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Companies Want to Exclude Gas Transportation Costs from Selection Criteria in Capacity Auctions, Which Could Generate Market Distortions and Directly Pass Losses to the End Consumer.
Natural gas transporters are mobilized to change the rules of the upcoming Capacity Reserve Auction (LRCAP), suggesting the application of the pass-through model for gas transportation costs.
In practice, this would allow these expenses to be removed from the competitive calculation of the auctions and charged directly to consumers after the contracting of the plants, without prior analysis of their economic adequacy.
If this proposal is approved, residential and industrial consumers could be penalized with significantly higher tariffs, while the transporters would be shielded from financial risks and incentivized to maintain inefficient cost structures.
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How Does the Pass-Through Model Work in the Natural Gas Sector?
Pass-through is a strategy that fully transfers certain operating costs — in this case, natural gas transportation — to the tariff paid by the consumer, without these values passing through the filter of competition or efficiency control mechanisms.
This practice has been heavily criticized by industry experts, who warn of the negative impacts on competitiveness and tariff fairness.
By excluding transportation costs from the proposal selection process in auctions, the mechanism would create an artificial advantage for companies that use the current infrastructure, even if it is obsolete or fully depreciated.
As analysts have warned, “the proposal represents a dangerous regulatory setback in the infrastructure sector. Instead of promoting efficiency and balance among agents in the energy chain, this model directly transfers the economic risk from transporters to the end consumer, in a distorted logic that rewards inefficiency and penalizes the citizen’s wallet,” reveals Aurélio Amaral, director of External Relations and Communication at Eneva and former director of the National Agency of Petroleum, Natural Gas and Biofuels (ANP).
High Tariff, Stalled Review, and High Profits
Since 2014, the National Agency of Petroleum, Natural Gas and Biofuels (ANP) has mandated that gas transporters carry out tariff reviews every five years.
The objective is to update the values based on the depreciation of assets, removing from the calculation base structures that have already been amortized.
Currently, about 80% of the assets used in natural gas transportation are already amortized. Even so, only one of the three largest transporters has carried out the mandated review, keeping the tariffs artificially high. The expectation was that, with the correct update, the charged values would decrease by up to 40%.
Meanwhile, these companies operate with profit margins that can reach 90%, raising questions about the real need to pass costs onto consumers through the pass-through.
Billion-Dollar Impact on Tariffs with Pass-Through and Risk of Distortion in Auctions
Preliminary calculations show that if the pass-through is accepted as part of the LRCAP, consumers could bear an additional cost of up to R$ 3.8 billion per year on their energy bills. This amount is close to the annual budget of the social tariff program for low-income families.
In addition to the economic issue, the proposal represents a threat to market logic. By allowing ventures to ignore transportation costs in their offers, false competitiveness is created.
Projects that depend on the gas grid end up being favored, even if there are cheaper or more efficient alternatives outside the current infrastructure.
It is important to highlight that natural gas transportation, although operated by private companies, constitutes a federal monopoly, authorized but not granted.
This means that there is no legal provision for automatic financial return guarantee — only remuneration for the service actually provided.
Alternative Solutions and the Role of the State
Today, several thermoelectric plants in operation in Brazil are supplied by logistical solutions that do not depend on the traditional transportation network, often with better results in terms of cost and flexibility.
The last major plant connected to the grid was the UTE Baixada Fluminense, inaugurated over a decade ago.
The pass-through proposal, therefore, reinforces an outdated model that favors stagnation and penalizes users of the electric system.
Instead of encouraging investment and modernization, it transfers to the consumer the responsibility for maintaining an inefficient infrastructure with guaranteed returns to the operating companies.
With information from the website Eixos
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