Government publishes guidelines for renewing distributor contracts

Concessionaires must provide information necessary to facilitate MMGD connection processes
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Governo publica diretrizes para renovar contratos de distribuidoras
In the center, Minister Silveira at a press conference in Brasília. Photo: Ricardo Botelho / MME

After almost one year discussion, the Palácio do Planalto published this Friday (21) decree no. 12.068/2024, which defines the rules for the renewal of 20 distributor concession contracts of electricity due between 2025 and 2031.

According to the government, The objective is to establish guidelines for the modernization and improvement of the quality of services provided to the population. The first distributors whose contracts are close to expiry are EDP Espírito Santo, Light (Rio de Janeiro) and Enel-RJ.

“It is the opportunity to effectively improve the energy delivered to homes, businesses and rural areas. There are 56 million consumer units impacted. The new contracts will be more modern and companies must guarantee the real capacity to provide the service. Quality will be effectively measured by the service provided to the consumer. Lengthy shutdowns and long waits in call centers are no longer tolerated by the population,” said the Minister of Mines and Energy, Alexandre Silveira, at a press conference held in Brasília on Thursday afternoon (20).

Rating criteria

To the concessions will be extended for 30 years, as long as distributors are committed to meeting quality and efficiency goals in economic and financial management.

Quality will be measured by indicators of frequency and average duration of service interruptions, while the management efficiency will be evaluated based on indicators that measure the concessionaire's ability to meet its economic and financial commitments in a sustainable manner.

The indicators will be defined individually by ANEEL (National Electric Energy Agency). The calculation period will be five years prior to the extension of the concession, excluding years prior to 2021 for the economic and financial management efficiency criterion.

It will be considered non-compliance with the provision of the service if the supply quality criteria are not met for three consecutive years or the management criteria for two consecutive years.

Additive term guidelines

For the distributed generation segment, the new concession contract will contain a guideline for distributors make available on their websites all the information necessary to facilitate the connection processes for micro and mini generation users.

Currently, the distributed generation segment faces difficulties in connecting its systems because distributors argue that there is an extrapolation of operational parameters of the electrical networks, a problem that has become known as flow inversion.

A consumer satisfaction, measured through service indicators and opinion surveys, will become a criterion for evaluating the quality of the service. Distributors will be obliged to deliver the same level of quality in all neighborhoods of its concession area. 

Will be established efficiency targets for service restoration after extreme weather events, like what happened in São Paulo in November 2023.

To the distributors will be able to carry out other business activities and offer new services to users, at their own risk, as long as they favor reasonable tariffs. 

New ones will be established incentives for concessionaires to invest in combating energy losses and defaults. ANEEL may establish different tariffs to address these problems. 

The new contracts will have the IPCA as an index for annual tariff adjustments.

In conjunction with the ANPD (National Data Protection Authority), ANEEL may establish criteria for sharing consumer datas, “with broad and equal access to interested parties, benefiting from competition and respecting data protection rights”. 

The data held by the concessionaire must be used strictly within the scope of distribution activities. Recently, the media reported an alleged use of consumer data between companies in the same economic group in order to gain an advantage in attracting new customers to the Free Energy Market. 

Distributors will also have to standardize technical qualification processes between their own and outsourced employees.

You must also have a gradual stimulation of digitalization of networks and services, including the exchange of energy meters, according to MME criteria.

One of the most controversial points was the distribution limitation of 25% (legal minimum) of dividends and interest on equity in the event of non-compliance with technical, commercial and economic-financial quality indicators. 

Distributors will also have to establish a communication channel dedicated to serving public bodies at the municipal, district and state levels. 

Concessionaires will still have to make compensation amounts available on energy bills due to violations of service continuity indicators. 

The draft contract must contain the hypothesis of opening the concession expiry process in case of non-compliance with service continuity limits, individually or jointly, for three consecutive years, or in case of non-compliance with economic-financial management efficiency criteria for two consecutive years. 

ANEEL may also define more restrictive criteria with the aim of enabling concessionaires to provide a service compatible with the “technological, regulatory and commercial reality of the electricity sector throughout the duration of the concession contract.” In this case, the application of these new criteria must be preceded by public consultation.

To the Concessionaires must also develop actions to increase the resilience of electrical networks in the face of climate events, as well as strengthen service in rural areas, “especially in regions with potential for agribusiness and family farming.”

Procedural rite

Concessionaires must file with ANEEL the request for extension of the concession with minimum notice of 36 months. Anyone who has already sent the application will have the opportunity to ratify it within 30 days, counting from the publication of the grant draft. 

ANEEL must forward the recommendation to the MME regarding the extension at least 21 months in advance. This criterion may be made more flexible for concessions expiring between 2025 and 2026

The MME's decision regarding the extension or bidding must be published 18 months before the advent of the contractual term.  

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Picture of Wagner Freire
Wagner Freire
Wagner Freire is a journalist graduated from FMU. He worked as a reporter for Jornal da Energia, Canal Energia and Agência Estado. He has covered the electricity sector since 2011. He has experience in covering events, such as energy auctions, conventions, lectures, fairs, congresses and seminars.

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