Government intends to cut benefits and reallocate resources to reduce electricity bills

The government of President Luiz Inácio Lula da Silva (PT) is preparing a set of provisional measures to try to reduce the price of consumers’ electricity bills after granting exemptions and special conditions for users of the free energy market. This modality has already been criticized by Lula, but it is used to benefit medium and large companies with bills above R$10,000 per month.

The government is now signaling a change in approach to balance costs, according to findings from the UOL published this Monday (22). The Ministry of Mines and Energy (MME) does not comment on possible changes.

At the end of last year, Lula complained that “rich people” pay less electricity bills, but the government itself has been delaying the presentation of a new electricity policy. “Three million people, who are businesspeople, pay a third of the price of energy that the poor pay. I ask a question: is it fair for the rich to pay less than the poor”, he asked.

The provisional measure should be published by the end of this month and intends to reallocate resources not coming from the Treasury to, among other objectives, mitigate the impact of the energy contractual readjustment in Amapá, scheduled for 2024. These resources would come from the privatization of Eletrobras, aiming reduce loans that put pressure on rates.

Other planned actions include the reduction of benefits for distributed generation, as approved in the offshore renewable energy framework, which could increase by R$39 billion per year in electricity bills in the regulated market; and emergency solutions to specific problems, such as the significant increase expected in Amapá’s energy tariff in 2024 – around 34%.

The provisional measure would also address the general review of subsidies on electricity bills, estimated at R$37 billion in 2024, representing almost 15% of the total value. The government is considering redistributing costs, such as those related to the reliability of the electrical system, sharing them between consumers in the regulated and free markets.

Although the Ministry of Finance highlighted the need to review subsidies, all measures to be adopted were not specified. On the other hand, the energy sector hopes to distribute the costs of purchasing energy from hydroelectric, thermoelectric and nuclear plants in extreme events to all consumers, both in the regulated and free markets.

The sector also hopes to redistribute the cost of overcontracting by distributors, with a realignment of the values ​​of energy purchased under long-term contracts and not sold to customers. This cost is normally at a lower price, which causes an imbalance in the flow of payments.