Subsidy costs skyrocket and can increase electricity bills by up to 4.6%.

Aneel (National Electric Energy Agency) approved this Tuesday (26) a budget of R$ 32.1 billion to finance subsidies charged to the electricity bill of Brazilians. The value is 34% higher than in 2021 and may represent an increase of up to 5% in the electricity bill.

The rise in the subsidy account reflects measures supported by the government, such as the extension of benefits to distributed generation of energy by renewable sources, whose extinction was debated in 2019 but was disallowed by President Jair Bolsonaro (PL).

Of the total budgeted, consumers will pay BRL 30.2 billion, up 54.8% from 2021. According to Aneel, the forecast represents an impact of 4.65% on tariffs in the South, Southeast and Midwest. In the North in the Northeast, the impact is 2.41%. The national average is 3.39%.

Subsidies are charged through a charge called CDE (Energy Development Account), paid monthly by consumers on their electricity bill.

In addition to the benefits to renewables, CDE finances subsidies for low-income and power generation and isolated systems in the north of the country. The generation of energy using mineral coal and investments in rural electrification are also benefited.

The largest volume of approved funds will be allocated to the purchase of fuels for the generation of energy in isolated systems, with R$ 11.9 billion. The discounts granted for the use of transmission and distribution networks, where distributed generation customers are included, will amount to R$ 11.7 billion.

These discounts were extended in 2021, through a bill that generated great debate in the sector and was approved with government support. The new rule extended until 2045 the benefit for plants registered until March this year, which generated a rush of investors for new projects.

At this Tuesday’s meeting, Aneel’s board expressed concern about the impact of this change in tariffs. “Some of these sources no longer need subsidies, as is the case with wind power, but the impact of this subsidy is still very significant,” said director Hélvio Guerra.

Director Efrain Cruz recalled that there are about 200 GW (gigawatts) already filed to maintain the benefit, which should put pressure on the CDE for the next few years.

In the opinion of Aneel’s directors, the increase in subsidies may have a snowball effect on the electricity bill: higher tariffs encourage the migration of customers to the free market or to distributed generation, reducing the number of consumers who share the CDE

“We need new sources of funds for the CDE”, said director Sandoval Feitosa, defending that part of the collection with bonuses from granting concessions in the sector is used to reduce the pressure on the subsidy account.

The subsidy to low-income customers is expected to cost R$5.4 billion. This is an increase of 48% compared to 2021, reflecting the increase of about 700 thousand consumers in this category, with automatic registration approved during the pandemic.