Text extends subsidies for distributed energy generation and extends the benefit to small hydroelectric plants
A bill that extends subsidies for distributed generation could increase Brazilians’ electricity bills by 5.4%. The calculations are from National Energy Consumers Frontwhich estimates an impact of R$4 billion per year on the CDE (Energy Development Account), totaling R$88 billion from 2024 to 2045.
O Bill No. 2,7032022 it was approved by the Chamber in December 2022 and is now in the CAE (Economic Affairs Committee) of the Senate. Here’s the complete of the text (PDF – 637 kB).
On hold since April, the text was included on the agenda for last Tuesday’s session (September 12, 2023). However, it was withdrawn without being appreciated.
According to the Power360the text continues with the rapporteur, senator Otto Alencar (PSD-BA), and there is no forecast for a vote in the CAE. Senators still presented amendments until this Thursday (September 14).
Authored by the deputy Celso Russomanno (Republicanos-SP), the text was approved in the Chamber of Deputies on December 6, 2022. Initially, the proposal would be voted directly in the Senate plenary, but congressmen decided that further discussion on the topic was necessary. It was sent to CAE in April and has been stopped.
UNDERSTAND THE BILL AND IMPACT
The text expands subsidies for those who requested to join the distributed generation system. I.e:
- currently, consumers who have expressed their desire to join the system January 7, 2023 do not pay for the cost of transmission and distribution of energy until 2045;
- the original project planned to extend this period by another year, until January 2024. After passing the Chamber, the deadline was enlarged in 6 monthsthat is, it will benefit whoever requested entry into the model until July 7.
Jabutis were included in the project in the Chamber that further expanded these subsidies –“jabuti” is a jargon of Brasília politics and refers to sections introduced in bills that would be foreign to the original spirit of what was intended to be approved.
- the main jabuti extends subsidies to PCHs (Small Hydroelectric Power Plants) up to 30 MW (megawatt) with authorization issued after the law comes into force, classifying these projects as distributed minigeneration.
A distributed generation it works as follows:
- the surplus from those who produce their own energy from their own generators is thrown into distributors’ transmission lines. The most common model is through solar panels;
- These people are paid for this and are not charged by the distributors for using the lines. This use is charged to other energy consumers.
The president of the National Energy Consumers Front, Luiz Eduardo Barata, says that the CDE already adds R$150 billion by 2045 to cover existing subsidies approved by law, a value that could reach almost R$238 billion if the PL is approved how are you.
“It is not a question of being against these energies, but against subsidies that favor a small group of consumers who do not need more subsidies to the detriment of a majority of consumers”he states.
The consumer front argues that the existing subsidy has already fulfilled its role of encouraging and creating a culture of solar energy in the country. It understands that, currently, distributed generation is viable. It would no longer be necessary to burden more than 200 million Brazilians for the benefit of the 2.1 million consumers who benefit from the subsidy.
“It is a project that is harmful to consumers because it extends distributed generation subsidies and also includes PCHs. Our understanding is that these sources do not need more subsidies, because they are already consolidated and competitive”said Barata to Power360.
COST PUSHED TO THE POOREST CONSUMER
For entities in the sector, the project will end up pushing the cost of energy generation that is mostly carried out by richer consumers even further onto poorer consumers – even considering the high cost of installing a solar plant.
This group is exempt from paying a large part of the CDE, while benefiting from discounts that make the energy bill cheaper. On the other hand, the expense falls into the laps of other consumers, through the charge charged on the electricity bill.
“[O projeto] It’s bad for consumers because it will increase the electricity bills of Brazilians, who already have the most expensive electricity bills in the world.”says Luiz Eduardo Barata.
The executive director of regulation of Abradee (Brazilian Association of Electricity Distributors), Ricardo Brandão, declared that the benefit is not sustainable from a social point of view and pushes an increasingly expensive electricity tariff to low-income consumers.
“It is a perverse impact, because we saw in this race that those who requested distributed generation in the last 12 months in this transition are high and very high income consumers. Consumers with level A and AA income profiles. This consumer does not need this benefit and it transfers a lot of impact on the tariff of small consumers”he said.
Brandão also argues that the number of people with distributed generation has increased year after year and this extra supply of energy will put even more pressure on other users of the electrical system.
“While one pays for the transmission and distribution that brings energy from far away from the hydroelectric plants, which produce all the time, even at night, this user of distributed generation does not pay. This is the origin of these values that are added to the consumer tariff and, therefore, extending this only increases this cost even further”he said.
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