Energy distributors await MP with BRL 15 billion in financing for this month

Energy distributors await for this month of November a possible provisional measure that may grant loans to the sector, in order to cover the costs of activating thermoelectric plants during the water crisis.

According to the president of the Brazilian Association of Electric Energy Distributors (Abradee), Marcos Madureira, this is the schedule released by the federal government, with the expected release of funds in January 2022.

Companies argue that loans are necessary to balance finances and prevent the transfer of an average 20% increase in electricity bills. The expectation is that around R$ 15 billion in financing will be approved.

As for the Consumer Defense Institute (Idec), the measure is seen with concern, as the bill would be paid by small consumers, who already cover the resources granted in 2020.

If it does, it would be the second relief program in two years. In 2020, the so-called Conta-Covid granted financing to compensate for the loss of revenue in the pandemic and to avoid adjustments.

“This amount may be a little higher depending on how the thermal dispatches are going to be carried out from now on. We have reduced the dispatch of the most expensive ones, but there are some other issues, such as the consumer bonus program, which will have payment in January”, pointed out Marcos Madureira, president of Abradee.

According to Madureira, the billionaire mismatch has the combination of sanitary and water crises as a cause. He explains that, in 2020, due to the social effects of the Covid-19 pandemic, most of the year passed without raising the tariff flag, even with the activation of thermoelectric plants, which left a loss of R$ 3 billion.

This year, due to the lack of rain, the demand for thermoelectric plants grew exponentially, which culminated in the tariff flag of water scarcity as of September.

“The flag was launched and not enough was done to cover these differences. We had to ship a much larger volume of thermal plants, we increased energy imports from Uruguay and Argentina, and programs to encourage the free market. […] And the costs of commodities (such as coal) raised the costs of generation even more”, stated the president of Abradee.

Therefore, distributors are waiting for a possible MP from the Ministry of Mines and Energy and believe they will have more details about the financing rules this week.

The agreement also involves the Ministry of Economy, the National Bank for Social Development (BNDES) and the National Electric Energy Agency (Aneel). If the MP leaves the paper, the increase in the electricity bill would be avoided in the middle of an election year.

Consumer Defense Institute is against funding

In a statement, the coordinator of Idec’s Energy and Sustainability Program, Clauber Leite, believes that the electricity sector needs to modernize so that the pricing model reflects production conditions and that each agent responds to the risks of the activity.

“The consumer has barely started to pay the Covid-Account and will already have to take on a new loan. In the current situation, the electricity sector is looking like a super-indebted consumer who, instead of solving the root of the problems, continues to buy superfluous purchases”, he pointed out.

Leite also argues that the decision is more serious due to the worsening social conditions in the country.

“Brazilians already pay one of the highest tariffs in the world and nothing has been done to reduce them, only palliative measures to postpone any cost transfers. The fact is that the sector’s risks continue to be passed on only to captive consumers, as well as the costs of sectorial inefficiencies, in addition to excessive charges. All of this also needed to be revised so that tariffs could be reduced”, he defends.

For Idec, the government’s current strategy to contain readjustments means energy rationing via prices.

A CNN sought contact with the Ministry of Mines and Energy and is awaiting feedback on demand from distributors and Idec’s position.