Slow-moving Congress stalls reform decree for power sector

Dubbed “Luz do Povo” (Light for the People), the new scheme offers free consumption of up to 80 kilowatt-hours (kWh) per month for beneficiaries. It has been in effect since July 5. The ministry believes the new rules are guaranteed for at least one tariff cycle — about a year. After that, one possibility would be to issue another MP next year to maintain the model.

At the National Electric Energy Agency (Aneel), however, the view is different. According to Valor’s sources, technical staff believe that if Congress fails to approve the MP, the new system would cease to exist immediately, as there would be no legal basis for the revised Social Tariff.

Lawyer Felipe Furcolin, a partner at Furcolin Mitidieri Advogados, says the continuation of the free allowance after the MP expires depends on how the relevant article of the Constitution governing MPs is interpreted. He notes that measures like the Social Tariff changes do not involve “established legal relationships” in the strict sense, which distinguishes them from cases recognized by previous Supreme Court rulings.

“Although actions have been taken, such as Aneel’s dispatch, the approval of the budget for the CDE [Energy Development Account], and even ordinary tariff reviews for certain distributors, these do not present the same level of individualization and bilateral obligations seen, for example, in an MP involving signed adhesion contracts and guarantee deposits,” Mr. Furcolin explained.

Similarly, lawyer Henrique Reis, a partner at Demarest, argues that while the subsidy is legitimate and socially justified, maintaining it after the MP’s lapse without conversion into law could face legal challenges.

“In principle, I understand that the discount from the MP would no longer apply. Just as the discount was applied immediately to the tariff in effect during Aneel’s approved cycle, the loss of effect of the provision that created the subsidy would have to be incorporated immediately into the current cycle,” he said.

The congressional committee’s installation had been scheduled for Tuesday (12), but the meeting was canceled for the second week in a row.

The government’s congressional leader, Senator Randolfe Rodrigues (Workers’ Party, PT, of Amapá), indicated that the decision to postpone came from Senator Eduardo Braga (Brazilian Democratic Movement, MDB, Amazonas), who was appointed by Senate President Davi Alcolumbre (Brazil Union of Amapá) to preside over the committee. Asked by Valor about concerns over deadlines, Mr. Braga said the government had not yet approached him about the matter.

Senate Infrastructure Committee Chair Marcos Rogério (Liberal Party, PL, of Roraima) said he sees no government effort to advance MPs in Congress. “The government should be the one in a hurry and get these committees working,” he said. “If there is no more careful and swift action, it will end up expiring.”

In a statement, the Brazilian Association of Electricity Distributors (Abradee) said it hopes deliberations begin as soon as possible, as the measures are both essential and urgent. “Abradee stresses that it is crucial for the MP to advance in its entirety, not just in the part concerning the social tariff. Without full review, the risk of further electricity bill increases is real.”