New Federal Government Decree Will Raise Electricity Bills to Offset Distributors’ Losses Due to Water Crisis

Due To The High Spending Of Electricity Distributors During The Water Crisis, The Federal Government Approved A New Decree That Will Increase The Electricity Bill To Reverse The Impacts

This Friday (14), the Federal Government published in the DOU (Federal Official Gazette) the Decree 10.939/2022, which regulates mechanisms for electricity distributors to cope with the impacts generated by the water crisis on the national energy sector. The document creates, through the Electric Energy Trading Chamber (CCEE), the “Water Scarcity Account,” intended to raise funds to cover additional costs generated by water scarcity for the utilities and permit holders of electricity distribution public services.

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Understand The New Federal Government Decree

According to studies by journalist Ana Flor from G1, the new measure of the Federal Government mandates final consumers to pay billion-dollar loans to compensate and assist the financial impacts caused by the water crisis on electricity distributors.

The total amount to be allocated to each company will still be defined by the National Electric Energy Agency (Aneel), however, according to the journalist’s studies, the total value may reach R$ 6 billion. According to the director of Exata Energia, Bernardo Marangon, the new federal government decree due to the water crisis resembles the Covid Account, which at the beginning of 2021 and also this year allocated resources to the utilities.

The professional also highlighted that the high use of thermal plants in the past year generated elevated costs for the country, making it necessary to amortize the costs generated by this source through debt. A very high cost was generated with the use of thermal plants that, if paid all at once, would result in a significant impact on the electricity bill.

Federal Government Creates Provisional Measure

The decree approved this Friday (13), due to the water crisis, is part of Provisional Measure No. 1.078, published in December 2021, which stated that funds raised through charges on the electricity bill would be used to cover the expenses that the energy sector incurred in 2021, primarily due to the activation of the country’s thermal power plants caused by the water crisis.

According to the General Secretariat of the Presidency of the Republic, the MP made it possible to structure financial operations guaranteed by the Energy Development Account (CDE), in order to mitigate the effects of the rising energy generation costs on the distributors and electricity consumers.

Brazilians Try to Migrate to Free Contracting

In order to prevent consumers from moving to the Free Contracting Environment, if they chose to bear the additional costs borne by the distributors, the Federal Government’s MP also aimed to establish a tariff charge for when migration occurred.

According to the Secretariat, the charge on the electricity bill due to the water crisis will be borne by all consumers serviced by the affected distributors, except for the portion of the deferrals, which will fall on the consumers of each distributor that obtains financing for that component.

The Union claims that the new federal government decree will ensure the integrity of the entire electrical system, allowing for the injection of resources into the distributors. At the same time, it seeks the possibility that the transfer of the additional costs observed in electricity generation to consumers be made “in a diluted and smooth manner over time.”