Change to help manage exchange-rate fluctuations reduces bonus that would go toward offsetting electricity increases for residential and rural consumers
03/07/2025
Decree 12,390/2025, published in the Diário Oficial da União (DOU) on February 5, may impose additional costs on low-income consumers, experts told Valor. They discussed the government’s decision to redirect part of the so-called “Itaipu bonus” commonly used to reduce electricity bills for poorer customers. With this decree, a portion of these funds will now be allocated to cover the deficit of the Itaipu Commercialization Account.
The Itaipu Account comprises various revenue sources, primarily from payments made by distributors in the South, Southeast, and Central-West regions, which share the cost of power generation from the binational plant. After covering the hydroelectric plant’s expenses, any remaining balance is returned to consumers.
Following Wednesday’s decree, Empresa Brasileira de Participações em Energia Nuclear e Binacional (ENBPar)–the state company overseeing Brazil’s stake in Itaipu–is authorized to establish a financial reserve, directing up to 5% of the positive balance from the Itaipu Account to manage fluctuations in the plant’s power cost. These fluctuations occur because the cost is booked in U.S. dollars and subject to currency variations throughout the year. Currently, the hydroelectric plant’s power cost is $17.66/kW, effective until the end of March.
Although the government argues that the measure prevents a 5.99% increase in average costs, experts warn that, in practice, using the “bonus” will result in disadvantages for lower-income consumers. Since up to 5% of these resources might be used to reduce the tariff deficit, the financial amount available for consumers will decrease. This amount is credited as a discount on the bills of residential and rural classes in Brazil with consumption billed below 350 kilowatt-hours per month.
The decree was issued after the Brazilian Electricity Regulatory Agency (Aneel) identified a calculation error in the price agreement between Brazil and Paraguay in 2024, resulting in a $120.9 million deficit (approximately R$700 million) in Itaipu’s accounts. Former Aneel director Edvaldo Santana notes that the Itaipu Account balance is not a real bonus but rather a refund of overpaid amounts by consumers.
The National Front of Energy Consumers had already warned that redirecting the bonus balance would increase electricity bills: “This is happening due to the poor agreement signede last April by Minister Alexandre Silveira and the successive increases in Itaipu’s socio-environmental expenses with funds that should have ensured tariff moderation,” said the front’s president, Luiz Eduardo Barata.
The Ministry of Mines and Energy stated that the decree “refers to a complementary strategy to the annual contribution already made by Itaipu.” According to the ministry, it is “a structural solution used to cover remaining balances of the commercialization account over time.”
For former Aneel general director Jerson Kelman, the decree resolves the calculation error in the negotiation between Brazil and Paraguay regarding power costs in 2024. However, a technical note from the National Academy of Engineering indicates that the $301 million cashback was insufficient to ensure cost stability in power bills.
“Like a magician, the government put money in the consumer’s left pocket, taking it from their right pocket. If the government had adhered to the treaty, refraining from inventing socio-environmental sponsorships in Brazil and Paraguay unrelated to the plant’s funding, Brazilian consumers would be paying about half of what they currently pay for Itaipu’s power,” he asserts.Decree 12,390/2025, published in the Diário Oficial da União (DOU) on Wednesday (5), may impose additional costs on low-income consumers, experts told Valor. They discussed the government’s decision to redirect part of the “Itaipu bonus” used to reduce electricity bills for poorer customers. With this decree, a portion of these funds will now be allocated to cover the deficit of the Itaipu Commercialization Account.
The Itaipu Account comprises various revenue sources, primarily from payments made by distributors in the South, Southeast, and Midwest regions, which share the cost of energy generation from the binational plant. After covering the hydroelectric plant’s expenses, any remaining positive balance is returned to consumers.
Following Wednesday’s decree, the Empresa Brasileira de Participações em Energia Nuclear e Binacional (ENBPar) – the state company overseeing Brazil’s stake in Itaipu – is authorized to establish a financial reserve, directing up to 5% of the positive balance from the Itaipu Account to manage fluctuations in the plant’s tariff. These fluctuations occur because the Itaipu tariff is denominated in U.S. dollars and is subject to currency variations throughout the year. Currently, the hydroelectric plant’s tariff is US$17.66/kW, effective until the end of March.
Although the government argues that the measure prevents a 5.99% increase in average tariffs, experts warn that, in practice, using the “bonus” will result in disadvantages for lower-income consumers. Since up to 5% of these resources might be used to reduce the tariff deficit, the financial amount available for consumers will decrease. This amount is credited as a discount on the bills of residential and rural classes in Brazil with consumption billed below 350 kilowatt-hours per month.
The decree was issued after Aneel identified a calculation error in the tariff agreement between Brazil and Paraguay in 2024, resulting in a US$120.9 million deficit (approximately R$700 million) in Itaipu’s accounts. Former Aneel director Edvaldo Santana notes that the Itaipu Account balance is not a real bonus but rather a refund of overpaid amounts by consumers.
The National Front of Energy Consumers had already warned that redirecting the bonus resources would increase electricity bills: “This is happening due to the poor agreement made last April by Minister Alexandre Silveira and the successive increases in Itaipu’s socio-environmental expenses with funds that should have ensured tariff moderation,” said the front’s president, Luiz Eduardo Barata.
When contacted, the Ministry of Mines and Energy stated that the decree “refers to a complementary strategy to the annual contribution already made by Itaipu.” According to the ministry, it is “a structural solution used to cover remaining balances of the commercialization account over time.”
For former Aneel General Director Jerson Kelman, the decree resolves the calculation error in the negotiation between Brazil and Paraguay regarding the Itaipu tariff in 2024. However, a technical note from the National Academy of Engineering indicates that the US$301 million “cashback” was insufficient to ensure electricity bill stability.
“Like a magician, the government put money in the consumer’s left pocket, taking it from their right pocket. If the government had adhered to the Treaty, refraining from inventing socio-environmental sponsorships in Brazil and Paraguay unrelated to the plant’s funding, Brazilian consumers would be paying about half of what they currently pay for Itaipu energy,” he asserts.
*By Robson Rodrigues And Fábio Couto — São Paulo and Rio de Janeiro
Source: Valor International