Energy Newsletter no 13 – May 2022

HIGHLIGHTS        NEWS       PUBLIC CONSULTATIONS AND PUBLIC HEARINGS       WHAT’S COMING UP

Check out our Energy Newsletter, which gathers information on the main administrative, normative and legal texts related to the regulation of the electricity sector in Brazil.

We are available to assist on any questions and listen to your ideas and suggestions on how we can improve even more.

Enjoy reading!

Demarest Energy and Natural Resources Team


HIGHLIGHTS

Eletrobras: news on the privatization process

After approval of the privatization framework on May 18, 2022, by the Brazilian Federal Audit Court (“TCU”), the Federal Official Gazette of Brazil published Resolution CPPI No. 225/2021, which establishes rules concerning the secondary public stock offering, which will be carried out with shares owned by the Brazilian National Bank for Economic and Social Development (BNDES), in compliance with rules set out in Decree No. 11,028/2022.

Subsequently, on May 27, 2022, Eletrobras filed a claim before the Brazilian Securities and Exchange Commission (“CVM”) to register a public stock offering, upon (i) primary distribution of common shares issued by the Company, to be carried out simultaneously in Brazil and in the United States and (ii) secondary distribution of shares, to be carried out in Brazil through non-organized over-the-counter market (OTC market).

According to the operation’s timetable, the negotiations of B3 shares are scheduled to commence on June 13, 2022.

Read in full – TCU Agreement

Read in full – CPPI Resolution

Read in full – Relevant fact

 

ANEEL publishes notice for Transmission Auction 01/2022

On May 27, 2022, the Brazilian National Electricity Regulatory Agency (“ANEEL”) published the Notice for Auction No. 01/2022-ANEEL, which involves the contracting of concessions for public services of electricity transmission, with facilities located in the states of Acre, Amapá, Amazonas, Bahia, Espírito Santo, Mato Grosso, Mato Grosso do Sul, Minas Gerais, Pará, Rondônia, Santa Catarina, São Paulo and Sergipe.

There will be 13 lots of facilities scheduled to initiate commercial operations in March 2026.

The Annual Revenues (RAP) for the lots range from BRL 16.1 million to BRL 724.7 million.

Interested parties must submit the applications between June 17 and June 20. The Auction is scheduled to be held on June 30.

Read the Notice in full

 

ONS determines priority regulatory topics for 2022

The Brazilian National Electric System Operator (“ONS”) has determined 5 topics as priority for the current year’s regulatory agenda, listed below:

  • demand response;
  • ancillary services;
  • distributed energy resources;
  • pricing and operations; and
  • access to the transmission system.

According to the ONS, “The review was carried out with the purpose of encouraging discussions on the most relevant topics for the modernization of the electricity sector in Brazil, thus ensuring the transition to a four-dimensional (4D) sector framework – digital, decentralized, decarbonized and democratized”.

Read in full

 

NEWS

“Streaming” solar energy trending in Brazil

The idea of using shared solar energy initiated in Germany, through cooperatives or purchase consortia that installed small plants together and shared the energy produced there. Such framework was introduced in Brazil by ANEEL in 2015, due to a realization that the increase in the use of electricity generation had halted due to a lack of capital and technique.

The creation of remote electricity generation gave rise to a subscription modality of solar energy, the so-called “streaming” solar energy.

According to news reported by G1, “around 20 companies currently act in this (shared solar energy) market in Brazil, and Minas Gerais is the state with the strongest presence in distributed generation, which includes other business models, other than the subscription model. In addition to enabling access to solar energy for individuals who pay rent, in apartments or real estate that doesn’t have the appropriate roofing or coverage, the subscription model also waives consumer costs with investment and maintenance of the solar panels.”

Read in full

Additionally, check out our “Distributed Generation Guide”.

 

ANEEL amends rules on the contracting of energy

On April 29, 2022, the Brazilian National Electricity Regulatory Agency (“ANEEL”) published Normative Rule No. 1,018/2022, which improved rules concerning the New Energy Surplus and Deficit Compensation Mechanism (“MCSDEN”), limiting the processing of the Compensation Mechanism. This modality of the MCSDEN is set to be carried out in the months of April and July.

The Rule also addresses contracts from A-6 and A-7 auctions in the compensation mechanism.

