Reducing confusion in the electricity sector
Aneel fails to balance the subsidies that are given to consumers "free" and others, to larger consumers, or even to fossil sources
By Roberto Kishinami
Public Consultation 25/2019 of Aneel about distributed generation, published on October 18, is generating a heated debate. The focus of attention is on the progressive taxation of the new photovoltaic installations proposed by the agency, beginning with the remote installations, located at a different address from the consumer units, and reaching, at some point, all the distributed generation.
Due to the significant importance of the distributed photovoltaic generation to the construction of a carbon neutral electricity sector, this debate has an enormous influence on the Brazilian energy transition. This transition has to deal with the current subsidies given to the fossil fuels that, in addition to those supported by Brazilians via taxes, place a burden on the electricity bills of residential consumers. These subsidies are hidden in the so-called "Sectorial Charges," of which the highest is the CDE – the Contribution to Energy Development, a miscellany of transfers and incentives that amounted to R$ 20 billion in 2019.
The background of the debate opened by Aneel, which dates back to 2015, is the regressive nature of the current pricing model of electric energy. In other words, every time a consumer reduces his electricity bill by self-generating part of his electricity consumption, he fails to pay not only the energy share of his account, but also that which is destined to the operation, maintenance and expansion of the electric energy network. In all fairness, this is not exclusive to the micro or mini generator with photovoltaic panels. Large consumers, who have become "free" by choosing their energy supplier, also have discounts in the transmission and distribution tariffs, in addition to the charges.
It is fair not to pay for the energy that is not consumed, but it does not seem correct to us to not pay for the availability of the electric energy network. Firstly, because a self-generator with a photovoltaic panel uses the network both to inject its surplus production, and to consume from this same network when the generation is insufficient. However, secondly, and perhaps more importantly, because this unpaid account is transferred to all the other consumers of the electricity network. It is a regressive process: in the end, it is the poorest, who cannot install photovoltaic panels and much less remain "free" who pay for the wealthiest to use the electric energy network.
Does this mean then that Aneel is right to propose the charge? No. It fails to balance the subsidies that are given to consumers "free" and others, to larger consumers, or even to fossil sources, such as coal and diesel and fuel oil in isolated systems. It can use the argument of laziness because this would mean reviewing the entire pricing structure, and not only that affecting Resolution 482/2012. True. But this is a situation where the shortest path, of using a pricing amendment, places us further away from a balanced and fair solution.
Furthermore, with the charge of a fee paid by the distributed generators, for the network availability, we would never know if such availability would not be charged more than once.
This is because, in Brazil, electric energy tariffs are not calculated in order to distinguish the two services provided by the electric network: the service of the physical connection between the producers and the consumers of electric energy, and, on the other hand, the sale of electric energy by those who produce it to those who consume it. These two services were historically compounded because the electric system was, at the beginning, one-dimensional: on the one side were the hydro-electric generators and, on the other side, the consumers. This system, however, is now a thing of the past.
This opinion article was originally published in the website of Valor Econômico on November 16, 2019.