

This percentage is significantly above European nations such as Spain (2.85%), Germany (1.72%) and Luxembourg (0.35%). It is also higher than that of emerging economies, such as Chile (2.65%) and Costa Rica (2.76%).

The analysis considered residential tariffs for 2022, based on data from the International Energy Agency, and GDP per capita calculated by the IMF for the same year.

Victor Hugo iOcca, Energy Director at Abrace, highlighted the need to reassess costs in the Brazilian electricity sector. According to him, the survey “demonstrates that we need to re-discuss costs in the Brazilian electricity sector, because it is distorted for local consumers compared to those in other countries when we consider income”, he said in an interview with Newspaper published this Monday (9).

Brazilians paid, on average, US$34 (R$176.50) for 200 kWh last year, an amount close to that paid by Poles, which was US$34.39 (R$178.50). However, per capita income in Brazil was around US$9 thousand (R$46.7 thousand), while in Poland it was double, US$18 thousand (R$93.4 thousand), resulting in a portion lower committed income, 2.26%.

The study also highlighted that Turkey, with a GDP per capita close to that of Brazil (around US$ 10 thousand or R$ 51.9 thousand), had an energy cost almost half that of Brazil, US$ 17.90 ( R$93), representing 2% of income.

Abrace experts highlighted that the variation in the cost of the tariff depends on the energy sources used. While renewable energies are becoming more competitive, sources such as coal, nuclear and natural gas have become more expensive, also due to geopolitical factors such as the war between Russia and Ukraine, which has put pressure on gas prices.

However, the Brazilian energy matrix is ​​based on hydroelectric generation, which did not help to lower the electricity bill. In Canada, for example, which also has a similar production – around 60% – the bill in 2022 cost US$10 (R$51.91), while in Brazil it was US$24 (R$124.60) , according to Abrace. Canadians saw just a 0.54% impact on income.

Paulo Pedrosa, president of Abrace Energia, emphasized that taxes and subsidies, which already represent 40% of the final price, burden the electricity bill and affect Brazilians’ cost of living. “The ranking shows how this cost reaches people through the electricity bill, but it is also in the price of everything manufactured in Brazil. The income commitment is much greater”, he added.

The electricity bill, however, could be even heavier for Brazilians’ pockets. Since April last year, the National Electric Energy Agency (Aneel) has been practicing the green tariff flag, with no extra billing costs. This is due to the favorable conditions for hydroelectric generation.

“The energy generated is cheaper. There has been more rain in the reservoirs, and then we can count on hydroelectric plants, which have a lower generation cost than other sources. Not to mention the advancement of wind and solar plants, especially in the Northeast of Brazil. country”, said Sandoval Feitosa, general director of Aneel.

The expectation is that the tariff flag will remain green until the end of the year.

Previous research has already highlighted the difficulty Brazilians have in dealing with additional expenses on their energy bills. A survey carried out by Datafolha for Abraceel (Brazilian Association of Energy Traders) revealed that 72% of Brazilians gave up buying basic items to pay their electricity bill, and 40% admitted to having stopped paying the bill at some point in the year previous.

The main components of electricity bill collection include the cost of energy (32.48%), transmission and distribution (27.38%), taxes (17.00%), charges (15.92%), technical losses ( 3.61%), energy theft (1.98%) and public lighting (1.54%).

Subsidies already weigh on Brazilians’ pockets at R$33.42 billion for the Energy Development Account; R$12.6 billion for the Reserve Account, which the consumer pays to guarantee the security of the system; R$6.8 billion to cover non-technical losses, such as energy theft from the system, R$5.34 billion for public lighting in cities, among others.