TCU should unlock auction that avoids R$60 billion more in electricity bills – 11/28/2023 – Panel SA

The TCU (Federal Audit Court) must authorize, this Wednesday (29), the transfer of the energy substations from Cteep (Companhia de Transmissão de Energia Elétrica Paulista) to the consortium led by Alupar. The operation had been suspended for a year due to the former concessionaire’s appeal to the court.

Two ministers of the court of accounts assess that, if confirmed, the decision will allow other very old and current contracts, similar to those of Cteep, to be broken so that the Union can grant the assets for the exploitation of other private groups.

They estimate that, if the TCU does not validate the auction, the costs for consumers would be R$60 billion on the electricity bill.

At the center of the discussion is the Centro Substation, located in the central region of the city of São Paulo. Opened almost 50 years ago, in 1976, its equipment is obsolete and, in many cases, close to the end of its useful life.

The concession contract with Cteep was signed in 2001 and renewed 11 years later with the condition that the company would only be responsible for the operation and maintenance of the asset.

At the end of 2021, the Ministry of Mines and Energy, after technical studies and public consultation, decided to revitalize and expand the substation and, to this end, opened a new tender with planned investments of R$500 million.

Aneel (National Electric Energy Agency) held the auction in December 2022. The consortium formed by Alupar and Perfin won, offering a 15% discount on annual revenue, which means a discount of more than R$300 million to the throughout the concession to consumers. Cteep also competed, but its bid was defeated.

However, the TCU did not approve the result due to a challenge from Cteep, which seeks to maintain the substation, despite not having been the winner of the auction.

The case sets a precedent for other similar cases. It is estimated that there are R$50 billion in assets in the same situation.

In March 2024, the transmission auction of the Anastácio substation, in operation and currently under concession by Eletrosul, an arm of Eletrobras, is planned. Recently, Eletrosul told Aneel that it intends to keep the asset under its concession.

Calculations by EPE (Energy Research Company) indicate that obsolete installations are spread across electrical companies in the country and will require investments between R$35 billion and R$55 billion in revitalization.

The chances are minimal, but if the TCU decides that the bidding for these goods represents a breach of contract, consumers will have to pay almost R$60 billion in the coming years due to the need to modernize this equipment fleet.

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