Energy Newsletter no 14 – June 2022

HIGHLIGHTS          NEWS          CONSULTATIONS AND 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

MME sets guidelines for Reserve Capacity Auction in the form of Energy

On June 24, 2022, the Ministry of Mines and Energy (“MME”) published Normative Ordinance No. 46/GM/MME, which establishes the guidelines to hold the auction for Energy Reserve Contracts resulting from natural gas-based thermoelectric projects, in the modality of availability, in accordance with art. 20 of Law No. 14,182/2021, named “Reserve Capacity Auction in the form of Energy, 2022” 

The auction will be held on September 30, 2022.

It is important to highlight that 1MW will be contracted in the North Region, with supply expected to commence on December 31, 2026, and 1 MW in the Northeast Region, with supply expected to begin on December 31, 2027.

Read in full

 

Law establishes limits for ICMS levy on electricity

On June 23, 2022, Supplementary Law No. 194/2022 was published, limiting the application of rates on the State Tax on Circulation of Goods and Services (“ICMS”) for electricity. The Law provides that electricity (in addition to fuels and natural gas) is an essential and indispensable service and good.

Accordingly, the Law:

  • prohibits the fixation of tax rates on operations belonging to a higher tier than operations in general, given the importance of goods and services;
  • allocates to the competent governmental entity the application of reduced tax rates about such goods, to benefit consumers in general; and
  • prohibits the fixation of reduced tax rates for fuels, power, and natural gas, at a percentage higher than the tax rate currently in force at the time of publication of the Law.

The measure is an effect of the spike in fuel and electricity prices in Brazil.

Read in full

 

Law provides that distributors return overpaid taxes

On June 28, 2022, Law No. 11,385/2022 was published, amending Law No. 9,427/1996, to provide for the return of taxes that were overpaid to electricity distributors.

The Law includes in the list of attributions of the Brazilian Electricity Regulatory Agency’s (“ANEEL”) the task of carrying out, on its own initiative, the full allocation (in benefit of users of public services affected in the respective area of concession or permission) of amounts subject to recovery of undue payments by electricity distributors due to overpayment, on the occasion of normative amendments or legal and administrative rulings that establish the reduction of such taxes, except for taxes levied on income and profits.

The full allocation will occur throughout the tariff proceedings and ANEEL must carry out an extraordinary tariff review to complete such allocation,  under legal decisions rendered before the new Law enters into force.   

Read in full

NEWS

ANEEL opens Public Consultation to address involuntary over-contracting and sale of GD surplus

On June 2, 2022, ANEEL opened Public Consultation No. 031/2022, which aims to regulate articles 21 and 24 of Law No. 14,300/2022, Legal Framework for Distributed Microgeneration and Minigeneration (“GD”).  The provisions address the involuntary over-contracting and sale of surplus resulting from the distributed microgeneration (micro GD) and minigeneration system (mini GD).

The exposure and involuntary over-contracting amounts will be assessed and ratified by ANEEL for each calendar year, following the accounting of operations involving the purchase and sale of electricity during December of each year. As a proposal for the Public Consultation, ANEEL recommends that the calculation of the total estimated generation in the charge of distribution agents be carried out (i) based on measured amounts, if there is no charge connected to the project; or (ii) based on the installed power of consumers’ generation equipment.

Regarding the trading of energy surplus, distributors must carry out the registration of parties interested in purchasing surplus through public consultations.

If the generation equipment is located at the same site of the charge, the electricity surplus will be defined as the positive difference between the injected electricity and the electricity consumed by the consumer unit with micro or mini GD of consumer-generator ownership. Meanwhile, for projects that have several consumer units or shared generation, electricity surplus can be defined as the entire amount of generated electricity or electricity injected into the distribution network, based on a pre-established generation percentage to be applied to the trading of surplus energy.

Read in full

 

ANEEL publishes rule including new versions of PRORET

On June 09, 2022, ANEEL published Normative Rule No. 1022/2022, approving new versions of Subsections 9.1 and 9.2 of the Tariff Regulation Proceedings (“PRORET”), which apply to public electricity transmission services.

