Ministry sees Aneel’s decision that benefited J&F thermal power as absurd and demands solution

The MME (Ministry of Mines and Energy) started to question Aneel (National Electric Energy Agency) to suspend the authorization given to a company of the J&F group (controller of the global company in the meat sector JBS) to supply energy through an existing plant in place of others that are behind schedule for construction.

In a meeting at the MME, Minister Adolfo Sachsida told the interim director-general, Camila Figueiredo Bomfim, that the agency needs to close the matter as soon as possible, suspending the precautionary measure that allows the use of the Cuiabá thermal plant in place of the others provided for in the Energy supply. His speech has been described among interlocutors in the energy sector as emphatic.

The ministry forms a chorus with the TCU (Union Court of Auditors), which has already asked the agency for formal clarification, and consumer protection entities, which have filed appeals with the agency requesting the immediate suspension of the operation.

Under the rule of the auction in which the company participated —a PCS (Simplified Competitive Procedure) held last October— only new projects could participate.

All 17 thermal plants that won the competition, including the four from Âmbar Energia (from the J&F group), were due to start operating on May 1st. In case of delay, the plant would have to pay a fine while it does not supply energy in the expected way and have the contract canceled on August 1st if it cannot start the new plants by then.

A provisional decision by Aneel, however, made an exception for Âmbar’s projects. As a precautionary measure, it allowed that, while the delayed thermal plants do not operate, the energy will be supplied by the Mário Covas thermal plant, from Cuiabá, which also belongs to Âmbar.

The injunction also suspended the fine of BRL 209 million per month and allowed the payment of a revenue of around BRL 1,761.30 per MWh, to be debited from the electricity bill of all Brazilians.

Sachsida has told those who follow the issue that he considers the injunction to be absurd and that, aware that he cannot interfere with a regulatory agency, he asked the technicians to seek alternatives through legal means to reverse the measure, in case Aneel does not act with diligence.

According to reports made to Sheetthe MME can reverse an Aneel decision in a very specific case: when it considers that the agency has deviated from the implementation of the policy outlined by the ministry.

Folder technicians have already found a loophole. It can be argued that Aneel’s decision violates the policy of the portfolio, which is established by the ministry in Ordinance 24/2021, which deals with PCS. In the text, it is determined that the energy must come from new plants.

As the Cuiabá plant has been in operation since 2001, it does not qualify as a new project.

There is another rule that has been used by people against the measure. In PCS, energy must be delivered by the auction winners, as highlighted in clause 4.4 of the contract.

“The energy defined in the contract cannot be delivered by another plant of the seller, by another agent of the CCEE [Câmara de Comercialização de Energia Elétrica]nor by the set of agents due to the optimized operation of the SIN [Sistema Interligado Nacional]”, highlights the text.

The market assessment is that the director-general would be able to close the issue.

MOBILIZED ENTITIES

Entities that question the injunction and ask for its suspension focused their efforts on technical arguments in the request for suspension of the injunction.

Abrace (Association of Large Industrial Consumers of Energy and Free Consumers), which mainly represents companies that depend on electricity on a large scale, made a detailed resource in which it highlights the damage to the consumer.

“Consumers’ interest is not to pay for this expensive, unnecessary energy, which, if the requests of the Interested Parties are accepted, will infringe several rules”, states the text. The entity cites that the precautionary measure opposes the Provisional Measure that dealt with the water crisis, a resolution by the Chamber of Exceptional Rules for Hydroenergetic Management, an ordinance of the Ministry of Mines and Energy on the subject, the auction notice and the contract signed for the company.

“Abrace has great confidence in Aneel’s decision-making process and in the solidity of the arguments brought to the Agency”, says Paulo Pedrosa, president of the entity, to the report. “With the involvement of the superintendencies and the attorney’s office and with the debate on the merits between the directors, the reversal of the precautionary decision that penalizes consumers is natural.”

Anace (National Association of Energy Consumers), which also asked for the suspension, presented direct questions to Efrain da Cruz’s arguments. He highlighted that the rapporteur’s vote “is fragile in terms of technical aspects and unacceptable from a legal point of view”. The entity does not rule out taking the case to court.

“What director Efrain is doing with the decision is breaking contracts. This sets a very dangerous precedent”, says Anace’s director of Technical and Regulatory Affairs, Mariana Amim, in a note on the matter. “When the contract is unfavorable to the entrepreneur, it can be changed, but when it is unfavorable to the consumer, it has to be fulfilled? I hope that common sense makes Aneel review the decision.”

The Polis Institute, a civil society organization that defends consumer rights, also asked for the suspension of the precautionary measure in an appeal prepared by the law firm Carvalho Siqueira, stating that it considers the decision to be financial irrationality.

The lawyers recall that the PSC plants were designed during the time of drought to operate as anti-blackout options and to preserve reservoirs. Now, however, the hydroelectric lakes are at 70% capacity. On the spot market, energy is sold at 55 MWh.

“In this context, Aneel’s decision becomes even more absurd”, says in a note the project coordinator of the Polis Institute, Clauber Leite.

According to Aneel’s rules, requests for suspensive effect presented by the entities make room for a monocratic decision by the agency’s director-general.

Director who acted as rapporteur of the case and defended the measure, Efrain Pereira da Cruz is saying goodbye to the agency. He tried to be nominated for the post of director-general, since he could not be reappointed to the same post, but in the matter he has two important allies.

The two other directors, present at the meeting that approved the injunction, and who followed the rapporteur’s vote, remain at the agency.

Hélvio Neves Guerra, who chaired the work at the meeting, was reappointed. Sandoval de Araújo Feitosa Neto will assume the main position (general director of the agency) in August.

Efraim has been working behind the scenes so that the precautionary measure is not overturned, as this is a trend among the agency’s technicians.

In January, Âmbar placed a first order to supply energy from the Mário Covas thermal plant while the new projects were not ready. On that occasion, he received a negative from the technical area.

The company resubmitted the request, requesting the injunction in April, and got the green light on May 17 — before technicians and the attorney’s office reevaluated the new proposal, which was confidential.

OTHER SIDE

Sought to comment on the questions, Aneel did not respond until the publication of this text.

Âmbar did not comment on the MME’s position until the publication of this text. However, in the note that comments on the arguments of the entities, he highlights that he will be able to meet the deadline of 90 days.

“The appeals before Aneel start from the false premise that the four plants taken over by Âmbar would not enter into commercial operation within the period of 90 days provided for in the contract”, says the text.

The company does not comment on the delay in starting operations, which expired on May 1.

Âmbar also says that it presented to Aneel two alternatives for fulfilling the contracts: generation from the four plants or generation from UTE Mário Covas, with a reduction in fixed revenue and unit variable cost, totaling an estimated benefit of R$ 650 million in favor of consumers.

The company also highlights that the request is supported by precedents from the TCU and the Superior Court of Justice.

It also says that, if Aneel does not confirm the acceptance of the Mário Covas generation, the contracts will be fulfilled with the generation of the four plants, which are on the verge of starting commercial operation, without the savings proposed by Âmbar.

“There is, therefore, no hypothesis in which the contract is not fulfilled. Behind this fanciful narrative is a mere attempt to break contracts irregularly”, states the text.