Agency accepts backup plant to cover delayed J&F thermal plants that cost BRL 18 billion

The gas thermal plants contracted by the new simplified regime are in a new controversy. Four of the 14 projects that were supposed to be in operation since May 1, but are still under construction, will be covered by another plant while they are not ready.

The backup was approved this Tuesday (17) at a board meeting of Aneel (National Agency of the Electric Energy Sector). The reporting director, Efrain Pereira da Cruz, approved the operation on a precautionary basis, that is, it is not definitive, but releases the operation. The deputy director general, Hélvio Neves Guerra, who presided over the work, and director Sandoval de Araújo Feitosa Neto also participated.

The four plants belong to Âmbar Energia, an arm of J&J, which also controls JBS, a global giant in the meat sector. While they are under construction, the lack of their generation will be covered by the offer from Térmica Mário Covas, in Cuiabá, also from Âmbar.

According to estimates, the operation of the four projects will cost R$ 18 billion.

Aneel’s decision was received with astonishment by members of the energy sector, since the assessment is that the agency did not act for the benefit of the consumer. “They created a great regulatory tortoise”, says Paulo Pedrosa, president of Abrace, an entity that represents large energy consumers. The alternative, he assesses, goes against the auction rule, the provisions of the contracts and goes against the reduction of the electricity bill.

There are other details that have bothered industry experts. Under the contract, the thermal plants of the simplified auction must be new projects, built from scratch, to expand the supply system, or plants that were not yet in operation on the date of the auction.

They should start generating energy on May 1, with regular supply until 2025. They are not shut down like other thermal plants. The postponement in the operation provides for a fine and cancellation of the contract after three months of delays, that is, August 1st.

The Cuiabá thermal plant, which is about 20 years old, does not fit the profile established in the rule, says Pedrosa.

“This decision protects the thermal harming the consumer,” he says. “The agent won the auction with a proposal, and when he won, these thermal plants could not have participated in the bidding because it was an existing thermal plant, which even generated emergency power to serve consumers, by government decision, at a very expensive cost. auction, then, did not enter through the front door, but now enter through the back door.”

Among senior executives in the energy sector, the following analogy circulated to explain how they interpreted the agency’s decision: in October they sold a brand new car for delivery in May. May arrived, the intermediary, Aneel, authorized them to deliver a 2002 Beetle in place of the zero car.

The emergency simplified auction and its thermal plants have been the subject of constant questioning.

Also last year, Anace questioned the auction model, called PCS (Simplified Competitive Procedure). Less than a month ago, the entity sent Aneel a survey showing widespread delays in the construction of these gas-fired thermal plants, and asked for the application of fines and the suspension of contracts, as defined in the sector’s regulation.

The main argument is that they are burdening the electricity bill unnecessarily, since the reservoirs are full.

In this Anace survey, four thermal plants were so behind schedule that they would have little chance of getting off the ground before the deadline — precisely the four that are now backed up. According to the agency, they were already framed by paying a fine, in a total amount of R$ 209 million per month of delay.

The question of the price of these thermal plants is sensitive. The average value in the auction was around R$1,560 per MWh (megawatt-hour), more than seven times the value reached in auctions for the regulated market, which was R$210/MWh in 2019.

While operating as a backup, the Cuiabá thermal plant will receive R$ 616.03 R$/MWh, a value lower than the auction and the market for similar gas projects. Because of the war, the price of gas rose and a project of the kind would be above R$ 3,000.

However, the value is considered high compared to other sources or to the current average, with full hydroelectric reservoirs. The projection is that the price of energy in the spot market this year will be below R$ 60/MWh.

Because of this huge difference, Idec (Brazilian Institute for Consumer Protection) went further in an attempt to mitigate the effect of emergency gas-fired thermal plants on the electricity bill. On Friday (12) he filed a complaint against them at the TCU (Union Court of Auditors).

The agency wants the complete suspension of all thermal plants for the benefit of the community, as they will cost almost R$ 40 billion and increase the electricity bill by 4.5% on average.

“These thermal plants violate principles of public administration and impose expensive, polluting and unnecessary energy on consumers”, says the coordinator of the Energy and Sustainability Program at Idec, Anton Schwyter.

In a note, Âmbar stated that the projects will be fully delivered, within the contractual term, adding generation capacity to the electrical system. “The company’s proposal maintains the construction of the new plants, already in progress, in addition to reducing the emission of greenhouse gas by 15 times and benefiting the consumer in R$ 628 million in relation to the initial project”, says the text.