The Rule is a result of Public Consultation No. 64/2021 and it is aimed at setting the methodology and reference amount for collection and sharing of productivity and business efficiency profits collected by transmission concessionaires with users of the National Interconnected System (“SIN”). Transmission concessionaires subject to such methodology are those (i) whose public bidding was held after 2008; and (ii) whose concession contracts were extended by Law No. 12,783/2013.

Read in full

 

ANEEL publishes a preliminary study on Distributed Energy Resources

Following several contributions from sector agents, ANEEL published the analysis of contributions received in Public Contribution Collection No. 11/2021, regarding proposals of regulatory frameworks for the inclusion of Distributed energy resources, including demand response, virtual power plants and micro-networks.

Among highlighted topics of the contributions are: the implementation of intelligent measuring equipment, adoption of hourly tariffs, opening to the free market, inclusion of energy storage, among others.

Read in full

 

ANEEL approves temporary methodology for UFVs constrained-off

On June 21, 2022, ANEEL approved a temporary methodology for the calculation of constrained-off due to the energy restriction of photovoltaic plants (“UFVs”). The methodology will take into consideration the installed power of the plant in proportion to the amount of physical guarantee negotiated within the Regulated Contracting Market (“ACR”), multiplied by the restriction period, and subtracted from any eventual generation accomplished by the plant during such period. Such proceedings will be followed until the matter, which is in the Agency’s Regulatory Agenda, is regulated.

Read in full

 

CNPE approves governance of the National Hydrogen Program

On June 23, 2023, the Brazilian National Council for Energy Policy (“CNPE”) approved a resolution on the National Hydrogen Program (PNH2) in Brazil. As announced by the MME, “PNH2 governance counts on a management committee that will provide strategic guidelines to be implemented following the structuring of thematic chambers. Through extensive participation of government and private agents, such chambers will encourage discussions between all agents of the sector. Following the publication of the resolution, the next steps include the setup of meetings among the management committee and thematic chambers, along with the establishment of a tri-annual plan”.

Read in full

 

MME opens Public Consultation on the valuation of Costs and Benefits of micro and mini GD

On June 23, 2022, the MME opened a Public Consultation to obtain contributions on the concept proposal for guidelines concerning the valuation of costs and benefits of micro and mini Distributed Generation (“GD”). Such guidelines are still pending regulation, provided for in art. 1, Paragraph 2 of Law No. 14,300/2022, Legal Framework for Distributed Microgeneration and Minigeneration.

The Technical Note introduced in the public call highlights, among others, the following guidelines to be adopted by ANEEL for the valuation of costs and benefits of micro and mini GD:

  • take into consideration the effects of the need for expansion of distribution, transmission, centralized generation and ancillary services;
  • take into consideration the effects of losses in electricity networks;
  • take into consideration the effects of sector fees and tariffs allocated to other consumers.

Read in full

 

ANEEL amends the PRORET subsection

On June 27, 2022, ANEEL published Normative Rule No. 1023/2022, amending submodule 2.1-A of the Tariff Regulation Proceedings (“PRORET”), which addresses the Periodic Tariff Review of Distribution Concessionaires. The amendment establishes that “a reference market consists of electricity amounts, power demand and use of the distribution system, invoiced during the Reference Period.

Such change results from an appeal filed by distributor Cope-D, following its tariff review versus the tariff calculation system. By suggesting the amendment, it was ANEEL’s understanding that “this model of procedure aims to eliminate conflicts between the internal regulation and clauses contained in the new contract amendment, clarifying that, for calculation of the required revenue, the reference market must consist of the invoiced market volume, regardless of the consumption type.

Read in full

 

Decree extends deadlines for programs “LUZ PARA TODOS” and “Mais Luz para a Amazônia

On June 30, 2022, Decree No. 11,111/2022 was published, amending:

  • Decree No. 7,520/2011, which implemented the Brazilian National Program for Universalization of Access and Use of Electricity – (LUZ PARA TODOS – Light For All)
  • Decree No. 10,221/2020, which implemented the Brazilian National Program for Universalization of Access and Use of Electricity in the Legal Amazon (in Portuguese, Amazônia LegalMais Luz para a Amazônia – More Light for the Amazon).

The innovations allowed the extension of the program LUZ PARA TODOS until 2026, and the extension of the program “Mais Luz para a Amazônia” until 2030. Such programs, whose expiration was expected for 2022, are aimed at the universalization of access and use of electricity in Brazil.

