In interview with TV Globo, the Minister of Mines and Energy, Alexandre Silveira, said that it is possible to fully open the free market by 2030. If this happens, all energy consumers in the country, including residential ones, will no longer be “hostages” to a single supplier .
“We are working so that we can expand the conditions of the middle class and the poor, the less privileged, to enter the free market. I want to believe that we are capable of doing this by 2030”, said Silveira.
This would be a way to reduce Brazilians' electricity bills, since free competition between suppliers in the free energy market brings more efficiency and lower energy costs for consumers.
The free market is a commercial environment in the electricity sector that allows consumers to negotiate all energy supply conditions, including price, payment term, volume to be contracted, type of source and other contractual flexibilities.
The captive market, where almost all consumers in Brazil are located, is the opposite of the free market. In it, consumers can only buy energy from the local distributor, without any freedom to negotiate prices.
Despite existing since the 1990s, the free market has always been restricted to large companies and electro-intensive industries, such as mining companies, vehicle manufacturers, cement and steel producers and many others.
In January this year, the free market was opened to small and medium-sized companies in tariff group A, that is, those connected to medium or high voltage (2,3 kV). The expectation is that 165 thousand business consumers will benefit.
The complete opening of the free market, however, does not depend solely on the government's will. The captive or regulated market has a structural role in maintaining the functioning of the electricity sector. He is the one who pays for the entire thermoelectric park and most of the charges, which are essential for providing security and quality to the energy supply.
Furthermore, there is another problem. Distributors buy energy at auctions for 20-30 years. This energy is entirely directed towards serving the captive market.
With the opening of the free market, the tendency is for there to be an increase in energy costs for captive consumers who are unable to migrate. This happens because the remaining captive consumers will have to bear the costs of the contracts (legacies) signed by the distributors.
Carrying out the transition from legacy contracts without burdening the captive consumer and weakening the electricity sector are the major challenges of opening the free market. In the future, consumers will be able to choose their energy supplier through cell phone applications, just as they do today with internet providers, where they choose the provider and data package.
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