ANA launches public consultation to propose regulatory standard for water supply and sanitation service tariffs

Brazil’s National Water and Sanitation Agency (ANA) has opened a public consultation, available until July 7, 2025, regarding a proposed regulatory standard (NR) addressing tariff structures and social tariffs for public water supply and sanitation services.

This initiative aims to regulate Federal Law No. 14,989/2024, which had already established general parameters for identifying users eligible for the social tariff and mandated the economic-financial rebalancing of existing contracts.

Key provisions of the draft regulation

• Water supply tariffs
  The proposed structure divides tariffs into “fixed” and “variable”. The variable tariff must be tiered according to increasing consumption. For the fixed component, the regulation recommends that it be differentiated according to user category and gradual adoption of a basic tariff, without establishing a minimum consumption.

• Sanitation tariffs
  Tariffs should reflect the costs of service provision and maintenance, as well as economic incentives for connection and access expansion. Tariffs can be fully charged provided that at least sewage collection and transport services have been provided.

• Social tariff
  The standard proposes a 50% discount on the water supply tariff cost per cubic meter water supply tariff, capped at a 15 m³ consumption, which applies to users whose per capita income does not exceed half the minimum wage and meet the criteria established in Article 2 of Law No. 14,898/2024. Eligibility will be automatically determined by the service provider based on the federal CadÚnico registry, with updates recommended at intervals not exceeding six months.

• Economic-financial rebalancing
  The efficient implementation of the social tariff is subject to prior economic-financial rebalancing of contracts, including in cases of direct service provision. This process must be monitored by the competent subnational regulatory authority, which will assess the actual granting of benefits and the resulting impact on the provider’s revenue.

Despite this factor, the draft regulation brings legal uncertainty, as it fails to provide for automatic rebalancing or a transition framework for standardizing existing contracts, which often already include specific provisions regarding eligibility, data updates, and rebalancing mechanisms.

Article 6, paragraph 2 of Law No. 14,898/2024, encourages regulatory entities to create subcategories for vulnerable residential users, considering local specificities. This may further complicate discussions regarding eligibility criteria for social tariffs.

For example, concession contracts in the states of Piauí and Pará define eligibility based on property characteristics (such as size and construction materials) and age groups, which affects the calculation for maintaining contractual balance.

In turn, upcoming tenders for the next semester in states such as Pernambuco and Rondônia provide for risk sharing related to demand fluctuations caused by social tariff eligibility, but lack clear definitions for eligibility criteria and economic-financial rebalancing procedures, potentially affecting the attractiveness of these projects.

Although Article 40 of the law stipulates that rebalancing must precede the implementation of social tariffs in existing contracts, the draft regulation does not delve into the budgetary implications of this requirement. While the regulatory impact analysis suggests cross-subsidies as a mitigation strategy, several sectors may struggle to absorb the additional costs.

Despite these challenges, the proposal aligns with the ANA’s targets of establishing a national tariff structure and implementing a social tariff framework. It complements an ongoing effort to improve regulatory consistency, promote universal service provision, and ensure the financial sustainability of public basic sanitation services.

Demarest’s Public and Regulatory Law and Infrastructure and Project Finance teams at Demarest are monitoring this matter closely and remain available to provide further legal advice and clarifications.