Electricity bill: slowdown by Aneel and MME postpones 5.2% drop – 05/05/2023 – Market

It is costing energy consumers a lot to push the government and regulatory bodies to define the fate of a group of gas thermal plants. Ten plants did not comply with energy contracts, but are trying to mitigate the penalties —and even continue operating— with high prices for the electricity bill.

The values ​​of this pendency are detailed in the most complete survey on the subject, carried out by Abrace (Brazilian Association of Large Energy Consumers and Free Consumers).

The entity shows that the collection of R$ 13 billion in fines and penalties is suspended. This amount, which could have already been reverted to the energy tariff, would lead to an average reduction of 5.2% in the electricity bill. There is also a group of thermal plants operating even after breaching contracts, and energy consumers have already paid R$ 1.2 billion in tariffs for this service.

These plants are part of the PCS (Simplified Competitive Procedure), a type of auction for contracting energy, made by drowning, in October 2021, when there was a risk of rationing because of the drought. The market reading is that everything about this auction went wrong.

Of the 17 plants qualified in the PCS, 14 were gas-powered —the group that faced the greatest difficulty. Only one was turned on on May 1st of last year, the scheduled date for the start of operation. Another five managed to start supplying energy before the deadline set in the contract, on August 22, 2022.

The remaining 11 plants have accumulated problems. One was suspended. Five weren’t even ready on time. Five more started operating after August —despite the auction rule providing for the cancellation of the contract in that case— and are paid for by consumers.

The impasse that most penalizes the electricity bill involves precisely these ten plants that did not meet the contractual deadline and appealed to Aneel (National Electric Energy Agency).

Their status has been under review for months by the agency. An outcome for the case of these plants, and the entire PCS, would have had to be monitored by the MME (Ministry of Mines and Energy). The portfolio was guided by the TCU (Tribunal de Contas da União) to forward the renegotiation of all contracts in that auction, to reduce the costs of energy consumers.

In the most recent chapter, the TCU itself took over the negotiation through the new Secretariat for Consensual Solution and Conflict Prevention. Now, Aneel and MME say that the PCS depends on the TCU. The companies involved are mobilizing law firms to fight a battle with the regulatory body.

“This case will go down in the history of the electricity sector as a lengthy and, above all, erratic process”, says Luiz Eduardo Barata, president of the National Front of Energy Consumers who has followed the imbroglio since the beginning.

Abrace’s balance sheet shows how the evolution of the problem is convoluted. Of the five plants that were not ready, one belongs to Rovema, a group from Porto Velho (RO), and four belong to Âmbar, the energy arm of J&F, which controls JBS. This group has almost R$ 8.9 billion in penalties that, although they were not paid, because the companies filed funds with Aneel, according to a survey by the association.

Rovema was unable to guarantee the supply of gas. Her first appeal was denied, and she appealed.

The case of Ámbar has dragged on for a year, involved in a controversy that has mobilized the energy sector.

The rapporteur of the process at the beginning of the discussion, today the executive secretary of the MME, Efraim da Cruz, made every effort so that the plants could operate, even with the delay in the works. There is even a process at the TCU, still ongoing, evaluating its conduct in this case.

The appeal requests (called by the agency exclusion of liability) that Ámbar submitted to the agency were unanimously rejected by the board. The company appealed. Based on analyzes by the technical area and the Federal Attorney’s Office, the new rapporteur, Director Fernando Mosna, rejected the appeal.

However, director Ricardo Tili asked for views at the end of February, and so far he has not resumed the discussion.

According to Sheet found out, in the conciliation with the TCU, Ámbar will insist on authorization to operate. Abrace’s survey shows that if this happens, there will be an increase in the tariff of almost 2.5%, since Ámbar’s thermal plants account for practically half of the generation of all the plants enabled by the PCS.

Among the five plants that managed to operate even after the contractual deadline of 90 days, four belong to the Turkish company KPS (Karpowership Futura Energia) and one to Trendner, headquartered in Paraná.

The KPS plants are floating barges, a model known as powerships, and are located in the Port of Itaguaí, in Sepetiba Bay (RJ). The company accumulated problems with the project, which was opposed even by environmental groups, given its location.

After having the first exclusion of responsibility denied at Aneel, KPS filed two other appeals with the agency, at the same time that it appealed to the Justice and obtained authorization to operate. Both the technical area and the Aneel attorney’s office have already expressed their opposition to the appeals.

The director who now has the rapporteur for the appeal, Ricarod Tili, however, does not present the process for judgment. According to estimates in the Embrace report, each month of uncertainty in the case of KPS costs BRL 255 million for energy consumers.

The process about the Tradener plant is a lantern in the discussion. Despite the technical area having recommended that the appeal be denied, the board has not yet evaluated the requests for exclusion of responsibility presented by the company.

“At a time when the agency has deserved so many and so unfair questions, deciding on the PCS would be the greatest reaffirmation of its role in the electricity sector”, says Paulo Pedrosa, president of Abrace. “The delay in closing processes that already have the technical and legal instruction ready is costing consumers a lot.”

In parallel, there is also a discussion about the companies that met the PCS contractual term and are operating. Its running cost is very high. On average, the price of this energy is R$ 1,300 per MWh (megawatt-hour), 20 times more than the value of the last auction for this type of supply, says Abrace. In the spot market, energy is traded at R$55.

Abrace’s survey shows that the consumer has already paid R$ 1.6 billion for this group of thermos. By December 2025, the final term of the contract, there will be an additional R$7.3 billion. The entity and the consumer protection front have been defending for months that the MME make a friendly negotiation with the companies for the suspension of the supply of these plants. The discussion now migrates to the TCU.

Aneel and MME say wait for TCU

A SheetAneel’s press office stated that PCS processes are being investigated, with several manifestations and meetings with companies and complementary analyzes of the technical areas since August 2022.

According to the agency, the KPS case had a new opinion recently included in the file. However, the Ministry of Mines and Energy informed that the case will be subject to a consensual solution process at the TCU, which was confirmed by the Court last week.

“In this sense, we are evaluating the consequences of such a procedure in the ongoing processes, which await deliberation by the collegiate”, said Aneel in a note. “I emphasize, however, that any amounts received by any companies that, after judgment in the second instance of administrative requests, are considered undue, will be returned to consumers.”

The MME advisory said that the ministry has sought specific treatment for PCS contracts, with the aim of guaranteeing security of supply with a tariff reduction. According to a note sent to Sheetit was within this principle that the MME requested support from the TCU in resolving the case.

“The situation of each company contracted in the PCS was and will be dealt with in a specific way, considering the particularities involving compliance with contracts and risks of attributing costs to electricity consumers”, says the folder.

When contacted by the report, KPS and TCU responded that they would not comment. Âmbar, Rovema and Tradener did not respond to an emailed request for comment as of this writing.