TCU and the issue of energy commercialization by solar communities

According to MME (Ministry of Mines and Energy), MMGD (distributed micro and mini generation) dates back to 2008. In this context, a working group was created that culminated in Normative Resolution 482/2012. 

With the exponential growth of the distributed electrical energy generation model, through SCEE (Electrical Energy Compensation System), several discussions began to change existing rules at the time, which led to the need for a new legislative framework for the sector, which remained consolidated with the Federal Law No. 14,300 of 2022, later regulated by Normative Resolution 1,000/2021, amended by Normative Resolution 1,059/2023.

With this new regulatory framework, ANEEL (National Electric Energy Agency) intended to resolve previously existing legislative omissions, bringing more legal certainty in relation to the use of SCEE.

MMGD became popular through the so-called “Solar Communities” or “Solar Farms”, whose model allows a group of people to maintain a MMGD and share the benefits with each other.

This model of electrical energy production has appeal among consumers who, despite the high consumption of electrical energy, are not included in the concept of free consumers., which can define who your electricity suppliers will be.

They are called captive consumers, that is, they are consumers without the freedom to decide who to buy their energy from, being linked to the local energy distributor.

In this sense, the consumer-generators connected to the electricity distribution network are small generators, and fall within the definition of captive consumers.

In other words, given the impossibility of choosing who to buy the energy consumed from, the consumer-generators included in the MMGD produce electrical energy for their own consumption.

According to the Federal Attorney’s Office at ANEEL, however, “[t]he fact that the captive consumer has generation, as provided by Resolution No. 482/2012, does not violate this premise. When installing, maintaining and operating its asset, using the energy generated by it, the consumer acts as a generator, not a generator holding concession, permission or even authorization, but a singular generator, with characteristics specific to a registration holder and others outlined by the Resolution no. 482/2012”.

The Federal Attorney's Office continues, “[a] commercialization of the input, in fact, is absent from the range of activities of this 'consumer. In fact, not even when it makes use of the electrical energy compensation system inaugurated by Resolution No. 482/2012 and injects unconsumed surplus energy into the distribution network, appropriating corresponding credits, is commercialization characterized? of the input. In fact, Opinion no. ° 108/2012 has already addressed the issue, having concluded, after analyzing the nature of several contracts, that the electricity compensation operation carried out constitutes mutual, (…)”.

Despite the fact that Resolution 482/2012 has been superseded by the publication of Resolution 1,059/2023, the precepts present there remain, so that the understanding adopted by the Federal Attorney's Office with ANEEL remains current, with regard to the validity of the model of MMGD for captive consumers.

And this is evidenced by ANEEL, which, asserts “(…) it is imperative to recognize that the new and recent provision in Law, by making explicitly eligible 'consortium, cooperative, voluntary civil condominium or building or any other form of civil association, established for this purpose, composed of individuals or legal entities that own a unit consumer of microgeneration or distributed minigeneration', among others, enabled the creation of new business models that use the shared generation modality, making the characterization and prevention of possible distortions of MMGD as generation for own consumption more complex.”

It is in the context of high tariffs and the lack of freedom to choose the electricity supplier, that Solar Communities, supported by current legislation, take advantage of the possibility of uniting a group of people, sharing the costs arising from the generation of electricity. to share the benefits resulting from joint investment in the system.

And based on this premise, some questions emerge, among them:

• Legality of Solar Communities;

• Delegation of supervision to distributors; It is

• Lack of clear penalties for irregularities highlighted by distributors.

Legality of Solar Communities

Given the growth of Solar Farms implemented in recent years, the distributors claim that they subverted the objective of the association permission for the purpose of self-generation of electrical energy, to, in practice, sell electrical energy, using the free market model for consumers. captives.

Even though we are dealing with a fraction of the distributors' captive consumers, the distributors' real concern is with the continued possibility of losing this consumer market, which was guaranteed to them by an old model of the electrical system, of structural monopoly, without the existence of current technologies.

Currently, distributors serve 90 million consumer units. Of this total, 2.09 million customers joined distributed generation.

However, solar communities do not enter the free market, because to date there is no possibility of choosing an electricity supplier for low voltage consumers, who remain linked to the local distributor. 

In fact, even if the legislation authorizes remote energy generation, it is not possible for them to be that remote, as distributed generation requires that the consumer-generator be within the same concession area as the consumer unit that will receive the energy credits.

In other words, energy consumption and generation must be covered by the same local distributor, there being, therefore, no interchangeability between distributors, and in this sense, there is no freedom of choice, an essential characteristic of the captive consumer model.

Deepening the analysis on the issue, obviously not exhausting the topic, it is observed that one of the points of discussion regarding the existing model is that the costs incurred by the distributors would be borne by other consumers, those unable to participate in solar communities or install systems own. 

However, we do not think this conclusion is true. Firstly, because the distortions are covered by current legislation, which seeks to compensate for any loss by the distributor. 

