The Brazilian electricity sector's short-term market (MCP) recorded a default rate of 12,5% in November, the first financial settlement in a decade without amounts held back by court decisions related to hydrological risk.
Of the total R$ 2,83 billion accounted for, R$ 2,48 billion has been effectively settled, leaving R$ 354 million in unpaid amounts.
The MCP (Market Clearing Point) is the environment in which CCEE (Chamber of Electric Energy Commercialization) reconciles accounts for all contracts in the country, comparing the volumes of energy traded with the amounts paid by the agents. When the amounts to be received exceed the payments made, default occurs.
For more than ten years, the sector dealt with significant amounts of receivable that were not classified as delinquent, as they were protected by court injunctions. Most of these amounts were associated with one of the main impasses in the electricity sector: the dispute over who should bear the costs of hydrological risk, known as... GSF (Generation Scaling Factor).
The GSF reflects the energy deficit between the physical guarantee (the maximum generation potential) of the group of hydroelectric plants participating in the MRE (Energy Relocation Mechanism) and the energy actually produced. The MRE functions as a system for sharing risks and bonuses among hydroelectric plants, diluting the effects of hydrological variations on individual generation.
Historical dispute
The water crisis observed between 2010 and 2015 exposed hydroelectric generators to the MCP (Marginal Cost of Production), since part of the contracted energy ceased to be generated. Arguing that a portion of this risk should not be attributed to the entrepreneurs, several companies resorted to the Judiciary and obtained injunctions to suspend payments related to the exposure.
At its peak, the amounts withheld due to court decisions totaled approximately R$ 10 billion. Over the past decade, the government has promoted different rounds of negotiations to reduce the default associated with the GSF (Generation Scaling Factor), without managing to completely resolve the controversy.
On August 1st of last year, CCEE implemented a GSF Competitive Mechanism for the negotiation of unpaid securities in the MCP, an initiative authorized by Provisional Measure No. 1.300/2025The design allowed generators to negotiate their debts with interested buyers, who, in return, received extensions of the hydroelectric plant concessions.
The mechanism had a significant result. blocked amount The amount spent on the GSF dispute fell from R$ 1,09 billion in June to R$ 310,46 million in July 2025 – a 72% decrease and the lowest level in ten years.
The measure released R$ 792,59 million for market operations, increasing the liquidity of the MCP and allowing agents to receive a larger share of their credits. Even so, more than R$ 300 million remained protected by court decisions, relating to agents who chose not to participate in the competitive mechanism.
This scenario changed on December 18, 2025, when the TRF-1 (Federal Regional Court of the 1st Region) revoked the last injunction that prevented the full financial settlement in the MCP. The decision ended one of the longest and most complex legal battles in the electricity sector and immediately released R$ 323,78 million that had been prevented from being settled.
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