ANEEL publishes Resolution that establishes the conditions for the creation of a Pilot Project of the Demand Response Program

 

 

On December 1st, 2017, Brazilian National Electricity Regulatory Agency (“ANEEL”) published Resolution No. 792/2017 (“RES No. 792/2017”), for the purpose of regulating and establishing the general conditions for implementation of the Pilot Project of the Demand Response Program.

RES No. 792/2017 is the result of the Public Hearing No. 43/2017, which received 114 contributions of the agents and institutions in the period from August, 23rd, 2017 to October, 7th, 2017.

In this first stage, the program will be temporary and shall remain in force until June, 30th,2019, in which ANEEL will evaluate its effectiveness for subsequent adoption of the Demand Response mechanism permanently throughout the national territory.

In accordance with article 2, item I of RES No. 792/2017, the Demand Response is defined as the reduction of the consumption of previously qualified consumers, as an alternative resource to the thermoelectric dispatch outside the order of merit.

The Demand Response mechanism aims, among other things, to reduce total energy consumption, eliminate the dispatch of high cost of power plants to meet peak demands and monitor the availability of renewable power sources, increasing overall system reliability.

The following may be eligible to participate in the program: (i) Free Consumers; (ii) Partially Free Consumers, at the limit of the portion of their free consumption; (iii) Consumers served directly by the São Francisco Hydroelectric Company (“CHESF”); and (iv) Agents participating in the Electric Power Trading Chamber (“CCEE”), as aggregators of the loads of these consumers (i.e. power traders), connected in the supervision power grids of the National Electric System Operator (“ONS”) and located in the North and Northeast subsystems. The request to participate can be made throughout the whole duration of the program.

The adhesion of the consumers will be formalized by the execution of an Ancillary Services Agreement (“CPSA”) with the ONS.

The eligible consumers will have to deliver to ONS their price offers and amount of power to be reduced weekly, by 12:00 noon on Thursdays and by 12:00 noon of the day before the dispatch, consumers will have to confirm their availability to effectively reduce demand.

The choice of Thursday as the deadline for the submission of price offers and amount of reduction was due to the fact that the Settlement Price of the Differences (“PLD”) is published every Friday. Thereby, ANEEL wishes to avoid price offers made by taking only the PLD as a parameter and to encourage these offers to consider the costs inherent in the industrial processes.

The offers will consist of products with a duration of demand reduction in 1 (one), 2 (two), 3 (three), 4 (four) or 7 (seven) hours, with a standard volume of 1 average MW and 5MW minimum batch average, with two types of prior notice:

(i)        D-1 (day-ahead): until 6:00 pm the day before the order, in case of order on the following day; or

(i)        D-0 (intraday): until 9:00 am on the day of dispatch, in case of dispatch on the same day.

ONS shall issue the orders for the reduction of demand whenever the total cost of operation, considering these orders, is less than the total cost of operation with the thermoelectric dispatch outside the order of merit.

The remuneration of these consumers for the reduction of consumption will consider the price offered by each qualified agent and the PLD

If the consumer’s offer is less than or equal to the PLD, the remuneration will be made through the financial settlement of the consumer’s positive exposure in the Short-Term Market (“MCP”). On the other hand, if the offer is greater than the PLD, the remuneration will be made both through the settlement of the MCP and the payment of the System Service Charge (“ESS”), which will be divided among the agents that would support the costs of the dispatches of thermoelectric plants, and the ESS part should be calculated considering the difference between the offer price and the PLD.

The amount of demand reduction will be measured by the CCEE considering the hourly difference between the consumption verified and the consumer consumption baseline, with safety margins (upper and lower margins) to prevent consumers from gaining without having actually reduced their demand, or by only displacing its consumption schedule, which would distort the purposes of the program.

Finally, ONS and CCEE shall publish, within 30 days from the date of publication of the RES No. 792/2017, the Provisional Operational Routine and the Marketing Procedures and Guidelines that will detail the conditions and criteria set forth in RES No. 792/2017 and shall prepare reports and disclose information about the program, such as the hourly dispatch schedule for demand reduction and the amounts paid to consumers participating in the program, among others.

For further clarification on the contents of this memorandum, contact:

[vc_row][vc_column width=”1/3″]

Rosi Costa Barros
rosi.barros@nbfa.com.br
(11) 3707-8370

[/vc_column][vc_column width=”1/3″]

William de Figueiredo Lins Junior
william.lins@nbfa.com.br
(11) 3707-8370

[/vc_column][vc_column width=”1/3″]

Luisa Tortolano Barreto
luisa.barreto@nbfa.com.br
(11) 3707-8370

[/vc_column][/vc_row] [mk_divider style=”single_dotted”]

This memorandum has been prepared solely for the clients of this firm and aims at informing major changes and news of interest in the legal field. In the event of doubts, the lawyers will be at your complete disposal for further clarification..
[mk_divider style=”single_dotted”]
The information included in this Newsletter is intended to provide the clients of our firm with general updates and does not constitute a legal opinion or professional advice in relation to any specific matter, present or future that our firm is or might be currently involved with. The English version of this Newsletter is a free translation from Portuguese.
2017 NBF|A Advogados. All rights reserved. The exploitation, reproduction, private or public distribution, total or partial modification are prohibited without prior written consent from NBF|A Advogados.