The cost of MP (Temporary Measure) 1304 for the electricity bill could reach R$16 billion, according to estimates by Abrace, an entity that represents companies that consume large amounts of energy. This value has the potential to increase your electricity bill by up to 3% per year, depending on your purchasing schedule.
Abras argues that President Luiz Inácio Lula da Silva (PT) vetoes departments that generate these expenses, on pain of leaving more unnecessary costs to the consumer. The president has until next Monday (24) to decide whether or not he will use his veto power, and what he will use his veto power for.
“We expect everyone to come together to solve the problems of the sector, which we are all aware of. What cannot be done is, when the time comes, for everyone to take care of themselves and leave the bill to the consumer to pay,” says Abrace President Paulo Pedrosa.
The MP encouraged reform in the energy sector. Some points have been well received by experts, such as extending the coal incentive. The text also left out long-awaited measures, such as readjusting the deadline to end benefits for installing rooftop solar panels.
This PV energy generated by homes and solar farms cannot be managed by ONS (National System Operator). Many experts point out that its expansion is largely responsible for power outages, or so-called curtailment, which increase losses for generators that are prevented from providing energy.
Abrace states that it does not make sense for Congress to program the obligatory and indiscriminate purchase of this or that energy, without any planning, and create a future calculation for the electricity bill that will reach R$9 billion.
The compulsory purchase of the coal plants – specifically Candiota 3 and Figueira – will cost an estimated R$981 million per year, from the signing of the contract until 2040. Abras says that in addition to making the tariff more expensive, the use of coal, a major source of greenhouse gases, conflicts with the world’s grain.
The commitment to include 3 gigawatts of energy generated from biomass will, in turn, add another R$2.76 billion to the bill. Although it is a clean source, there is no explanation for its forced purchase.
The commitment to purchase energy from small hydroelectric stations with a capacity of up to 50 megawatts, starting in 2032, has no technical justification, according to the entity. The forecast of placing an additional 3 GW on this block will create increasing costs: R$1.72 billion in 2032 and R$3.44 billion in 2033, reaching R$5.16 billion per year from 2034 onwards.
Abras also opposes passing the compensation tariff to generators affected by the curtailment, although it acknowledges the need to find a way to stem the losses.
The payment is provided for in a last-minute amendment introduced by Rep. Danilo Fortes (União-CE). According to Apres, this is the MP’s highest expenditure. The text specifies the payment of losses from September 2023 to December 2025, which, according to the entity’s estimates, will total R$7 billion.
However, the device also concerns Abrace because it creates new regulations that are detrimental to the proper functioning of the energy market. Although the cuts also affect hydroelectric and thermal power plants, the amendment stipulates that only solar and wind generators will be compensated. In fact, in addition to paying out previous losses, it also sets deadlines for regular compensation for potential losses due to cutbacks from 2026 onwards.
Abeolica, an association representing wind generators, says compensation does not need to be charged to the electricity bill. It could come from an account in the CCEE (Electric Energy Clearinghouse), specifically from the fines that the generators themselves had to pay for not delivering the cut power. In this case, consumers will have to part with approximately R$4 billion.
“We are under capitalism,” Pedrosa says. “I ask: Are we going to generalize the loss caused by business and allow the consumer to pay for this energy that they did not consume? Doing so sets a very strong precedent.”
“But we are not insensitive either. Generator losses are already high. Consumers are entitled to a fine for this undelivered energy. This fine is worth billions. Now the other question: Does it make sense for the consumer to get these amounts if the generator only delivers because it was prevented?”
The alternative of redirecting fines is also controversial. The National Energy Consumers Front states that the fine is legitimate and should be used to reduce energy tariffs. Aneel (National Electric Energy Agency) has started using the resources.
The government has already indicated that it will veto payment to prevent electricity bills from increasing. But what we see behind the scenes is a struggle over this payment.
As it appears from BoundThe discussion has escalated to the point that French President Emmanuel Macron has already asked Lula not to veto the project because foreign companies, especially French ones, are accumulating losses and this affects the image of the Brazilian renewable energy market.
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