Government supports full opening of free energy market in Brazil, says ministry

RIO DE JANEIRO, BRAZIL – The program director of the Executive Secretariat of the Ministry of Mines and Energy (MME), Camilla Fernandes, said that the federal government supports the proposal of a full opening of the free energy market.

She made the remarks Tuesday morning (24) during a lecture at Ipea (Institute for Applied Economic Research) on draft law 414/2021, which provides for the market’s opening in up to 42 months.

“This project, in its current form, has already summarized everything that has been developed, the public consultations, studies, etc. The Ministry of Mines and Energy also supports it, the Ministry of Economy and government. So the executive branch is waiting for this progress from the legislature,” Camilla Fernandes said.

However, the director said the opening process would be “complex.”

“The conclusion of the public consultation of the EPE (Energy Research Company) was that the opening of the market can bring benefits to society and lead to a reduction in electricity costs. However, this is a complex process that requires in-depth studies and, above all, several changes in the regulatory framework for the sector,” she said.

Last week, the deputy secretary of the Secretariat of Infrastructure Development (SDI) of the Ministry of Economy, Gabriel Fiuza, told Power360 that the ministry considers the project very important for the electricity sector.

“We have supported this project from the beginning and worked with the MME. On the government side, there is a great convergence. So I think this bill is ripe for approval,” she said.

Fiuza believes the project has the potential to attract more investment and reduce tariffs in the right way.

“Reduction through economic rationality, better choices, empowerment of consumers. And by incorporating more innovation and more technologies. So this is a fundamental project for the country’s future,” the secretary said.

The free market is an environment where consumers and traders – or generators – freely negotiate the prices they want to pay for electricity. It is already similar in the cell phone market, where customers contract for the carrier’s service they want.

It is the opposite of the regulated market that most consumers are in, where they cannot choose who they buy energy. They are supplied by distributors who hold the concession for the region in which they live and have already purchased power from generators.

For these consumers, the energy tariff is reviewed annually based on the tariff revision analysis conducted by Aneel (Agência Nacional de Energia Elétrica).

Only consumers with a capacity greater than 500 kW can contract on the open market. According to Abraceel (Brazilian Association of Energy Sellers), the savings relative to regulated market tariffs reaches 58%.

PL 414/2021 is ready to be voted in the Chamber of Deputies. In the electric sector, it is expected that the vote will take place in May. After that, the Senate will have to vote on it again, as the deputies changed the text after the first vote by the senators.