Lawmakers mull power price intervention

Brazilian lawmakers are discussing putting a brake on power regulator Aneel's planned electricity tariff increases with a bill that some market participants say is merely a political ploy.

Aneel is calculating a 15-25pc increase in power tariffs to compensate for loans taken by distributors to cover revenue losses during the Covid-19-related economic downturn.

According to the power distributors' association Abradee, the tariff increase this year also corrects for lower-than-needed tariff increases last year, which were carried out in a maneuver to help reduce inflation during the second year of the pandemic.

The bill, PDL 94, proposes that tariff increases not be included in consumer electricity charges in the state of Ceara — with the possibility of the provision extending nationwide. It does not specify how distributors will be paid for expenses made last year, however. Despite not being scheduled for discussion in plenary sessions, lower house president Arthur Lira (Progressistas party, Alagoas) last week said the topic could be a priority.

Still, the power sector is skeptical that the bill can pass before July's three-month pre-election period, when congress members are not required to attend so there is hardly ever a quorum. Lower congress member Paulo Ganime (NOVO party, Rio de Janeiro) warned that the measure is unconstitutional and would set precedent for similar proposals, defeating the technical role of the regulatory agency.

Marcos Aurelio Madureira, president of Abradee, said there is little chance the bill will pass, as Aneel followed proper procedure and there is no basis for legislative interference.

Large energy consumers' association Abrace also criticized the bill, saying the solution for higher costs on power bills cannot come from interference with Aneel's duties and would raise great legal uncertainty. Abrace argues that an artificial price reduction will force prior costs to be carried on for the next few years, and be paid under high interest rates, because the sector is already operating under two loan programs.

A more practical solution would be to take a hard look at modernizing the sector by approving the PL 414 bill, said Ganime, which shifts the allocation of risk among consumers and allows for the redistribution of costs paid currently by regulated consumers to the billateral market.

By Rebecca Gompertz