The publication of Provisional Measure 1.304/2025, published last Friday (11), reignited the debate on the sustainability of subsidies in the electricity sector. By limiting the growth of the CDE (Energy Development Account) and changing guidelines for the contracting of new plants, the MP seeks to contain distortions created by the overturning of the vetoes to the offshore wind power law – but may, in practice, encourage a “gold rush” for new incentives before the ceiling comes into effect.
The MP proposes limiting the growth of the CDE – a fund that finances public policies and subsidies in the electricity sector –, repealing the requirement for compulsory contracting of thermoelectric plants, and creating new guidelines for gas sales in the country.
According to the text, the 2026 CDE will serve as a reference for subsequent years. If there are insufficient resources, the ECR (Resource Complement Charge) will be created, paid by the CDE beneficiaries themselves, with the exception of programs such as the Social Tariff, Light for All, Fuel Consumption Account, CCEE remuneration, and energy purchases by distributors serving capital cities not yet connected to the SIN in December 2019.
If the ECR needs to be activated as early as 2027, beneficiaries will bear 50% of the funding shortfall. From 2028 onwards, the burden will be 100% in full.
Industry agents warn, however, that defining a ceiling based on a future (and not retroactive) value could accelerate the movement of creating new subsidies before the CDE freeze.
This Tuesday (15), the ANEEL (National Electric Energy Agency) approved the CDE budget for 2025, worth R$49,2 billion, representing an increase of 32,4% compared to 2024.
For Edvaldo Santana, former director of ANEEL, the decision not to use 2024 figures as a reference accelerates the increase in the CDE. "Between January and June 2025, the amount went from R$43 billion to almost R$50 billion. Knowing that starting in 2027, the CDE will be limited to the previous year, it's possible that this ceiling will rise to R$65 or R$70 billion, a figure that should only be reached around 2030," he assessed.
ABRACE, an association representing large industrial energy consumers, projects that, even without new expenditures, the CDE could reach R$55 billion in 2026. "Starting in 2027, with the risk of ECR payments, there is an incentive to speed up the processing of proposals that create new subsidies. This could further raise the CDE ceiling, triggering a kind of 'gold rush' for benefits," the organization warned.
Frederico Boschin, CEO of Noale Energia and a lawyer specializing in the electricity sector, shares this concern. He says the government didn't adopt the 2024 value as a reference due to the creation of the new Social Tariff, established by Provisional Measure 1.300/2025. The full financial impact of this policy will only be known in 2026.
"Furthermore, the text is contradictory: it proposes to lock in the value of the CDE, but creates a charge to cover potential funding shortfalls. The CDE has become a checking account where all the sector's mess is dumped," Boschin criticized. "It lacks technical expertise. Both MP 1.300 and MP 1.304 are populist, misguided, and non-technical responses to structural problems," he added.
For ABRADEE, which represents energy distributors, the CDE cap is positive. "The guideline that any excesses above the cap be borne by the beneficiaries themselves, without passing them on to other consumers, reinforces tariff fairness and responsible cost allocation," it stated in a statement.
New rules for energy contracting
MP 1.304 also revokes the mandatory contracting of 8 GW in inflexible natural gas thermoelectric plants – a requirement established by Law No. 14.182/2021, which dealt with the privatization of Eletrobras – and eliminates the 50% reserve of demand from auctions A-5 and A-6 for hydroelectric plants of up to 50 MW.
Instead, the MP proposes contracting 4,9 GW of small hydroelectric power at the ceiling price of the 6 A-2019 Auction adjusted by the IPCA (R$397,56/MWh), with a 25-year supply term. Contracting will begin in the first half of 2026, with supply beginning between 2032 and 2034. According to ABRACE, this change could generate savings of R$110 billion in thermal power plant costs over the coming years.
Charles Lenzi, president of ABRAGEL – an association representing 75% of the country's operating small hydroelectric plants – emphasized that the provisional measure reinforces the importance of small hydroelectric plants as a clean, renewable, low-cost source of energy with dispatch capacity. "The establishment of an auction schedule for small hydroelectric plants, a 100% domestic source, confirms the strategic role of this generation for the country," he said.
Boschin also welcomes the development of small hydroelectric plants, which generate distributed energy and boost local development. However, he points out that most small hydroelectric plants lack energy storage capacity, which compromises their role as reserve capacity.
Santana, a former director of ANEEL, also criticizes the proposal. He considers it a serious mistake. "These plants are not dispatched by the ONS. We're going to increase the inflexibility of supply, when the ONS itself is already projecting increasing power losses between 2027 and 2029. In other words, we're going to contract plants that need backup as backup," he stated.
ABRADEE, on the other hand, believes the MP corrects distortions created by the overturning of vetoes in the offshore wind sector. "By reestablishing the leading role of energy planning and making new contracts conditional on technical criteria, the MP contributes to predictability and balance in the sector," the organization concluded.
New rules for natural gas marketing
ABRACE Energia said it recognizes the importance of the MP in proposing measures to enable the commercialization of the Union's natural gas through PPSA (Pré-Sal Petróleo SA
The MP's main merit is to allow PPSA to access gas flow and processing infrastructure, through conditions and values defined by the CNPE (National Energy Policy Council).
For ABRACE, this measure enables the commercialization of federal gas more quickly, pending final regulation by the ANP (National Petroleum Agency). However, ABRACE points out that the proposed solution is limited to PPSA and does not extend to other sector players, which maintains barriers to competition and effective market opening.
Furthermore, the entity highlights concerns about the potential regulatory overlap between the CNPE and the ANP, suggesting that the CNPE's decisions be temporary. Another critical point is the risk of cross-subsidies in the transportation of gas from the Union, which could burden other consumers.
Finally, there is the fear that maintaining the PetroBras, as a reseller of gas from the Union, perpetuates its dominant position and hinders the entry of new suppliers, which goes against the principles of a competitive and dynamic market.
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