Massive Increases of Electricity Charges Loom Ahead in Brazil

By Xiu Ying, Contributing Reporter

RIO DE JANEIRO, BRAZIL – A new resolution issued by the National Electric Energy Agency (Aneel) increased the value of tariff brackets, which are designated by colored flags on electricity bills. The move will raise the price of electricity throughout the country.

The yellow flag went from R$1.00 to R$1.50 per 100 kWh consumed – an increase of 50 percent. The red flag for level 1 increased from R$3 to R$4 – a 33.3 percent increase and the red flag level 2 had a 20 percent increase — from R$5 to R$6.

The billing changes will take effect as of June 1st.

Aneel explained that the increase occurred because there had been an update of the calculation methodology for the so-called hydrological risk.

With this, the consumer will pay part of the cost when electrical energy is more expensive due to a lack of rainfall.

“The effect felt by consumers will more accurately reflect the production of hydroelectric power and the energy scenario of the system. The change was especially motivated by last year’s water deficit, which repositioned the flags’ value scale”, Aneel said in a note.

The agency noted that the plan had undergone a public hearing where 56 contributions were received, of which 36 percent were fully adopted, and an additional 2 percent partially adopted.

The tariff flag system was created by Aneel in 2015 as a way of recalculating the extra expenses incurred by the use of energy generated by thermal plants, which is more expensive than that from hydroelectric plants.

The color of the flag is printed on the electricity bill (red, yellow or green) and indicates the cost of the energy as a function of electricity generation conditions.