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Aneel Tries to Reduce Subsidy the ‘Clean’ Sources



The new director general of the National Electric Energy Agency (Aneel), André Pepitone da Nóbrega, points to a challenge for the four-year term that he now heads the regulating body: to contain the escalation of subsidies thrown on consumers’ back, responsible in large part by the increase in tariffs in recent years.

And the main target in Pepitone’s sights has already been chosen: the subsidies given to generators and consumers of energy sources (basically wind and solar). These incentives already account for almost half of all expenditures of the Energy Development Account (CDE), the “superfund” that funds sector subsidies, whose budget for this year was revised last week and reaches a steep R $ 19.7 billion.

The resources of the CDE to give more competitiveness to wind and solar energy jumped in a short time. They were R $ 4 billion in 2013 and will reach R $ 8.7 billion this year. With no prospect of control and with everything going on in the beads of light.

Roughly, each additional billion of CDE’s expenditure is reflected in an increase of nearly one percentage point for final consumers, in a perverse dynamic that has caused tariffs to rise.

The new head of Aneel, who takes office this afternoon in a ceremony at the Ministry of Mines and Energy (MME), warns: the law does not establish a deadline for the granting of incentives and the value should increase even more with the trend of expansion of the free market. “If we do nothing, [the subsidies] will continue to grow,” Pepitone told Valor .

A 44-year-old civil engineer, graduated from the University of Brasília (UnB), Aneel career officer and director for two consecutive terms, he now replaces Romeu Rufino in charge of the agency and becomes the most visible face of a new group of regulators. “The biggest challenge for the new composition of the collegiate board is the tariffs charged to consumers.”

Two directors took over at the end of May. Two others, including Pepitone, begin their mandates today. An exchange at the top of the agency is lacking – which should happen this year.

For him, the question of subsidies is fundamental. “We are in a moment to make this reflection with society.” The discount [for incentivized sources] is a public policy guaranteed by law. Is it not the moment to discuss with the National Congress if this subsidy is still necessary? he questioned on the eve of his inauguration.

“We have to think about the correctness of the subsidy. At an early stage, it may prove really necessary, but will it be the case for sources that are already consecrated in the matrix?” Adds the new director general. In his analysis, proposals for a solution such as passing the account to the National Treasury are false, because in the end “everything comes out of the same pocket”.

It seems redundant, but it is an allusion to MP 579, the controversial interim measure signed by former President Dilma Rousseff on September 11, 2012 – a day that is ironically called “September 11 by the electric sector” by investors due to extent of the mismatches caused. The burden of paying the subsidies went out of tariffs and went straight to the taxpayers’ lap. Another point he says he will not accept is to review the agreed incentives for contracts of the past. “A basic pillar for us is regulatory stability and legal certainty.”

Pepitone, however, finds it urgent to discuss the future of subsidies. Even because the free market – one in which large consumers, such as industries and shopping malls, can seek supplies at any generator and are not tied to the local energy distributor – has grown strongly. The new regulatory framework for the electric sector, designed by the MME and currently in the process of being replaced in the Chamber of Deputies, provides for the gradual expansion of the market and its complete opening up to 2026.

Subsidies for incentivized sources already reach a value 64% above the R $ 5.3 billion in 2018, with the purchase of fuels for the isolated systems, under the heading known as CCC by the electric sector, that had been occupying so far the rank of villain in the subsidy account.

Despite the concern about the tariffs, Pepitone suggests a longer look. According to him, from 2001 to 2017, light bills went up 190%. The IGP-M, the inflation of the rent, rose 215%.

In recent years, in addition to the CDE budget boom, the director mentions unfavorable hydrology and the devaluation of the real as factors that pressure prices. The energy of the binational Itaipu plant is quoted in US dollars and is reflected in the energy mix purchased by the distributors in the South, Southeast and Midwest regions. Already the scarcity of rains and the fall in the volume of the reservoirs made the drive of the thermal, more expensive, to be above the normal. “There is a conjunction of unfavorable issues.”