Aneel and the Ministry of Mines and Energy implement actions to alleviate the impacts of the pandemics on energy consumers and distributors

Covid-19 impacted the entire electricity chain: consumers, generators, traders and distributors were all hit hard.

The economic slowdown led to a sharp drop in electricity consumption and rising default levels, prompting the Ministry of Mines and Energy (MME) and the National Electric Energy Agency (Aneel) to take measures to reduce the impact and mitigate the adverse effects on all market players.

Some measures are already in place, such as the six listed below.

1- “Conta-Covid”: relief for distributors

On May 18, the Official Gazette of the Union published the decree with the rules and conditions for the creation of the “Conta-Covid”, an account designed to relieve the financial situation of energy distributors affected by the covid-19 pandemic.

Aneel will define the amounts to be lent to each distributor and the Energy Trading Chamber (CCEE) will be responsible for this financial transfer and for the management of the account.

An additional cost included in this account is the contracted demand from Group A consumers, that is, large consumers such as industries and retailers. Group A consumers are charged for contracted demand, even when they do not actually consume such total amount of energy.

With the economic slowdown caused by the new coronavirus, energy consumption has dropped significantly. This led to the request for Aneel to bill only the energy effectively consumed, rather than the total contracted demand.

Find out more about this relief account here::   Government publishes decree regulating “Conta-Covid”

2- Distributors must ensure energy supply for all

The first move in the electricity sector was made on March 25, when the National Electric Energy Agency (Aneel) published its Normative Resolution No. 878.

The main objective for this resolution is to preserve energy supply, even in the face of possible defaults. The measure is initially effective for 90 days, and may be extended.

The resolution establishes that distributors cannot cut power supply from the following groups:

• Users of essential life support equipment
• Essential services and activities
• Homes (rural and urban)

The resolution also defined that during the pandemic, distributors may read the meters at larger intervals than usual, and they are not obliged to compensate consumers for damages resulting from power outages.

Find out more here in MegaWhat's story: Aneel bans power cuts for payment default for the next 90 days

3- Readjusted tariffs postponed

On April 7, Aneel held a public meeting to readjust distributor prices charged by CPFL Paulista, Energisa Mato Grosso and Energisa Mato Grosso do Sul.

The new tariffs were approved at the time, with the agreement that they will only be applied from July 1, 2020. Until then, the difference in distributors' revenues will be offset by the Energy Development Account (CDE).

After this first initiative, all other distributor readjustments followed the same guideline and will only be applied in July.

4- Free consumers and distributors receive balance from Reserve Fund

On April 8, Aneel published Dispatch nº 986, introducing yet another relief measure for consumers in the free market and for distributors.

This time, the agency decided to release the balance of the Reserve Fund for Relief from Charges for Services and Systems (ESS) for both consumers and distributors.

As a result, the Electric Energy Trading Chamber (CCEE) calculated and passed on the total amount due to each participant, assigning them a proportional value based on their consumption in the last 12 months.

The total amount reached R$ 2.022 billion, of which R$ 1,475 billion was released to distributors and R$ 0.547 billion credited to free consumers.

CCEE may repeat this release throughout the year. It should be noted that this amount was already sitting in a reserve fund endowed by charges.

Check out the details here: Aneel releases R$ 2 billion from Coner to mitigate the adverse financial effects of covid-19 on distributors and free consumers

5- Increased Social Tariff

For the first time, the Union made a contribution to the Energy Development Account (CDE). The total contribution was R$ 900 million, aiming to cover the increased subsidies granted with the extension of the Social Tariff.

The proposal, presented in Provisional Measure No. 950, defines that low-income families consuming up to 220 kW /month will have a 100% discount on their energy bills.

Originally, this benefit was gradual, as shown below:

Source: MegaWhat

The resulting expenses are estimated at R$ 1.2 billion.

6- Discount on transmission charges

Aneel Dispatch No. 1.106 authorized the National System Operator (ONS) to deduct charges for the Use of the Basic Network Transmission System for April, May and June.

In April alone, the amount totaled R$ 144.2 million -- 90% went to distributors and 10% to free consumers. This represents 16% of the monthly revenue from this charge.

Read more about this: Covid-19: Distributors and free consumers will benefit from 16% reduction in transmission charges

Exclusive materials: Electric sector faces covid-19

MegaWhat, the electricity sector intelligence and content platform of the Comerc Energia Group, put together the document called Electric Sector faces covid-19 with the chronological list of key measures adopted to mitigate the crisis triggered by the new coronavirus in the energy market.

The presentation will be updated as the government releases new measures.