Taking Subsidies ANEEL 18/2023: Is this the end of shared generation?

In collaboration with Isabella Agarbella, Leonardo Balbino and Renato Edelstein

A ANEEL (National Electric Energy Agency), through the Superintendency of Administrative Mediation and Consumer Relations, initiated TS 018/2023 (Public Consultation No. 018/2023), with a period for submitting contributions until January 31, 2024, through document exchange.

The purpose of TS 018/2023 is to assess the need for possible specific regulatory commands to:

• To ensure compliance with the provisions of Article 28 of Law No. 14.300/2022 – known as the legal framework for micro and mini-distributed generation, which characterizes MMGD as the production of electricity for self-consumption; and
• To mitigate the occurrence of energy trading mechanisms in the SCEE (Electric Energy Compensation System) for surplus or credited energy, in violation of current regulations. That is, the offering of surplus energy at prices lower than the regulated tariffs charged by electricity distribution concessionaires or licensees.

Through TS 018/2023, agents and other interested parties will be able to send contributions by filling out a form, in which interested parties will answer the technical questions of the ANEELQuestions such as: "What situations in the market can be classified as energy trading in the SCEE?" and "What elements could characterize or indicate energy trading in the SCEE?", among others.

The topic was already under analysis by ANEEL since the 3rd RPO (Ordinary Public Meeting) of the Board of Directors, held on February 7th of this year, which approved the Normative Resolution ANEEL No. 1.059/2023 and defined rules for the connection and billing of distributed generation plants in distribution systems, prohibiting the commercialization, even implicitly, of energy credits and surpluses, as well as obtaining any benefit in the allocation of energy credits and surpluses to other holders.

In the 3rd RPO, the Board also determined that the STD evaluate the need to include regulatory commands to promote the application of the provisions of art. 28 of Law No. 14.300/2022, which led to the preparation of Technical Note No. 101/2023 – STD/ANEEL, of October 17, 2023, the details of which were the subject of TS 018/2023.

The objective, according to the ANEEL, is to prevent the purchase and sale of energy by consumers who are not free or special. This is because failure to comply with regulations or attempts to circumvent legal provisions for personal gain harm the electricity sector as a whole, since the undue capture of tariff subsidies causes losses of great magnitude, at the expense of incentives paid for by users of the energy distribution system – which should not be allowed in the view of the Regulatory Agency.

Although the scope of TS 018/2023 is to contain the commercialization of electricity within the scope of the SCEE, it is important to highlight that the legal exceptions, foreseen in articles 24 and 36-A of Law nº 14.300/2022, will not suffer any interference in our view.

With this, the scenario of selling surplus energy with the local distributor, through public calls and the scenario of trading surplus electricity with public bodies (as long as the holder is a beneficiary of a social or housing program at the federal level, state, district or municipal) will continue to have the same effects after due regulation and implementation.

It is also worth noting that the analysis carried out by STD, through NT 101/2023, in no way changed the rights of compensation and sharing of electrical energy applicable to consumer units with MMGD in our analysis.

The consumer who owns a consumer unit, whether through remote self-consumption or shared generation (in which consortia, cooperatives, voluntary or building civil condominiums, or any other form of civil association are formed, provided it is established for this purpose), can continue generating their surplus and energy credit to be used in other consumer units under their ownership and served by the same distributor.

Once the project has been implemented in accordance with current legal guidelines, there is no illegality to be assessed by the ANEEL.

In other words, these premises have not undergone any change, given that the Agency does not even have the competence to alter or restrict these rights linked to MMGD holders, due to the provisions expressed in art. 1st, inc. X and Chapter IV, of Law No. 14.300/2022 (and REN No. 1.000/2023).

Even though the market is uncertain about the extent of the effects of TS 018/2023, especially with regard to the compensation of electricity in the electricity bill through MMGD systems, limiting this right of the holders of consumer units is not part of the attribution of the ANEEL and it would be a setback for the expansion of the GD (distributed generation) retail model.

In our view, it is not up to the ANEEL interfere in business models that are being practiced in the distributed generation sector.

As there are no illegalities in such models, it seems to us that the Regulatory Agency, with measures such as the establishment of TS 018/2023, ends up creating legal uncertainty in this sector, which fought so hard for such security to come with the publication of Law No. 14.300/ 2022.

Any structures that go beyond legal guidelines must certainly be prevented and combated, but exceptions must be dealt with and not the general rule that allows the allocation of energy credits in the shared generation model, which is a model provided for in Law and that allows consumers to lease energy credits from plants installed within the distributors' concession area, including the “energy by subscription” format that began to be implemented in Brazil for low voltage consumers (group B) who do not yet have a minimum demand to migrate to the free market.

The distributed generation sector definitely needs legal security and predictability to guarantee the significant investment curve that has been seen in recent times. This movement is natural and should not be blocked or prevented through restrictive regulation.

It is important to remember that, to date, the benefits of distributed generation for the system have not been calculated and/or defined, despite the deadline established in the legal framework for distributed generation. This debate is essential and is being sidelined once again.

The implementation of TS 018/2023 will be important so that the sector can identify the address given by ANEEL on the subject. What is expected (and trusted) is that TS 018/2023 will not call into question all the achievements of recent years.

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