What we did not realize was taken into consideration when analyzing the topic is that solar communities bear part of the cost of expanding the system, which is used by other consumers, not generators.

In accordance with article 108 of Resolution 1000/2021, the consumer-generator must financially participate in the works necessary to increase demand, according to the connection request. It is also important to highlight the obligation of the group A consumer-generator to pay the minimum contracted demand. 

It is clear that the increase in load and its costs are not fully borne by the distributor, which will pass it on to its captive consumers, but there is clearly a division of costs with the solar communities, so that the claim that Solar communities would result in an increase in the cost of energy for other captive consumers.

The discussion then turns to the legal prohibition on the sale of electricity under the MMGD model. Again, what is observed is a discourse from distributors that solar communities would, in fact, sell the energy generated, which violates current legislation.

The legislation is expressed:

 “Framing in the SCEE is prohibited of a consumer unit with microgeneration or distributed minigeneration that is not characterized as producing electrical energy for own consumption”. 

AND, “[it] is prohibited to sell credits and surplus energy, as well as obtain any benefit in the allocation of credits and surplus energy to other holders, applying the provisions of art. 655-F if this is found.”

It turns out that solar communities do not sell energy, the system is built based on the possibility of compensating the energy generated by the consumer-generator, whose associates are several holders of consumer units. 

Obviously, this is a private enterprise, which must be maintained through financial contributions at a frequency agreed between the parties. 

At this point, the Director-Rapporteur of the review of REN no. 482/2012 presented his understanding that “(…) there is not the same normative restriction for captive consumers to carry out the activity of self-production of electrical energy (or self-consumption, according to the nomenclature of Resolution no. 482/2012, of 2012, which seeks to emphasize the characteristic of consumer of who chose to install distributed micro and mini generation), and they may exercise ownership of the land and generation equipment through rental and leasing contracts whose consideration is not, fundamentally, payment for the energy produced. In other words, equipment contracts may have clauses defining the payment of variable installments associated with the income and performance of the equipment, but the value of the main installment must be fixed so as not to characterize the commercialization of electrical energy.”

Contrary, therefore, to what the Specialized Audit Unit for Electrical and Nuclear Energy of the TCU (Federal Audit Court)), which asserts that there is an irregular commercial arrangement in the organization of solar farms.

It is worth clarifying that, although the understanding was adopted under REN No. 482/2012, the core of the issue is the same under Resolution 1000/2021, the legal impossibility of selling electricity within MMGD.

In fact, corroborating this conclusion, ANEEL's response to the TCU: “(…) However, unless the sale of electrical energy is identified between associations/consortiums/cooperatives/voluntary civil condominiums or buildings and the respective beneficiary consumers within the scope of the SCEE, or irregularities in the constitution of these associative forms, it is not possible to see a priori that distributors have sufficient legal support to withdraw or not allow these consumers to participate in the SCEE. This is because the law itself explicitly provides for the right of consumers to come together in one of these associative forms to participate in the SCEE in the form of shared generation.”

And finally, the distributors themselves use the solar community model, which would be contrary to their own interests, if, truly, this model were harmful to the captive consumer system.

We could extend the debate and delve deeper into all the points covered, however, it seems clear to us that solar farms are perfectly in line with the legislation on the subject.

Thus, we move on to the next point, the problem of delegating supervision of compliance with legislation to local distributors.

A delegation from inspection to distributors

Chapter – distributor – carry out the inspection and install or adapt the measurement system.

According to article 655-F, in the event of evidence of irregular receipt of a benefit associated with the SCEE, the distributor must adopt measures for its faithful characterization, composing a set of evidence that proves the irregular receipt of the benefit.

It is clear that the distributor is responsible for compliance with MMGD legislation and regulations, in accordance with Resolution 1000/2021, which clearly presents a conflict of interest.

Local distributors through ABRADEE (Brazilian Association of Electric Energy Distributors) question the validity of solar communities, essentially alleging that they violate the captive market, generating losses for distributors due to the reduction – allegedly – of their effective consumer market, and these same companies are those responsible for monitoring the validity of the energy compensation system.

Inspection should be carried out by an independent body whose purpose is to ensure faithful compliance with the legislation. 

We question, at this point, how to ensure that the inspection body will, in fact, and impartially analyze whether the situation actually complies with the legislation, whether the body responsible for this has an interest in the result of the inspection.

We do not stop at this point, but expand to the issue relating to the granting of connection budgets, which are also often denied in a discretionary manner by the distributors, who use arguments sometimes without any factual support to deny the connection.

It is extremely important to highlight that it is not only up to the local distributor to assess whether the project requesting the connection budget is in line with the legislation during the use of the compensation system, but also at the time of granting the connection budget.

To repeat, local distributors are visibly not impartial entities for the role of overseeing the electricity compensation system, and should not have this role delegated to them.

Furthermore, distributors – despite the social function of societies – are guided by profitability, not social well-being, and the electrical energy system, which definitely benefit from the growth of MMGD, which is an essential part of the energy transition has been in vogue recently.

