Entity wants Lula government to transfer electricity bill subsidies to the Treasury

The Front for the Defense of Electric Energy Consumers is going to present a proposal to the elected government to transfer the sector’s billion-dollar subsidies, currently concentrated in the electricity bill, to the National Treasury. The cost of these benefits is growing and has been especially burdening the pockets of the poorest consumers, for whom the energy tariff weighs more.

An initial discussion has already taken place with the Mines and Energy transition group. Now, the entities are writing the details that will appear in a document to be delivered to the future minister of the area.

Currently, these subsidies are grouped in the CDE (Energy Development Account). In 2017, for example, it cost around BRL 17 billion, an already high amount. This year, it reached R$ 32 billion. This is equivalent, on average, to 13% of the tariff.

The entity understands that most of the CDE’s resources are collected to finance public policies, thus, this cost should be discussed in the government bodies and distributed in the Federal Budget, and not grouped in the bill of energy consumers, who don’t even know that they are paying.

In an attempt to clarify this cost, which is included in the tariff, Aneel (National Electric Energy Agency) launched at the end of November the Subsidiometer, a digital tool that updates how much subsidy is being paid on the electricity bill throughout the year.

According to the president of the front, Luiz Eduardo Barata, the entity understands that this transfer to the Treasury could occur gradually, over five years, with a transfer of 20% of subsidies per year.

“We understand that the proposal is fair and, as it will be done with planning, it is perfectly adjustable to the Federal Budget”, says Barata.

An example of the success of gradualism for a transition of this type, says Barata, was the treatment adopted for ending subsidies for irrigation and sanitation. The extinction was negotiated and carried out gradually over the last five years, with all those involved already prepared for its end, scheduled for 2024.

At the same time, the front also intends to present suggestions for, in the short term, reducing subsidies and creating criteria to define a limit for benefits, a kind of expenditure ceiling in the energy area. This would be an alternative to stop the creation of new benefits, which has been happening especially through lobbies that change the rules of the sector in Congress.

Right now, for example, PL 2703/2022 is in the Senate, which can add R$ 125 billion in subsidies to the light bill.

The biggest concern is with the CCC (Fuel Consumption Account), which corresponds to practically one third of the CDE. Basically, it covers the costs of generating energy in isolated systems, which were not connected to the National Interconnected System, as part of the Amazon.

The entity believes that this cost could fall with the adoption of a decarbonization program. Photovoltaic plants could be installed alongside fossil fuel thermal plants, so that they operate in an interspersed manner.

In Rondônia, something of the kind is already done informally, via the distributed generation of the consumers themselves, as shown by Folha’s report.

Barata recalls that the transfer of subsidies to the Treasury is just one part of the urgent review of the sector’s model. He reinforces that the entire framework needs to undergo a radical revision to meet the new reality of the sector.

The current model was created in 1998 and revised in 2004, and no longer meets current demands, he says.

In 1998, practically 90% of generation was hydroelectric. There were few coal and fuel oil thermal plants. In 2004, the thermals had advanced, taking up space from the hydroelectric plants. At the time, there was no free market and renewable sources were expensive and limited alternatives.

Currently, the water source has dropped to around 60% of total generation, the free market is home to large companies and a good part of medium-sized businesses, and there is already a discussion on how to take it to homes. Wind and solar sources, especially in the form of distributed generation, are advancing rapidly, with increasingly competitive costs.

“In the coming years, we will no longer operate with hydroelectric plants at the base [como fonte que segura a oferta de energia]but with renewables”, says Barata. “These are conditions very different from those that existed when the model was created, and we need a structural review of the sectoral framework.”

They form part of the front Conacen (National Council of Electric Energy Consumers); Idec (Brazilian Institute of Consumer Protection); iCS (Climate and Society Institute); Instituto ClimaInfo; Polis Institute; Abrace (Association of Large Industrial Energy Consumers and Free Consumers); Anace (National Association of Energy Consumers) and Abividro (Brazilian Association of Glass Industries).