Read in full

 

ANEEL sets rules on TUST and TUSDg Locational Signal

On June 30, 2022, Normative Rule No. 1024/2022, which resulted from the second phase of Public Consultation No. 39/2021, aimed at establishing rules on the Locational Signal of the Tariffs on the Usage of Transition Systems (“TUST”) and of the Tariffs on the Usage of Distribution Systems for generation facilities connected in 88kV and 139 kV (“TUSDg”), and at the approval of Subsections 7.4, 9.4 and 10.5 of the Tariff Regulation Proceedings.

The purpose of the locational signal is to flag the entry of new users, enable the implementation of their projects and encourage the rationalization of the use of systems and mitigation of expansion costs; and assess the current landscape of costs, to ensure that those who most encumber the system be subject to higher taxes.

Read in full

 

PUBLIC CONSULTATIONS AND HEARINGS

SUBMISSION OF CONTRIBUTIONS (ANEEL) SUBJECT MATTER

CONTRIBUTION TERM

No. 8/2022 Improvement of Subsection 12.1 PRORET review – Review of the Annual Generation Revenue of electricity generation concessionaires.

Until July 25, 2022

No. 9/2022 Update the procedural document of Subsection 7.3 of the Network Proceedings due to changes in the Electricity Transmission Facilities Database (“BDIT”).

Until July 14, 2022

No. 10/2022 Regulation proposal of criteria regarding the installment payment plan for penalties, fines and amounts in default of the Reserve Energy Trust (“EER”) within the scope of the Electric Energy Trading Chamber (“CCEE”).

Until August 1, 2022

No. 11/2022 Improvement of new versions of subsections 2.3, 2.9, 2.10, 2.12, 2.14, 7.1, 7.2, 7.13, 8.1 and 8.3 of the Network Proceedings.

Until August 8, 2022

 

PUBLIC CONSULTATIONS (ANEEL) SUBJECT MATTER

CONTRIBUTION TERM

No. 27/2022 Regulation about the economic subsidy to distribution concessionaires with an annual market lower than 350 Gwh provided for in Law No. 14,299, of 2022.

Until July 04, 2022

No. 29/2022 Improvement of the Rules of Electricity Transmission Services due to Decrees No. 11,016/2022, which addresses the Single Register for Social Programs of the Federal Government, and No. 11,034/2022, which addresses Customer Service (SAC).

Until July 17, 2022

No. 31/2022 Regulation of articles 21 and 24 of Law No. 14,300/2022, which address the involuntary over-contracting and sale of surplus from distributed microgeneration and minigeneration framework.

Until July 18, 2022

No. 32/2022 Draft Notice and Annexes of Existing Energy Auctions “A-1” and “A-2”, of 2022

Until August 02, 2022

No. 33/2022 Regulation on the sharing of Transmission Facilities

Until August 05, 2022

No. 34/2022 Supplementary regulation of item I, art. 4 of Law No. 14,182/2021, which addresses operational matters, including proration and tariff treatment rules, related to contributions to be paid by Eletrobras or its subsidiaries to the Energy Development Fund (“CDE”), corresponding to 50% of the amount added to the concession through new energy contracts. 

Until August 05, 2022

 

PUBLIC CONSULTATIONS (ANEEL) SUBJECT MATTER

CONTRIBUTION TERM

No. 128/2022 Technical documentation of the Methodology Work Group of the Permanent Commission for Analysis of Methodologies and Computing Programs of the Electricity Sector (“CPAMP”), including topics for the next cycles of activities, such as Variable Energy Sources, hybrid NEWAVE, Hydraulic Unit Commitment, among others.

Until July 09, 2022

No. 129/2022 Conceptual Guidelines Proposal for the Valuation of Costs and Benefits of Distributed Microgeneration and Minigeneration, as provided for in paragraph 2, art. 17 of Law No. 14,300/2022

Until July 03, 2022

No. 130/2022 Amendment to Ordinance No. 29/GM/MME/2021, regarding the commencement of permanent anemometric and climatological measuring proceedings at wind power plants.

Until July 14, 2022

WHAT’S COMING UP

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 under 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.

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