In a meeting with the Electricity Regulatory Agency, Mines and Energy Minister Alexandre Silveira says he is considering measures to revoke the power utility’s concession

04/02/2024

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Alexandre Silveira — Foto: Valter Campanato/Agência Brasil

The series of problems with the electricity supply in the São Paulo area could jeopardize the continuity of Enel’s concession contract. On Monday, the minister of Mines and Energy, Alexandre Silveira, ordered Brazil’s Electricity Regulatory Agency (ANEEL) to open disciplinary proceedings against the utility. In a meeting with the agency’s board, Mr. Silveira said the company had “crossed the line” and that “all possibilities” of punishment should be considered by the agency.

In an official notice to ANEEL, the minister cited the “repeated episodes” of power outages in Enel’s concession area and said that the dissatisfaction of the population served by the company is “notorious.” Mr. Silveira commented on the decision to initiate the process in an interview with cable news channel GloboNews.

At the meeting with the agency officials, Mr. Silveira reiterated his arguments, pointing out that the plan to renew concessions currently being analyzed by the government could be affected by Enel’s problems. For this reason, he advocated that the company should be sanctioned severely in order to send a message to others, according to an excerpt that Valor had access to.

In addition to the technical problems with the power supply, Mr. Silveira told Enel’s executives that the company had “little dialogue” with governments. “Enel goes beyond all limits in its relationship with the states and the federal government. Given this, we need to be a little more radical,” he said.

For him, the regulator should “consider all the possibilities of punishing the company” and “better evaluate its condition as a concessionaire of energy services in Brazil.” Pointing out that all rights of defense must be granted, Mr. Silveira mentioned a possible action to declare the concession null and void, which means terminating the supply contract.

“Enel has the right to an adversarial hearing, which is natural, but it’s important to note that over R$300 million in fines have been imposed, yet none have been paid. It has consistently failed to meet the required quality of service as outlined by regulations.”

Experts interviewed by Valor believe that it is the ministry’s prerogative to request an investigation, take action, and adopt measures against the company. Still, they believe that the service provided by the company is within the limits set by the agency.

Mr. Silveira informed ANEEL that the case could impact the concession renewal process. He emphasized that any requirement to re-tender the contracts would lead to “chaos.” He said, “If investments regulated for medium and low voltage are already restricted, imagine the reactions if these investment plans were disrupted. It would result in chaos in the Brazilian electricity sector.”

He added that “when distribution contracts were signed 10, 15, 20 years ago, they were very loose, which gave the freedom to provide a quality of service far below what the Brazilian population demands.”

He also urged ANEEL to prioritize the most pressing ongoing cases. Besides Enel, Mr. Silveira mentioned Amazonas Energia, a utility whose concession the agency had already advised to terminate. Although the case is still under evaluation, he noted that President Lula has the final say on the matter.

ANEEL’s board of directors has already rejected a request to transfer control of Amazonas Energia. The distribution company, controlled by the Oliveira Energia group, requested the transfer of control to regularize the situation, as it was no longer able to guarantee the economic and financial sustainability of the concession.

Enel said it was “in full compliance with all contractual and regulatory obligations and is implementing a structured plan that includes investments to strengthen and upgrade the network structure, digitize the system and expand communication channels with customers, as well as mobilizing teams in the field preventively in case of failures.”

The utility said it has made “significant investments to improve the quality of service and face the challenges of the electricity sector considering the impact of climate change.”

The company claims to have invested R$8.36 billion since 2018 when it assumed the concession in São Paulo, averaging R$1.4 billion per year, nearly double the investments made by the previous concessionaire.

*Por Murillo Camarotto, Rafael Bitencourt — Brasília

Source: Valor International

https://valorinternational.globo.com/