Read in full

 

MME establishes guidelines for A-1 and A-2 auctions

On May 23, 2022, the MME published Normative Ordinance No. 45/GM/MME/2022, which establishes the Guidelines for the carrying out the “A-1” and “A-2” Auctions for the Purchase of Electric Energy resulting from new energy generation projects, set to be held in sequence on December 02, 2022.

The electricity traded in the auctions will be an object of the Regulated Market Energy Trading Contracts (“CCEARs”) in the electricity quantity modality. The sellers will bear the resulting costs of hydrological risks in their entirety.

Read in full

 

EPE announces registration of projects in A-5 and A-6 auctions

On May 24, 2022, the Brazilian Energy Research Company (“EPE”) announced the results for applications for the new energy “A-5” and “A-6” auctions in 2022. More than 2,000 projects were registered with the EPE, which add up to around 115 GW in offerings. The auction is scheduled to be held on September 16, 2022.

In addition, the EPE, the ONS and ANEEL published a joint Technical Note (OONS NT 0052/2022 / EPE-DEE-RE-024/2022) establishing the methodology, provisions, criteria and configuration of the electricity framework in order to determine the capacity of flow of facilities belonging to the  Transmission Grid, Other Transmission Facilities (DIT) and Facilities of Exclusive Interest to Generation Plants for Shared Connection (ICG).

Read in full

 

MME establishes provisions on the calculation of physical guarantee for new generation projects

On May 06, 2022, the MME published Normative Ordinance No. 43/GM/MME, which established general provisions concerning the application of a methodology for the calculation of physical guarantee for new Hydroelectric Plants and new Thermoelectric Plants centrally dispatched by the Brazilian National Electric System Operator (“ONS”).

Such provisions encompass configurations concerning reference, topology, Proportionality of Charge, Exchange Limits between Subsystems and Costing of Energy Deficit and Associated Penalties.

Read in full

 

ANEEL publishes rule on the enforcement of a transition rule for generators that participated in energy auctions

On May 30, 2022, ANEEL published Normative Rule No. 1,021/2022, which improves art. 8 of Normative Rule No. 559/2013, which addresses the enforcement of a transition rule for generators that participated in energy auctions.

The rule establishes that commencing from the 2022/2023 tariff cycle, the rules provided for in art. 8 will not apply to generation plants whose established Tariff on the Usage of Transmission Systems (TUST) has been fixed within the terms of Normative Rule No. 267/2007.

Read in full

 

ANEEL and SPU/ME Joint Rule concerning nationalized assets and facilities expropriated through Global Reversion Reserve Funding

On May 31, ANEEL and the Ministry of Economy’s SPU (Department of the Brazilian Government) published Joint Rule No. 6/2022, which regulates art. 3 of Law No. 14,120/221 regarding the alienation, transfer to concessionaires, permit holders or authorized agents of the electricity sector, or transfer to SPU management of goods and facilities that were nationalized and expropriated through Global Reversion Reserve Funding (“RGR”) resources, considered Government Assets under administration.

Read in full

 

Government qualifies energy auctions in the PPI

On May 24, 2022, the Government published Decree No. 11,078/2022, which qualified electricity sector projects and developments connected to the new energy A-4 auction, within the scope of government’s Investment Partnerships Program (PPI). The qualification of projects for the PPI grants them national priority.

Read in full


ANEEL recognizes constrained-off situations in UFVs

On May 30, 2022, ANEEL published Order No. 1407/2022, which partially granted the Administrative Requests of recognition of situations that restrict the operation due to constrained-off events in certain photo voltaic power plants (“UFVs”)

The decision recognizes the right to constrained-off amounts for energy restriction, exclusively within the Regulated Contracting Market (“ACR”), which must not exceed the minimum amount that nullifies the compensation provided for in contracts.

Read in full

 

Water crisis provisional measure expires

Provisional Presidential Decree No. 1,078/2021, which provided for measures aimed at addressing the financial impacts of the water crisis in Brazil on the electricity sector, expired on May 22, 2022, as established by Declaratory Act No. 46/2022 of the President of the National Congress Board.

Read in full

 

ANEEL approves review of sections in the Rules of Electricity Transmission Services

On May 27, 2022, ANEEL published REN No. 1,020/2022, which approves the review of Sections 3 and 4 of the Rules of Electricity Transmission Services, and of Subsections 9.1, 9.2 and 9.7 of the Tariff Regulation Proceedings, of the Electricity Sector Property Control Guide Glossary, and amends Normative Rule ANEEL No. 903/2020, and ANEEL Ordinance No. 3,926/2016.

