Measures against energy crisis already cost R$ 140 billion, says institute

The series of measures taken by the government to face the water crisis that brought down the levels of reservoirs at Brazilian hydroelectric plants will cost consumers at least R$ 140 billion, which will be paid in the electricity bill in the coming years.

The calculation is made by the ICS (Instituto Clima e Sociedade), which also questions the environmental impacts of the strategy adopted by the government, which focuses on increasing the supply of energy instead of encouraging savings and investments in energy efficiency.

The cost account for the consumer considers the high generation of thermal plants to supply the market in 2020 and the decision to contract more expensive plants for the coming years, both in an emergency auction promoted by the government and by the inclusion of tortoises in the Eletrobras privatization law .

“Although the risk of blackout has cooled this year, we continue with a very high cost to the consumer, with a tendency for increases in the future”, said ICS coordinator Amanda Ohara, in a virtual event this Monday (22).

The BRL 140 billion includes BRL 11.8 billion referring to thermal plants in operation, BRL 10 billion to BRL 15 billion corresponding to a loan under negotiation by the government to fund new plants, BRL 39 billion to pay for the operation of these new plants and R$78.3 billion referring to tortoises under the Eletrobras law.​

This last amount was estimated by the Fiesp (Federation of Industries of São Paulo), according to the ICS, as necessary to pay the benefits provided by law to the natural gas and renewable energy segments.

“[O impacto na conta de luz] it is not accumulated in a year, but it is a significant amount, considering that the sector’s turnover was BRL 162 billion in 2019”, compared Ohara, defending that energy efficiency programs could have an impact on solving the crisis at lower costs.

Fiesp, however, questions the inclusion of its projections in the calculation of measures adopted to face the water crisis. His study on tariff impacts of Eletrobras MP, says, “never took into account any relationship with the water crisis”.

The R$ 78 billion, he says, are divided between R$ 36 billion for the contracting of new small hydroelectric plants, R$ 12 billion for the extension of incentive renewable energy contracts and R$ 30 billion for the construction of gas pipelines for the planned thermal plants by the MP.

“None of these items has become cost effective so far, as they still depend on the holding of auctions and/or specific regulations”, said the federation, in a note sent to sheet this Tuesday (23).

To try to avoid a 21% readjustment in electricity bills in 2022, when Jair Bolsonaro will be campaigning for re-election, the government is trying to accelerate the privatization of Eletrobras, which provides for the contribution of resources in charges charged in tariffs, and streamline the loan to fund the thermal ones.

The ministerial crisis response group even launched two programs to reduce consumption, one for industries and the other for small consumers, but there is still no information about their effectiveness or costs.

The first was discontinued in November by the ONS (National Operator of the Electric System), under the argument that the rains eliminated the risk of problems during peak consumption times. The second is still in effect, but consumption data indicate low adherence.

The coordinator of the Energy and Sustainability Program at Idec (Consumer Defense Institute), Clauber Leite, says that the cost of the energy crisis is a “damned inheritance” of the government’s lack of planning.

“We are already experiencing tariff rationing and the choice was not to have a consumption reduction program,” he said, criticizing the distortions in the energy pricing model in the country, which has been harming consumers linked to distributors.

The complaint, in this case, is that energy trading prices have plummeted in recent weeks, driven by the increase in the forecast of rain, even though thermal generation is still at full capacity.

With energy left over after the start of the pandemic, electricity distributors could be profiting from the sale of the surplus, which would be reverted into discounts for the consumer. “It’s an unsustainable model,” he says.

The project coordinator at Iema (Instituto Energia e Meio Ambiente), Ricardo Baitello, calculated that the contracting of thermal plants provided for in the Eletrobras privatization law represents emissions from 17.5 to 20 million tons of equivalent CO2 per year.

During the duration of the 15-year contracts, he says, they will be between 260 million and 300 million tons, the equivalent of all emissions from the Brazilian transport sector in one year. “We are not taking advantage of cheaper and less polluting energy to use more polluting and expensive energy,” he said.

For the former general director of the ONS (National Operator of the Electric System), Luiz Eduardo Barata, energy efficiency is the only way to ensure that the crisis goes through without putting pressure on energy costs. He questioned the suspension of the savings program by industries.

“It’s no use prioritizing supply at any price, because then it comes at a price that we can’t pay,” he said. “It’s no use insisting on the error.”