Economy

Electricity bill may rise with fight between government and J&F thermal

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Energy distributors and large companies are mobilizing to gather millions of reais and comply with a first-instance injunction that the government cannot reverse and could put even more pressure on the electricity bill.

The multimillion-dollar apportionment will fund a payment to the Rio Grande do Sul-based Usina Termoelétrica Uruguaiana (UTE Uruguaiana), owned by Âmbar, an energy company belonging to the J&F group, which owns the meat company JBS.

The CCEE (Electric Energy Commercialization Chamber), responsible for the sector’s accounting, has already paid the R$ 19 million considered fair by the government. But Âmbar got the director to receive around R$ 740 million in court, and the payment needs to be deposited by March 9.

Most of this expense will be covered by the distributors and, when it comes to the electricity bill, it will raise the tariff by 0.5%, according to an estimate by the AGU (Advocacia Geral da União). As a rule, distributors bear 70% of this type of expense and large industrial consumers, with 30%.

The government’s legal department is still running out of time to suspend the decision or obtain authorization to make the deposit in court, considering that, once the payment is made, the money will not return.

To understand how the situation reached such an impasse, it is necessary to go back a few months. At the height of the drought and the supply crisis, the government created a kind of emergency program to buy energy from thermal plants that were out of operation.

The Uruguaiana thermoelectric plant, powered by gas, responded to the call and made an offer. As the time was of desperation among the authorities, who were trying to avoid blackouts, Âmbar got a contract for R$ 2,518.44 per MWh (megawatt-hour) – which serves as the basis for calculating the R$ 740 million that the company defends. to receive.

It was the second highest amount paid for energy generated by natural gas contracted by the government during the crisis. The company has committed to making deliveries in the months of October, November and December 2021.

But the thermal failed to deliver on time. Ordinance number 17, of the MME (Ministry of Mines and Energy), which allowed the emergency purchase of thermal suppliers, required the monthly delivery of at least 50% of the energy established in the contract.

Alleging problems with gas suppliers in Argentina and Bolivia, the Âmbar thermal plant delivered only 6.45% of the agreed amount in October. The ONS discredited the plant and sought other suppliers.

Dissatisfied, after securing the gas supply, Ámbar went to court to be able to deliver the volume of energy agreed in the emergency contract. From the end of November, it began to inject electricity into the system.

At that moment, however, the rains had already started to reach the reservoirs, bringing down the price of energy and leading the government to shut down more expensive plants. Therefore, the government understands that it must pay R$ 19 million, not R$ 740 million.

In the lawsuit, the company alleges that the breach of the contract was caused by unmanageable external factors, since the Argentine government determined the suspension of gas exports, making generation impossible in October.

He also says that he received support from the Brazilian government to overcome the impasse with the Argentine government, which would indicate the intention to buy energy from Uruguaiana. Finally, he says he paid around R$500 million for a new gas contract.

The lawsuit claims that Âmbar “made its best efforts to enable the generation of electricity by UTE Uruguaiana” and that the cancellation of the offer in November and December was “inadequate, unnecessary and disproportionate”.

Ámbar got a first favorable decision on 31 November. Judge Ivani Silva da Luz, from the 6th court of the Federal Court in the Federal District, agreed that the company was the victim of force majeure and determined, in an injunction, that the plant could make deliveries for the months of November and December, within the parameters provided for in the original contract.

The ONS appealed on December 10 and the Union on December 13. The demands are already on the table of judge Augusto Pires Brandão, from TRF 1 (Federal Regional Court of the 1st Region), in Brasília. But there has been no demonstration so far.

AGU alleges that Âmbar did not meet the term of the contract and lost the right to receive the agreed amount, which is equivalent to 39 times the average market value in December, around R$67 per MWh. This was the amount used by the CCEE to pay the Âmbar.

For AGU, when the thermal plant began to generate “it was not in the interest of the National Electric System Operator, nor of the Union, to use energy from Âmbar”. The risk of the gas supply, he adds, belonged to the company.

On December 31, an order from the judge on duty at TRF 1 asked for urgency in complying with the decision. As the public authorities’ appeal is not in the second instance, and the deadline is expiring, the chamber determined that companies send the money to make the payment.

The dispute with Ámbar is not the only case of problem faced by the government with the thermal plants contracted during the water crisis.

The high amounts paid for this energy led Aneel (National Electric Energy Agency) to create the water scarcity tariff flag, which adds R$ 14.20 to the electricity bill for every 100 kWh (kilowatt-hour) consumed.

The value is 50% higher than the most expensive tariff flag in force until the beginning of the crisis, but it was not enough to cover the costs of thermal plants and today the government is negotiating a new loan to the electricity sector, which could reach R$ 10.8 billion , to cover the hole.

The ONS says that it discredited the plant following the guidelines of MME ordinance 17/2021, which provides for the cancellation of future deliveries when generation is less than 50% of supply, and that the thermal operated between December 3 and 31 due to an injunction .

Ámbar had not responded to interview requests until the publication of this text.

electricity billENERGY CRISIShydroelectric plantsMinistry of Mines and Energysheettariff flagwater crisis

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