The rule is a result of discussions carried out during the second phase of Public Consultation No. 30/2020 and is aimed at establishing rules concerning additional maintenance and improvements on electricity transmission facilities.

Read in full

 

MME approves Report on Forced and Programed Outage Rates (TEIF/IP) Reference Amounts of Hydroelectric Plants

On April 29, 2022, the Ministry of Mines and Energy (“MME”) published Normative Ordinance No. 42/GM/MME, which approved the report “Review of Reference Amounts for Forced Outage Rate (TEIF) and Programed Outage Rate (IP) of Hydroelectric Plants – Review 4”, thus updating the reference amounts for such rates. Such reference amounts must be applied to the development of inventory and viability studies, the development of basic projects and the establishment of “physical guarantee” (guaranteed power output) of hydroelectric plants.

Read in full

 

PUBLIC CONSULTATIONS AND PUBLIC HEARINGS

SUBMISSION OF CONTRIBUTIONS (ANEEL) SUBJECT MATTER

CONTRIBUTION TERM

No. 002/2022 Extension of the period for obtaining additional contributions for reviewing the Regulatory Remuneration Base of electricity distributors.

Until June 17, 2022

No. 006/2022 Obtaining contributions for the improvement of the rules concerning the participation, the possibility and/or the requirement of incorporation of Special Purpose Entities in sectoral auctions.

Until June 20, 2022

No. 008/2022 Extension of the period for obtaining contributions for the improvement of the review of Subsection 12.1 of Proret – Review of the Annual Generation Revenue of electricity generation concessionaires.

Until July 25, 2022

 

PUBLIC CONSULTATIONS (ANEEL) SUBJECT MATTER

CONTRIBUTION TERM

No. 017/2022 Obtaining contributions for the consolidation of normative acts concerning the topic of “Production and Trading of Power”.

Until June 03, 2022

No. 021/2022 Obtaining contributions for the improvement of the draft resolution and other attachments that address the possibility of islanding of basic network substations

Until June 02, 2022

No. 022/2022 Obtaining contributions for the improvement of the Trading Rules in compliance with Normative Rule No. 927/2021, which established proceedings and criteria to carry out the assessment and payment of constrained-off operation restrictions of wind power plants.

Until June 24, 2022

No. 023/2022 Obtaining contributions for the approval of Notices of Auctions No. 4/2022-ANEEL (New Energy A-5 Auction) and No. 5/2022-ANEEL (New Energy A-6 Auction), aimed at the contracting of electricity originated from new generation developments.

Until June 27, 2022

No. 024/2022 Obtaining contributions to improve the Draft Notice and Attachments of Auction No. 2/2022-ANEEL (Transmission Auction)

Until June 27, 2022

No. 027/2022 Obtaining contributions for the regulation of the economic subsidy to distribution concessionaires with annual market lower than 350 Gwh provided for in Law No. 14,299, of 2022.

Until July 04, 2022

No. 029/2022 Improving the Rules of Electricity Transmission Services due to Decree No. 11,016/2022, which addresses the Single Registry of Social Programmes of the Federal Government, and No. 11,034/2022, which addresses Customer Service (SAC).

Until July 17, 2022

WHAT’S COMING UP

. June 30, 2022 – Transmission Auction No. 1/2022
Consisting of 13 lots in the states of Minas Gerais, São Paulo, Espirito Santo, Amapá, Bahia, Pará, Rondônia, Mato Grosso, Pará, Santa Catarina, Mato Grosso do Sul, Amazonas and Acre.

Notice: ANEEL

More information here

September 16, 2022 – New Energy Auctions A-5 and A-6
Notice: ANEEL (to be published)

More information here
September 30, 2022 – Auction for contracting reserve capacity, in the form of reserve energy and within the terms of Law No. 14,182/2021
Notice: ANEEL (to be published)

More information here
October/2022 – Auction for Supply of Isolated Systems
Notice: ANEEL (to be published)

More information here
November/2022 – Auction for Contracting Reserve Capacity in the form of power capacity
Notice: ANEEL (to be published)

More information here
December, 2022 – New Energy Auctions A-1 and A-2
Notice: ANEEL (to be published)

More information here
December, 2022 – Transmission Auction No. 2/2022
Notice: ANEEL (to be published)

More information here

 

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This material is for informational purposes only, and should not be used for decision-making purposes. Specific legal advice may be provided by one of our lawyers.