On December 28th, 2018, was published the Decree No. 9,642 (“Decree No. 9,642/2018”) which eliminates certain discounts granted for a specific class of agents and that are paid by all consumers through a charge called Energy Development Account – (“CDE”).
The CDE is a charge created in 2002 by Law No. 10,438 and is intended to promote energy development throughout the country. Among others, the CDE is used to subsidize: (i) tariff discounts for low income consumers, rural producers and irrigators; (ii) power generation in isolated electrical systems; (iii) the tariff modality; and (iv) the universalization of the power service in the entire national territory.
With the publication of the Decree No. 9.642/2018, as of January 1st, 2019, the discounts granted to the rural producers, rural electrification cooperatives and public water and sewage services, that are subsidized by CDE, will be reduced by 20% (twenty percent) per year, until they are completely eliminated.
Furthermore, the Decree No. 9,642/2018 prohibits the cumulation of more than one type of discount by the same consumer, and that which is most beneficial to him shall prevail.
It was also published by the Ministry of Mines and Energy – MME (“MME”) the Ordinance No. 514, which reduces the load limits for the migration of consumers to the Free Contracting Environment.
In this sense, from July 1st, 2019, consumers with a load of 2.5 MW or more will be able to purchase power from any supplier and from any source. From January 1st, 2020, this limit drops to 2 MW. Previously, the minimum limit was 3 MW.
It should be noted that consumers with loads between 500 kV and 3 MW could already migrate to the Free Contracting Environment. However, such consumers could only purchase power from incentive sources (solar, wind, small hydroelectric plants etc.).
Thus, with this change, from 2020, consumers with a load of 2 MW or more will be allowed to buy energy from any source.
For further clarification on the contents of this newsletter, please contact the following:
Rosi Costa Barros
William de Figueiredo Lins Junior