Brazil: Energy - Relevant News - October 2013

The Federal Government approved the energy expansion plan for the next 10 years - PDE 202 ("Plano Decenal de Expansão de Energia"), whichis the government plan for the expansion of the energy system in the next 10 years. The PDE was developed by Empresa de Pesquisa Energética - EPE (a governmental entity for energy researches).

Relevant News

Launch of a Power Innovation Plan

The Brazilian Development Bank - BNDES (Banco Econômico de Desenvolvimento Econômico e Social) and FINEP (Financiadora de Estudos e Projetos, a governmental fund for project finance) executed a cooperation agreement to launch a plan for innovation on the energy sector called Plano de Ação Conjunta Inova Energia. Three billion Reais shall be invested in the development of innovation projects. The areas that may apply for such plan are smart grids, power transmission on long-distance and high voltage, alternative sources power generation and hybrid vehicle and vehicle energy efficiency.

Service Quality Ranking for Power Distributors

ANEEL disclosed the raking of the quality of the services provided by distributors in 2012. The ranking is based on the comparison between the DEC and FEC amounts. DEC (Duração Equivalente de Interrupção por Unidadade Consumidora) indicates the number of hours that, on average, a consumer is not supplied by power during a period, generally a month or the year. FEC amount (Frequência Equivalente de Interrupção por Consumidora) indicates the average frequency on which a consumer unit has not been supplied by power. Click here to see the ranking.

Relevant Decisions

ANEEL Decides to Maintain Registered Monthly Allocation

ANEEL's Executive Committee decided, on 03/26/2013, to maintain the monthly allocation of the physical guarantees registered by generators for January and February, 2013. As a result of such decision, the spot market liquidation procedures referring to such months, which were suspended by ANEEL, shall be resumed. The suspension had been requested by companies that were exposed to atypical market conditions created by a regulatory gap. According to ANEEL's decision, its technical area shall, in the next 60 days, analyze whether any improvements of the liquidation rules are necessary. Any changes shall be applicable in 2014.

ANEEL Approves Changes to ONS

ANEEL's Executive Committee approved changes to the Accounting Manual of Operador Nacional do Sistema Elétrico - ONS (Brazilian electric system operation). By virtue of such changes, ONS must specify ledger accounts in the record of fines imposed by ANEEL, as well as specify the reasons of such penalties.

ANEEL Approves DEC and FEC Applicable to Permission Holders

ANEEL's Executive Committee approved the DEC and FEC amounts that permission holders shall comply with in 2013. DEC (Duração Equivalente de Interrupção por Unidadade Consumidora) indicates the number of hours that, on average, a consumer is not supplied by power during a period, generally a month or the year. FEC amount (Frequência Equivalente de Interrupção por Consumidora) indicates the average frequency on which a consumer unit has not been supplied by power. This shall be the first year on which permission holders are required to meet such limitations established by ANEEL. Click here to see the limitations established to each permission holder.

ANEEL Ratified the Enforcement of Guarantees

ANEEL ratified the decision to enforce the performance guarantees related to the authorizations granted to 5 thermoelectric power plants (TPP) of the same group. ANEEL revoked the authorizations of all such TPPs as a result of their delay in the implementation schedules. The full transcript of such decision has not been disclosed yet.

Legislation and Regulation

PDE 2021

By means of Administrative Rule No. 107/2013, the Ministry of Mines and Energy (MME) approved PDE 2021. PDE is the government plan for the expansion of the energy system in the next 10 years, and was developed by Empresa de Pesquisa Enegética - EPE (a governmental entity for energy researches). According to PDE 2021, an annual average growth of 5.1% is expected for renewable sources, which shall represent 45% of the Brazilian energy matrix. This growth is expected regardless of the projected increase on the natural gas participation, as a result of the Pre Salt projects (from 11% in 2012 to 15.5% in 2021). The installed capacity in the National Interconnected System (SIN) is expected to have a 56% increase until 2021 (from 116.5 GW to 182.4 GW). The wind source shall remain in the top sources, with 16GW as a forecast of installed capacity. Brazil is expected to have a 31.7 GW increase on hydroelectric generation and the transmission lines are expected to have a 47.7 thousand km expansion.

MP No. 605/2013 is Extended for 60 days

The Interim Measure (MP) No. 605/2013 was extended for 60 days and shall be applicable until 05/21/2013; during such term the Congress shall decide whether it shall be converted in a permanent law or not. MP No. 605/2013 amended Law No. 10,438/2002, and authorized the use of the Conta de Desenvolvimento Energético - CDE (an account created for the development of energy matters) to offset the discounts applicable to the power tariffs and to the tariffs for the use of distribution systems. Click here to see the full text of MP No. 605/2013.

Public Consultation

Power Distribution to Rural Areas

ANEEL is conducting Public Hearing No. 19/2013 to obtain information for the proposal of amendments to Normative Resolution No. 488/2012 and Normative Resolution No. 414/2010, contemplating the conditions to universalize power distribution to rural areas. The deadline for contributions is 04/12/2013. Click here for further information.

Energy Sector Database

ANEEL is conducting Public Consultation No. 03/2013 to obtain information for the proposal of a normative resolution regulating the conditions and procedures applicable to database positive and negative enrollments within the power sector. The deadline for contributions is 04/10/2013. Click here for further information.

Authorization of Tests and Commercial Operation

ANEEL is conducting Public Hearing No. 28/2013 to obtain information to review ANEEL Normative Resolution No. 433/2003, which regulates the criteria and procedures for the authorization of tests and commercial operation of power generation projects. The deadline for contributions is 05/13/2013.

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