And, finally, we move on to the topic of legal uncertainty due to the lack of clear definition of penalties and their extent in the electricity compensation system.

Lack of clear penalties for irregularities highlighted by distributors.

In addition to the impartiality of the agent to whom the inspection was delegated, there is no clarity about what the penalty would be, if the solar communities were, in fact, irregular.

Solar farms, as seen throughout this explanation, are in perfect accordance with the electrical energy compensation system, including in ANEEL's understanding. 

The creation of associative groups in order to reduce their costs for using the compensation system in no way violates the norm, however, if irregularities were identified, the question we must ask is: how will the solar farm be penalized?

We could try to answer the question by analyzing article 655-F, of REN no. 1000/2021, which says:

“Art. 655-F. In the event of evidence of irregular receipt of a benefit associated with the SCEE, the distributor must adopt measures for its faithful characterization, composing a set of evidence that proves the irregular receipt of the benefit. (Included by REN ANEEL 1,059, dated 02/07/2023)” (no emphasis in the original).

Or still in continuity with what was said above, we must analyze article 655-D, § 3, which reads, as transcribed below:

Art. 655-D. The consumer responsible for a consumer unit can participate in the SCEE:

§ 3º The inclusion of consumers in the SCEE is prohibited in cases where it is detected, in the document that proves the possession or ownership of the property where the microgeneration or distributed minigeneration is installed or will be installed, that the consumer has rented or leased land, lots and properties under conditions in which the rental or lease value is given in reais per unit of electrical energy.

And, further, we look at article 325:

“Art. 325. The distributor must compensate the billing when there is a difference to be charged or returned resulting from the following situations: I – measurement defect, as referred to in Section V of Chapter VIII; II – proof of irregular procedures, as referred to in Chapter VII of Title II; or

§ 1 The distributor must notify the consumer in writing, using a method that allows proof of receipt, containing the following:

III-A – in the case of irregular receipt of a benefit associated with the SCEE, description of the irregularity and associated signs, as well as the amounts to be rebilled; and (Included by REN ANEEL 1,059, dated 02/07/2023)” (no emphasis in the original).

The above regulations are all based on the terms of Resolution 1,000/2021. Although we have the articles above addressing the topic, none of these articles completely answer the question proposed.

Assuming that the distributors will in fact act impartially, once the irregularity is corrected, could the consumer-generator be reinserted into the electricity compensation system? How long?

By paying the differences determined by the distributors in any irregularity found, and correcting the identified irregularity, should the compensation system be reinstated for that consumer unit? When?

The insecurity caused by the lack of answers to the questions above is evident, since, even though solar communities are not profit-making ventures in essence, as they are not about the sale of electricity, as we have made clear, they are of investments, the results of which are harvested through compensation for the energy generated, and which in the current system are at the mercy of the distributors.

We consider it unfeasible to apply the penalty of exclusion from the SCEE indefinitely, however, with the distributors as agents of supervision and application of the penalty, due to a clear conflict of interests.  

In our view, there should be a cure period for the irregularity, enabling the inclusion of the consumer-generator in the SCEE, and what's more, ANEEL should necessarily be part of this procedure, in order to guarantee the appropriate penalty. 

References

• Consumers covered by articles 15 and 16 of Law no. ° 9,074/1995 and by §5 of article 26 of Law no. 9,427/1996
  
• Opinion no. 00542/2015/PFANEEL/PGF/AGU
  
• Letter no. 20/2024 -AIN-ANEEL, of 04/18/2024
  
• https://app.powerbi.com/view?r=eyJrIjoiZTZhYWU4ZTItNGVjYy00NWIwLTg3ZjMtNGIwMzBiZGNhMDAwIiwidCI6IjQwZDZmOWI4LWVjYTctNDZhMi05MmQ0LWVhNGU5YzAxNzBlMSIsImMiOjR9 (a ceased on 04/12/2024)
  
• https://abrapch.org.br/2023/08/geracao-distribuida-ja-representa-11-de-toda-energia-gerada-no-pais/
  
• Art. 108. The consumer's financial participation is the positive difference between the budget for the work with minimum overall cost, proportional in accordance with this article, and the distributor's responsibility. § 1 The distributor must proportionalize the budget for the minimum overall cost work considering the relationship between the greatest load or generation demand to be met or increased and the maximum demand made available by the budget at the connection point, with mandatory application of art. 100. (Wording given by REN ANEEL 1,059, dated 02/07/2023) § 2 The budget cannot contain the items set out in § 4 of art. 98
  
• Art. 2°. (…) the consumption of active electrical energy or accounted for as energy credit by consumer units participating in the system. (…) – REN 1,000/2022
  
• § 5 of article 655-D, of REN 1000/2021
  
•  § 5 of article 655-M, of REN 1000/2021
  
• Circular Letter No. 0010/2017-SR/ANEEL, dated 03/22/20217
  
• Letter No. 20/2024 – AIN/ANEEL
  
• Cemig SIM- company linked to a distributor