Water crisis MPs undergo changes that will make electricity bills more expensive, experts say – 02/10/2021 – Market

Included Deputy Adolfo Viana (PSDB-BA) in his report on MP (Provisional Measure) for the Water Crisis Extension of support for coal-fired power plants and other measures to specific sectors which, according to entities and experts, should increase the cost of energy in the country.

Abrace (Association of Large Industrial Energy Consumers and Free Consumers) estimates that the cost transferred to the electricity bill will be R$46.5 billion.

In the parlance of Congress, peculiar modifications to the main subject of the MP are called – as the MP did – “turtles”.

Viana submitted its report on Friday (1). The text published by President Jair Bolsonaro (non-partisan) at the end of June is already in effect. For the amendments made by a congressman to take effect, the representative must be voted on by the House of Representatives and the Senate.

The main point of the MP is the creation of the CREG (Exceptional Rules Chamber for Hydropower Management), an emergency electrical system monitoring group led by the Ministry of Mines and Energy.

The aim of the Chamber is to ensure a faster and more effective government response to Dealing with the water crisis.

The commission was authorized to decide on the level of water flow in hydroelectric reservoirs, a kind of A procedure that was previously dependent on agency approval Such as Ibama (Brazilian Institute for the Environment and Renewable Natural Resources) and ANA (National Agency for Water and Sanitation).

In his report, Fianna included an apparatus that practically grants more powers to the President of the Republic.

The change, in cases of water scarcity, allows the Chief Executive to establish a CREG at any time by decree and to fix its term.

The decree can only be amended if ANA reports a shortage situation or upon the recommendation of the entity’s CMSE (Committee on Electricity Monitoring).

According to the original text edited by Bolsonaro, the term of the emergency group was expected to expire on December 30, 2021.

The congressman also confirmed that CREG would be eligible to promote awareness-raising actions on voluntary reductions in energy consumption.

Sector entities criticized parts of the Fiana An report Dealing with benefits and subsidies for specific segments. These implications made by the MP are not related to the emergency group monitoring the electrical system.

Viana added in the text, for example, the expansion of subsidies for energy production from mineral coal. According to the new wording, the resource use term from CDE (Energy Development Account) to promote this fuel has been extended from 2027 to 2035.

He stated as a condition that the benefit would be valid only for thermal power plants which, from 2028, would replace coal with biomass.

Viana also welcomed the amendment that allows gas pipeline installation costs to be reduced in the electricity sector transmission costs.

Ana Carla Petti, President of MegaWhat Consultoria, explains that the amendment specifies that the cost of these new gas pipelines must occur through transmission system usage tariffs, which are paid by consumers and generators.

It also considered that defining the president’s competence “to establish and determine the term of the National Coordination Committee by decree is important because it speeds up this process.”

Paulo Pedrosa, of APRES (Association of Large Industrial Energy Consumers and Free Consumers), criticized the inclusion of “turtles”.

The prospect of an opinion bringing so much cost to society to vote without transparency and without debate is impressive. With discussion, it will become clear that these new inclusions are harmful to consumers and society. More than half of our energy is already allocated to additional costs that are not part of the energy chain. This takes away from the country’s development,” he says.

The rapporteur also extended the deadline for generators to decide on renewing Proinfa (incentive program for alternative sources of electric power).

Edvaldo Santana, a former Aneel director who specializes in energy, agrees that the actions in the report should raise the price of electricity.

“The consumer will pay, in addition to energy consumption, to build gas pipelines that supply thermal power plants through tariffs. This tends to distort the resource matrix,” he says.

Regarding the extension of Proinfa, the specialist says that the contract should be made through auction, as it creates a reserve in the market.

By placing various “turtles” in his report, Viana attempts to replicate the strategy adopted by Congress during Parliament’s vote to privatize Eletrobras. By the way, deputies I was able to include modifications that were not in the original version of the project.

According to associations in the electricity sector, the changes made to Eletrobras MP will make power generation more expensive in the coming years. The government refutes the thesis and says that despite the amendments to the House of Representatives there will be a reduction in the cost of energy.

Embrace estimates the additional costs will be from billionaires.

When contracting for capacity reserve, for example, the cost of gas pipelines can be incorporated into the cost of the power transmission system. In this case, the increase in generators and consumers should reach 33.2 billion R$ for 15 years of operation.

The extension of domestic coal subsidies, which will expire in 2027 and extend through 2035, will create an additional R$2.8 billion account in CDE.

The entity also evaluated another point: the SHP market reserve of MP Eletrobras. There will be an increase in the term of contracts from 20 to 25 years. Given fees and taxes, the increase will be R$700 million.

An extension of Proinfa (Incentive Program for Alternative Sources of Electric Energy) for 20 years was also evaluated. The impact will be R$8 billion. Since it would be possible to increase power delivery at constant prices, without competition, Abrace estimated that for every 10% increase in power delivery, Proinfa’s cost would increase by R$1.9 billion.

Representative Adolfo Viana sought not to respond to his calls a sheet.