Electricity bill: Congress decision is equivalent to 6 years of red flag and 19 of yellow

The National Energy Consumers Front (FNCE) responded this Thursday (26) to the president of the Senate, Davi Alcolumbre (União-AP), about the impact of the overturning of the presidential vetoes on the Offshore Energy Regulatory Framework. The FNCE stated that the Congressional decision is equivalent to decreeing the red flag level 1 on the electricity bill for six years, in addition to 19 subsequent years with a yellow flag.

The red flag level 1 represents an increase of R$4.46 for every 100 kWh in the electricity bill; the yellow flag consists of an increase of R$1.88 for every 100 kWh. “In a comparison with the tariff flag system of the National Electric Energy Agency (Aneel), it can be said that the National Congress is imposing on the population a condition similar to what we would face if we spent six uninterrupted years in extreme drought,” said the Front, in a note.

Alcolumbre used Wednesday's session (25) to "vehemently repudiate the frivolous attacks" directed at Congress after the vetoes were overturned. "The objective, unfortunately, seems to be one: to spread panic and confusion among Brazilian consumers, attributing to the National Congress the responsibility for a false increase in energy tariffs," he declared.

For the FNCE, Alcolumbre's speech “demonstrates the extent of the Parliament's lack of knowledge about the technical and regulatory aspects of the electricity sector”. “Contrary to what the senator stated, the decisions taken in Congress regarding the overturning of the vetoes were not technical, nor were they transparent, and much less were they focused on the public interest”, emphasized the Front, in a note.

Bill 576/2021, which gave rise to the regulatory framework, received a series of additions unrelated to the original theme when it passed through the Chamber of Deputies, the so-called "jabutis" . They contemplate various lobbies in the electricity sector and burden the population.

On the 17th, parliamentarians overturned eight of the 24 vetoes made by President Luiz Inácio Lula da Silva (PT) in the offshore wind farms bill. The vetoes affected the mandatory contracting of Small Hydroelectric Power Plants (PCHs), hydrogen plants in the Northeast and wind farms in the South region even without demand, in addition to the extension of Proinfra contracts, the Program of Incentives for Alternative Sources of Electric Energy.

The FNCE pointed out that the decision by senators and deputies will cost Brazilians R$197 billion by 2050, with an approximate increase of 3.5% in the electricity bill, which will also have an “impact on the price of products and services, and a consequent rise in inflation”.

“We can no longer normalize the practice of jabutis, faithfully described in current doctrine as 'legislative smuggling', nor accept statements from authorities without consistent technical basis”, says the statement.

The FNCE also estimates that the compulsory contracting of small hydroelectric plants (PCHs), provided for in one of the approved bills, will worsen the cuts in renewable energy by the National Electric System Operator (ONS), the so-called curtailment . According to the Front, “there is no need to use the force of law to force Brazilian consumers to buy more energy precisely when there is already oversupply.”

Analysis of data from the National Electric System Operator (ONS) indicates that the National Interconnected System (SIN) will have an oversupply of 18.9 GWm in 2025 and that the energy supply in Brazil is 23% higher than demand. “In other words, in the current scenario, even without the effect of the riders approved by Congress, Brazil has the capacity to meet consumption that is almost 1/5 higher than current consumption,” he emphasized.

“For operational reasons, curtailment is carried out in wind and solar power plants, given the operational flexibility of these sources. Therefore, by implementing the PCHs bill, the National Congress is establishing a mechanism within the framework of offshore wind power that promotes the reduction of wind and solar generation in the country,” the statement said.

"Losses incurred by investors in solar and wind power plants may still be charged to consumers, further increasing the losses for the entire population, in addition to worsening the insecurity and unpredictability of the electricity sector," stated the FNCE.