A lengthy wait for Brazil's congress to pass a key power modernization bill is forcing market participants to consider distributing its components into other laws and ordinances.
The Brazilian power market has long been awaiting approval of the bill — known as PL 414/2021 — as a first step to reform key issues, such as improving spot price calculation, deploying new meters and continuing the market's liberalization. After being approved by the senate in 2021, the bill is now stuck in the lower chamber of congress.
The legislative agenda is frozen because of disputes among President Luis Inacio Lula da Silva's supporters in congress and a queue of presidential decrees awaiting congressional votes, said Rodrigo Ferreira, president of the electricity resellers' association Abraceel. Still, Ferreira believes the lower chamber may vote on the bill this year, as the project is part of the Brazilian national confederation of industry's (CNI) strategic agenda.
But other market participants say it is unlikely the bill will be voted on as it stands. The power sector is waiting for the political process to resumeafter last year's elections hampered the chances of moving the bill to a vote, according to Brazilian association of energy-intensive industries Abrace's director of institutional relations and communication Fernando Teixeirense.
Congress had created a special committee for the bill last year but many of those committee members were not re-elected, so now the process is stuck, according to Teixeirense.
The federal branch, the mines and energy ministry MME and congressional leaders would have to work together to approve the bill — or at least move it along — according to market participants.
Another alternative would be for the government to include some of the issues that the power sector hoped to solve with PL 414 into a presidential decree drawn from the Gas for Jobs work group.
The PL bill would be the first step toward review of Brazil's spot power prices (PLD), which is known for being unpredictable and unrealistic. Price changes are often quick and sharp, such as the 169pc increase in the third quarter of 2021 followed by a 77pc drop in the following quarter.
The bill would also address the power market's liberalization for low voltage consumers, setting a schedule for the sector's opening and updating regulations and trading rules. Thanks to an MME ordinance, high-voltage power consumers will be allowed to migrate to bilateral contracts in 2024.
