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The Ministry of Mines and Energy (MME) presented a draft legislative proposal that could reduce the energy bills of low-income families at a cost of $620 million. Diluted in the rates of other consumers, this would have a 0.9% impact on rates. Last week, Brazils Ministry of Mines and Energy (MME) presented a legislative proposal to reform the Brazilian electricity sector. The proposal focuses on three pillars: fair tariffs, freedom of choice for consumers, and rebalancing the cost structure among different user profiles. The proposal is expected to be submitted to Congress in the coming months. Broader social rate Among the highlights is the creation of a new Social Tariff, which provides for free tariffs for low-income families with consumption of up to 80 kWh per month. This measure could benefit approximately 17 million families, of which 4.5 million would see their electricity bills completely canceled. For families with slightly higher incomes—between half and one minimum wage per capita—a social discount would be granted, with exemption from the Energy Development Account (EDA) for consumption of up to 120 kWh per month. According to the Ministry of Energy and Mines (MME), the goal is to simplify current regulations, considered complex and outdated, and guarantee access to electricity as a basic right. The estimated cost of the measures is 3.6 billion reais ($620 million) per year, which will be shared among other regulated consumers, generating an average impact of 0.9% on electricity bills. Full market opening Another important aspect of the proposal is the complete opening of the electricity market, planned in two stages: starting in March 2027 for industries and businesses, and starting in March 2028 for other consumers. The measure will allow any citizen to choose their energy supplier, following a model similar to that adopted in telecommunications. To make the change viable, the government proposes the creation of new mechanisms, such as flexible rates (prepaid, dual-rate, or hourly), a Supplier of Last Resort to guarantee supply in the event of a marketers bankruptcy, and charges to cover distributors potential operating costs. Distribution of rates The third pillar of the reform aims to correct distortions in the distribution of tariffs between consumers in the free and regulated markets. The proposed measures include the equitable distribution of energy generated by the Angra 1 and 2 nuclear power plants, proportional pricing of the CDE based on total consumption (rather than voltage level), and an end to cross-subsidies between consumer classes. The bill also proposes restricting the misuse of the self-generated energy model, which has been used by large companies to reduce tariffs, often without meeting the original requirements of the legislation. The text also includes measures to unblock debt payments in the Short-Term Market (STM) and maintain discounts for irrigation and aquaculture at specific times. |
