Agents from the electricity sector met this Wednesday (12), in São Paulo (SP), to follow the results of the META 2 project, which aims to present proposals for modernizing the energy price formation model in Brazil.
The project, which began in June 2023 and is scheduled for completion in December of this year, is a partnership between CCEE (Chamber of Electric Energy Commercialization), MME (Ministry of Mines and Energy), and the consulting firm PSR.
In total, the research lasted 30 months and involved R$ 11,7 million in investments, with resources financed by the World Bank. “The pricing structure we have today can and should evolve – and this evolution needs to move towards economic efficiency,” stated Alexandre Ramos, president of the Board of Directors of CCEE.
The final proposal of META 2 combines characteristics of the current price formation model with the supply-based pricing model, allowing consumers in the free market and generators to bid on energy prices. The study also foresees double ex-post accounting, the implementation of virtual reservoirs, and the decoupling of the minimum PLD (Price of Energy in the Spot Market) from the Itaipu TEO (Energy Efficiency Test), among other points.
The project suggests two implementation scenarios. In the conservative scenario, the changes would begin in 2028, preceded by a testing period (“shadow period”) of between six months and one year, starting in 2027. The more ambitious scenario proposes implementation starting in 2029, with testing beginning in 2028.
According to Maria Cândida Lima, Executive Manager of Operation Programming at ONS (National System Operator), the current moment is opportune to discuss the modernization of the model. “We need to face the difficulties, and the timing is right. The system has become much more complex, and the pricing structure was conceived years ago and needs to be reviewed,” she stated.
According to the Deputy Executive Secretary of the Ministry of Mines and Energy (MME), Fernando Colli, the main challenge of modernization is overcoming resistance to change. "The biggest obstacle is breaking the inertia of the current model," he noted.
Colli recalled that Conversion Bill No. 10/2025, originating from 1.304 Provisional MeasureIt already provides for the legalization of double accounting and relaxes the rule requiring that all cargo be backed by a contract. "This is fundamental, as it opens up space for agents who want to operate in the short-term market," he highlighted.
According to Reinaldo Garcia, Director of Electric Energy Studies at EPE (Energy Research Company), as the market advances, the pricing model also needs to evolve to ensure efficiency and predictability.
"Well-calibrated signals stimulate investment, offer predictability, and preserve affordable tariffs – without sacrificing what is most essential: security of supply," he stated.
Paula Valenzuela, technical director of PSR, pointed out the need for adjustments to the MRE (Energy Relocation Mechanism). "The current language of the MRE is restrictive and incompatible with some reforms that seek to incorporate hybrid elements (by cost and by supply) into the design of the Brazilian market," she explained.
Valenzuela also highlighted that the offer-based pricing model will require new rights and obligations in energy contracts, with possible regulatory adjustments and specific renegotiations to adapt existing contracts.
“Regardless of the chosen scenario, a legal and regulatory process must be followed. The main regulations that will need to be revised to enable hybrid pricing mechanisms have been identified. For most agents, legacy contracts would not be an obstacle,” he stated.
With the implementation of double accounting and ex-post AML/CFT, the objective is to allow:
- The price offer from non-centrally dispatched power plants, distributors, and free and special consumers;
- The inflexibility and pricing of thermal power plants;
- The price and quantity offered by hydroelectric plants.
These changes presuppose the redesign of the MRE (Energy Reallocation Mechanism) with the introduction of virtual reservoirs, an accounting mechanism that explicitly allocates water use rights to specific agents, without altering the coordinated physical operation of cascaded power plants.
Finally, Luiz Barroso, CEO of PSR, emphasized that the introduction of the offer-based pricing model does not compromise the independent operation of the ONS. "The core of the project is not to alter the physical operation of the system, but to distribute the responsibility for price formation among the agents," he concluded.
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