TCU Requires 60-Day Plan to Ensure Energy Supply in SP After Enel Contract
The Federal Court of Accounts (TCU) has set a 60-day deadline for the Ministry of Mines and Energy (MME) and the National Electric Energy Agency (Aneel) to present a detailed plan for the continuity of electricity distribution in São Paulo. This measure aims to ensure supply after the current Enel SP contract expires, scheduled for mid-2028. The auditing court also highlighted the lack of studies on the impacts of a potential contract termination.
This directive comes in the context of a process that has been monitoring, since 2023, the actions of the federal government and Aneel regarding failures in the electricity distribution service in the São Paulo capital. Reporting Minister Augusto Nardes deemed the agency’s responses adequate so far but warned of potential investigations into irregularities and accountability for managers in case of emergency contracts resulting from planning failures.
Risks of Contract Expiration
The TCU acknowledges the serious and recurring failures in the Enel São Paulo concession. However, the lack of studies on the effects of a possible contract expiration is seen as a risk. Concerns include the transition to a new company, compensation costs that could impact tariffs, risks to the electrical system, and the absence of a prepared operator to assume the concession.
Therefore, the court believes that any decision for contract expiration must be preceded by a thorough analysis of the impacts on consumers, comparing it with alternatives such as administrative intervention or transfer of control. Regardless of the concession’s fate, the minister emphasized the need to prepare a solution for the post-contract period.
Studies for New Bidding Process
The TCU has ordered the MME and Aneel to immediately begin technical and economic studies for a future bidding process. This framework should include quality targets, service provision during extreme weather events, and the possibility of dividing the concession to avoid market concentration.
The concern is that the planning process might start too late, considering the time required to define rules, conduct the bidding process, and carry out the operational transition.
Previously, the TCU had already requested a timeline of actions from Aneel to determine the future of electricity distribution in São Paulo. The agency explained that, in case of termination, the MME would define the guidelines for the bidding process, and only then would Aneel develop a timeline.
For Minister Nardes, this approach is:
extremely concerning
as there is no plan to guarantee service continuity after the contract ends.
Recommendations and Next Steps
In addition to demanding studies for a new bidding process, the TCU recommended that, should the contract with Enel be extended, the MME and Aneel demonstrate compliance with the conditions for adequate service provision.
The court also suggested improving quality targets, planning for underground networks in critical areas, implementing more effective sanctions, and establishing reimbursement mechanisms for consumers in cases of prolonged blackouts.
Furthermore, the creation of a joint structure to monitor network operations, with participation from the state government and the city hall, was recommended, along with an integrated plan for vegetation management and preventive measures against severe weather events.
The TCU also authorized a new inspection to investigate the causes of recurring failures in power restoration and the opening of an operational audit on the impacts of weather events on distribution infrastructure. The confidentiality of the case files has been lifted, and the determined measures will be monitored by the court’s technical team.
