On November 30, 2017, the National Electric Energy Agency (“ANEEL”) started Public Hearing No. 70/2017, with the purpose of obtaining support for the creation of a Mechanism of Sale of the Surplus Electric Power (“Mechanism”) by electric power distribution concessionaires (“Distributors”).
The creation of this Mechanism aims to regulate the provisions of §13 of art.4th of Law No. 9,074/1995[1] and of art. 47-A of Decree No. 51.163/2004[2], which authorized the sale of power surpluses by Distributors.
The Public Hearing No. 70/2017 will have two stages. In the first stage, which will take place between November 30th, 2017 and January 1st, 2018, contributions will be accepted in relation to the creation of the Mechanism, to the proposal of amendment of Resolution No. 693/2015[3] (“RES No 693/2015”) and to the revocation of Resolution No. 711/2016[4] (“RES No. 711/2016”). In the second stage, which will take place between January 18th, 2018 and February 01st, 2018, the interested parties will have the opportunity to express their views regarding the contributions received in the first stage.
In accordance with Technical Note No. 199/2017-SRM/ANEEL, made available under Public Hearing No. 70/2017, the Distributors will be able sell their electric power surpluses to: (i) free consumers; (ii) power traders; (iii) concessionaires, power permitted or authorized companies; and (iv) self-producers. The sale of the Surplus Electric Power will be centralized by the Electric Energy Trade Chamber (“CCEE”), with the objective of stimulating the competitiveness of potential power buyers.
Pursuant to the draft Resolution submitted to the Public Hearing, the Mechanism will be processed:
(i) annually, after the processing of the New Energy Leftovers and Deficit Compensation Mechanism, with effect from January to December of the following year the Mechanism; and
(ii) biannually, with effect from July to December of the year of the Mechanism.
It shall be incumbent upon each Distributor, at its own risk, to voluntarily declare any excess of electric power to participate in the Mechanism, up to a limit of 10% (ten percent) of its cargo, calculated in the period of 12 (twelve) months prior to the effecting of the Mechanism. This way, ANEEL wants to avoid reckless behavior on the part of the Distributors, which have the potential to jeopardize the fulfillment of consumer demand.
In relation to price for the sale of these surpluses, the ANEEL submitted for discussion two proposals: (i) definition of a minimum price for sale; and (ii) definition of the price by the Distributors themselves. The ANEEL’s technical department considers that the second alternative is the most viable, as it is the Distributors’ responsibility to manage their contracts.
The accounting and liquidation of these contracts will be carried out by CCEE, similarly to the liquidation of the Short-Term Market. However, such accounting and liquidation will occur prior to the accounting and liquidation of the Short-Term Market.
In case of default in the liquidation of the Mechanism, the registration of the contract will not be effected by CCEE and the defaulting buyer will be prevented from participating in new processes for the purchase of surplus electric power from the Distributors for period of 2 (two) years, without prejudice to applicable the others penalties.
In addition, the Public Hearing No. 70/2017 also intends to amend the RES No. 693/2015 and propose the revocation of RES No. 711/2016.
In relation to changes suggested in RES No. 693/2015, ANEEL observed that most of the generators that participated in the New Power Leftovers and Deficit Compensation Mechanism, carried out until then have power plants that are already in commercial operation. Therefore, ANEEL verified that these plants have disengaged their electric power in order to benefit from a possible increase in the Settlement Price of the Differences or to sell their electric power in the Free Contracting Environment, at the most attractive prices, distorting, according to ANEEL’s understanding, the purpose of the norm, which was the disengagement of plants that could not deliver the power sold. Thus, the proposed amendments aim at correcting such distortions.
Moreover, the suggestion of revocation of RES No. 711/2016 derives from the fact that ANEEL understands that the Mechanism of Sale of the Surplus Electric Energy, together with the other existing mechanisms (Leftovers and Deficit Compensation Mechanism existing and New Energy Deficits and Deficit Compensation Mechanism), are sufficient for the Distributors to manage their contractual portfolios, it being no longer necessary that bilateral agreements are entered into between the parties in Power Sale Contracts in the Regulated Environment so that Distributors can reduce their levels of over contracting.
Finally, ANEEL proposed that the agents who renegotiated the hydrological risk, under the terms of Brazilian Law No. 13.203/2015, be barred from offering to reduce the amounts of power that were subject to renegotiation.
This is due to the fact that all the financial and hydrological risk associated with this renegotiated power is already allocated to consumers. Thus, if these agents can reduce those amounts of power that were subject to renegotiation, consumers would be harmed because they would be undertaking the financial impacts of a power that is not being allocated to them. In turn, according to ANEEL, the generators would gain twice, since they are not taking the hydrological and financial risks of the power that was renegotiated and could also resell that energy that was subject to a reduction in Free Contracting Environment at prices above the respective regulated contract.
Therefore, in order to avoid any abusive behavior of the agents during the execution of Public Hearing No. 70/2017, ANEEL published Order No. 4,008/2017, in which it determines to the CCEE that, from December 28th, 2017 until the discussions of the Public Hearing No. 070/2017 are completed, CCE (i) effect new registrations of bilateral agreements under RES No. 711/2016; and (ii) shall not allow total or partial, temporary or permanent reduction, under RES No. 693/2015, of contracts regulated by Resolution No. 684/2015.
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¹ Art. 4th […]
§ 13. The concessionaires of the public electricity distribution service may, according to ANEEL’s regulation, negotiate with consumers mentioned in arts. 15 and 16 of this Law, except for the provisions of item III of § 5th, contracts for the sale of electric power backed by the excess energy contracted to serve the entire market.
² The distribution agents may negotiate, in the Free Contracting Environment, electric power sale contracts backed by excess power contracted to cover the entire market. (Included by Decree No. 9,143, dated 2017)
³ Regulates the New Energy Deficits and Deficit Compensation Mechanism
4 Establishes the criteria and conditions for the conclusion of bilateral agreements between the signatory parties of Power Sale Contracts in Regulated Environment.
For further clarification on the contents of this memorandum, contact:
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Rosi Costa Barros
rosi.barros@nbfa.com.br
(11) 3707-8370
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William de Figueiredo Lins Junior
william.lins@nbfa.com.br
(11) 3707-8370
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Luisa Tortolano Barreto
luisa.barreto@nbfa.com.br
(11) 3707-8370
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