Marina Meyer Falcao

ANEEL, since April 17, 2012, it has been established that captive consumers can generate their own electricity from renewable sources or qualified cogeneration, and supply the surplus to the distribution network in their locality. This is the distributed micro and mini-generation of electricity, innovations that combine financial savings, socio-environmental awareness and self-sustainability. In this regard, it is worth noting that electricity from distributed micro or mini-generation units does not fall within the constitutionally provided for incidence hypothesis for ICMS (Tax on Circulation of Goods and Services). Since the basic elements capable of establishing the legal-tax relationship of the tax under state jurisdiction are not present, due to the total absence of circulation of goods, and in view of the lack of effective transfer of ownership/property of the good in question, which is electricity. It is important to emphasize that the charge portrayed arises from a mistaken understanding practiced by CONFAZ (National Council for Tax Policy) and, consequently, by state tax authorities. This distorts the legislator's intention of enabling captive consumers (with micro or mini distributed generation installed) to generate their own energy, consumed without a commercial nature. In compliance with REN 482, it indicates that ANEEL expressly prohibited any connotation of commercial operation for energy from distributed micro and mini-generators, in keeping with the primary objective of the sectoral regulation, which is to allow the complementary production of energy for own use, through the compensation system. It should be clarified, on this point, that electric energy is not a storable asset, and, given this specificity, the electric energy compensation system regulated by REN 482 aims to ensure that the amount of energy generated by a unit is, in fact, consumed by the generating unit itself or another unit located in the same concession area (shared generation), emphasizing that any attempt to commercialize this energy is expressly prohibited and penalized by the ANEEL. Precisely with the aim of ruling out any possibility of commercialization, REN 482 classifies the surplus energy generation by a given micro or mini-generator unit distributed as a free loan of a fungible asset to the distributor, which must return the asset received at the exact moment the company itself micro or mini-generator unit – or other units located in the same concession area as the local distributor (shared generation) – demand consumption. Although it is clear that ICMS is not levied on such transactions, CONFAZ, in view of the innovation brought by REN 482, issued – in an erroneous and illegitimate manner – CONFAZ Agreement no. 16/2015 and “authorized” the States of the Federation to “exempt” consumers from the incidence of ICMS on such transactions: (...) § 1 The benefit provided for in the caput: I - applies only to the compensation of electric energy produced by microgeneration and minigeneration defined in the aforementioned resolution, whose installed power is, respectively, less than or equal to 75 kW and greater than 75 kW and less than or equal to 1 MW; (our emphasis) It so happens that, considering the regulatory and tax aspects applicable to the subject, such transactions have never been shown to be subject to taxation by ICMS in order to be subject to exemption. In fact, the publication of this resulted in the distortion of regulatory concepts, while the “exemption” does not reflect the power limits and generation modalities contained in REN 482, in addition to leading state tax authorities to the mistaken understanding of the supposed incidence of the tax on such operations. Based on this premise, the state of Minas Gerais issued State Law No. 22.549/2017 and, extrapolating the rule of the CONFAZ agreement, granted “exemption” – until December 2022 – to consumers with micro or mini distributed generation of photovoltaic solar energy classified in the four modalities currently provided for in REN 482, namely: (i) generation close to the load; (ii) remote self-consumption; (iii) undertaking of multiple consumer units; and (iv) shared generation, with installed capacity less than or equal to 5 MW. The law of the state of Minas Gerais left out the source of hydroelectric generation and other renewable sources, to which ICMS “exemption” applies only in the modalities (i) generation alongside the load and (ii) remote self-consumption, with lower installed power or equal to 1 MW. Having outlined the misunderstanding expressed by CONFAZ on the subject, as well as the consequent false belief of the States of the Federation regarding the incidence of tax on such operations, Agreement 16/2015 and the Minas Gerais state law are based on distorted regulatory concepts for the purposes of “election” of criteria for “granting exemption”, such as installed power, generation modality and ownership of micro or mini-generator units. In other words, CONFAZ and Minas Gerais legislation emptied the incentive granted by REN 482, discouraging the creation of new sources of renewable energy and causing legal uncertainty for entrepreneurs. With this, it is concluded that the consumption of electrical energy from consumer units with installed micro or mini-generation – regardless of the source used for generation (solar, hydro, wind, biomass), the verified power (less than or equal to 75 kW – micro-generation ; greater than 75 kW and less than 5 MW – minigeneration) or the chosen modality (generation alongside the load, remote self-consumption, multi-unit enterprise and shared generation) – does not appear to be a taxable event for ICMS, noting that such a charge is revealed. fully subject to questioning before the Judiciary, which has shown itself to be in favor of not imposing the tax. *Lawyer and Founding Partner of LTSC Law Firm, specializing in Regulatory Law and Energy Law from CEDIN (Center for International Law) and IAED (Institute for Advanced Studies in Law). Founding member of ABDEM (Brazilian Association of Energy and Environmental Law) and member of the Natural Gas Committee. Vice-President of the Distributed Generation Law Committee of the OAB/MG (Brazilian Bar Association, Minas Gerais chapter).

Marina Meyer Falcao

Published articles

Maintenance of ICMS incentives for solar in MG

The legality of changing ownership of access opinions

The normative review of distributed generation and the Brazilian electricity sector

ICMS exemption on distributed generation in Rio de Janeiro

Group B contracts in distributed generation