Spending on Thermoelectric Plants and Energy Imports Results in Billion-Dollar Loss, According to Ministry of Energy

Written by Roberta Souza

Published on 27/12/2021 at 17:03

Updated on 27/12/2021 at 17:04

Foto: reprodução google

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Water Crisis Generated Cost Of R$ 16.8 Billion According To The Ministry Of Energy. During 2021, All Thermoelectric Plants Were Used

The cost of measures taken due to the water crisis exceeded the government’s expectations. According to the Ministry of Mines and Energy (MME), spending on the use of thermoelectric plants and on the import of electricity from Argentina and Uruguay totaled R$ 16.8 billion by October. During 2021, all thermoelectric plants were used, including the more expensive ones, in order to maintain the supply of energy in Brazil, thereby avoiding a new blackout. The costs are borne by all consumers through the electricity bill.

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In July, the MME predicted that these same actions would total R$ 13.1 billion by November 2021. “The variation in the costs compared to the forecast is due to the worsening operating conditions throughout 2021, as well as the increase in fuel costs for electricity generation from thermoelectric plants,” stated the Ministry.

The capital spent by October is the result of all costs related to the need to additionally activate thermoelectric plants and the import of energy from neighboring countries, including charges and hydropower displacement.

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Tariff Flags

The tariff flags – a fee charged when there is a need to activate more expensive plants to generate energy – cover the use of thermoelectric plants, passing the costs on to consumers. With the aggravated water crisis, the National Electric Energy Agency (Aneel) adjusted the fee by 52% and declared that the resources might not be sufficient.

For this reason, the government created the so-called “water scarcity flag,” which represents an extra charge of R$ 14.20 for every 100 kilowatt-hours (kwh) consumed. The new measure took effect in September 2021 and is expected to remain in place until April of the following year.

Despite the higher fee, the total collected is still not enough to cover all the emergency costs associated with the use of thermoelectric plants. According to Aneel’s data, the Tariff Account recorded a combined loss of R$ 12.01 billion by October. To avoid an extremely high tariff in 2022, an election year, the executive branch issued a provisional measure allowing for a new line of credit for companies in the sector to face these costs.

Consumers will pay off the financing over the next few years, with interest accruing. However, the MP does not provide details on the loan, which will need to be structured through a presidential decree by Jair Bolsonaro. According to the Ministry of Mines and Energy, “the items and amounts to be covered by the credit operation supported by MP 1078/2021 are still under evaluation by the technical teams of the MME and Aneel.”

Spending on Thermoelectric Plants and Energy Imports Results in Billion-Dollar Loss, According to Ministry of Energy

Water Crisis Generated Cost Of R$ 16.8 Billion According To The Ministry Of Energy. During 2021, All Thermoelectric Plants Were Used

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