Union Budget could lose R$ 1.2 billion from Copel – 09/25/2023 – Market

Changes in the way the transmission tariff is charged, under analysis in Congress, could change the value of the grant bonus that Copel must pay to the Union for the extension of the concession contracts for three of its main hydroelectric plants.

The value has already been set at R$3.7 billion and even approved by the TCU (Federal Audit Court), but it could fall by almost half.

The term that extends the concessions and releases the resources needs to be signed by December of this year, and the amount is being considered in the 2024 Budget by the Ministry of Finance, within the effort to guarantee revenues capable of meeting the goal of bringing the primary result to zero.

Through official correspondence to the MME (Ministry of Mines and Energy), obtained by SheetCopel warns that the rules in force are part of the premises for calculating the granting of the hydroelectric plants Governador Bento Munhoz da Rocha Netto (also called Foz do Areia), Governador Ney Aminthas de Barros Braga and Governador José Richa (previously called, respectively, Segredo and Salto Caxias) —and warns that the changes proposed by the Legislature will increase the company’s costs, reducing the grant bonus.

Congress discusses the change through PDL (Project Legislative Decree) 365/2022. The text, proposed by deputy Danilo Forte (União Brasil-CE), has already been approved in the Chamber.

Now, the PDL is under the rapporteurship of Senator Otto Alencar (PSD-BA), and is scheduled to be evaluated by the Senate Infrastructure Services Commission this Tuesday (26).

The PDL will suspend two normative resolutions from Aneel (National Electric Energy Agency) that deal with the calculation of the Tust (Tariff for Use of the Transmission System) paid by all users, generators, distributors and free consumers connected directly to the transmission network.

“In this context, Copel informs this ministry that the revocation of the aforementioned resolutions imposes extra costs for the company, with charges for the use of the transmission system than was computed for the calculation of grant bonuses. Thus, if PDL 365 /2022 is approved, the amounts to be collected should be revised by minus R$1.2 billion, according to estimates made by this company”, highlights the letter.

When contacted, Copel said it did not comment on the issue.

Congress’s proposal to overturn Aneel’s resolutions has been strongly opposed by consumer organizations since it was presented, and for different reasons. Firstly, because it will increase the energy tariff of consumers who use more renewable energy, notably in the poorest states.

The increase in electricity bills, according to data from Aneel itself, could reach 2.4% in the Northeast and almost 1% in the North. On a smaller scale, it would also affect consumers in Minas Gerais, Rio de Janeiro, Espírito Santo, Goiás and the Federal District.

“We believe that parliamentarians are not properly informed about the effects of this PDL, and we have provided parliamentarians with more data”, says Luiz Eduardo Barata, president of the National Energy Consumers Front.

“The measures proposed by the PDL will not make a difference to wind and solar generators, as expected, but will represent an increase in the electricity bill of consumers in the poorest states in the North and Northeast.”

The front also states that the Northeast will continue to increase its participation in the expansion of renewables with or without PDL, as the region is naturally suitable for wind and photovoltaic projects.

This year, already under the validity of Aneel resolutions, consolidated data until this Monday (25) indicate that the region accounts for 59% of the expansion of the electrical matrix, with 3,296.8 MW (megawatts) from wind farms and 1,230, 6 MW of photovoltaic solar plants.

The PDL also concerns the energy sector because it is seen as undue interference by the Legislature in a regulatory agency.

“The proposed intervention on an exclusively technical and regulatory topic, which was widely debated with the entire electricity sector and its users, will produce negative effects on the energy market, such as instability and legal uncertainty”, highlighted Abrace (Brazilian Association of Large Consumers Energy Industries and Free Consumers) in a note to senators.

The core of the disagreement over the transmission tariff is the so-called “locational signal”, the mechanism that, based on price, indicates which is the most rational location for installing new energy projects, in order to bring generation and consumption closer together.

Aneel concluded that, because of the increase in the number of hydroelectric, wind and solar projects in the North and Northeast, consumers in these regions must now pay less, as they are close to generators. On the other hand, these new generators require the construction of more transmission lines, so the reading is that they must pay more.

PDL reverses the logic. It burdens generators in the South and Southeast (hence the impact reported by Copel), and consumers in places where there are more renewable sources.

Aneel’s prerogative to deal with the location signal is contained in the law that created the agency in 1996.

Before publishing the resolutions that address the topic, in 2022, the agency promoted two long public consultations, which began in 2018. Aneel estimated that it took 418 days for all interested parties to present their contributions.

Renewable energy companies were defeated in this long debate and, after the publication of the resolutions, they turned to Congress in an attempt to prevent their effective application.

When contacted by the report, Aneel stated in a note that correct price signaling in the electrical system avoids cross subsidies, makes the operation of the electrical sector more efficient, benefiting all users in the long term, whether consumers or generators, and that the change is carried out gradually over five years.

When contacted by the report to explain what the government’s position will be, Finance and MME did not respond until the publication of this text.