Brazil's power sector must urgently address subsidies shared among consumers, power regulator Aneel's interim general-director Camila Bomfim said, telling Argus they are "unsustainable."
Bomfim said it is about time for a debate on the R30bn/yr ($5.5bn/yr) Energy Development Account (CDE), created to gather funds from power consumers to pay for subsidies given to specific power generation and consumer groups.
At first, the fee created in 2002 was aimed at developing new and renewable power sources and public programs to guarantee electricity connection in poor communities. As the years passed, lawmakers have used the CDE to include benefits for groups such as rural producers that use power for irrigation and coal-fired thermal generators, among others. From 2021-2022, CDE's total budget rose by 28.2pc, and now equals the cost to run Brazil's entire power transmission system for a year.
"It is time we verify whether those public subsidy policies are hitting the target and who should be paying for them," Bomfim said.
Bomfim said that it is not up to Aneel to determine which group will benefit from the CDE, but subsidies should be treated as public policy, with costs considered in the federal budget and not shared with other power consumers, as is the case currently.
"Aneel must bring transparency to those subsidies and allow the debate to flourish," Bomfim said.
Other challenges that Aneel will face in the coming years are linked to the growth in distributed generation capacity, which is growing at a pace of 1GW every two months, according to the agency's data.
Total power consumption liberalization and a more responsive power pricing model are also among Aneel's near-term challenges. Bomfim said there is no return from a totally open market, which will benefit consumers with more competition and lower prices. She supports a power pricing model that best provides price signals for generators and consumers.
Bomfim argued that Aneel is working to move the debate forward and actions such as the demand response — when consumers can offer power to the system in moments of higher power prices — confirm that.
Bomfim took on the top position at Aneel in mid-May after general-director André Pepitone stepped down. She will hold the seat until 13 August, when Sandoval Feitosa's term as the general-dierctor starts, according to the law for the regulatory agencies operation.
