EPP Challenges Auction Disqualification, Warns of Rising Energy Costs.
Evolution Power Partners (EPP) has escalated its dispute to reverse the disqualification of six of its consortia, the ION Consortia, in the recent Capacity Reserve Auction (LRCap). In a new memorandum sent to the National Electric Energy Agency (Aneel), the company argues that the reduction in power offered during the auction directly impacted the projected investment and, consequently, the minimum required net worth, a crucial point for the projects’ qualification.
The company points out that the investment value for the projects in question dropped from R$ 7.64 billion to R$ 6.35 billion, a decrease of almost 17%. This change, according to EPP, resulted in a need for a minimum net worth of R$ 634.6 million, an amount the company guarantees is fully met by its consortia members.
EPP‘s justification comes in response to the Permanent Auction Commission’s (CPL) decision to disqualify the consortia, alleging the exclusion of values such as Advances for Future Capital Increases (AFACs) and promissory notes, in addition to questioning the duplicate counting of net worth among companies within the same group.
Expert Reports and Valuations as Defense
To support its position, EPP presented a series of technical reports and valuations. An opinion from Ernst & Young (EY), for example, indicated an accounting net worth of R$ 56.1 million for EPP itself in December 2025. The company also attached accounting expertise reports and findings from Opinião Auditores Independentes to prove that the companies involved possess sufficient net worth to meet the individual requirements of the tender.
EPP argues that the equity method (MEP) is mandatory and that the tender did not foresee the consolidation of financial statements for companies within the same group, criticizing the CPL‘s creation of an “effective net worth” criterion.
Concern Over Consumer Impact
One of the strongest arguments presented by EPP is that replacing its projects with others in the auction’s ranking could result in higher costs for the final consumer. The company claims that subsequent projects offered lower capacity at higher prices, which, if called upon, would lead to the contracting of more expensive tariffs. This situation, EPP warns, contradicts the principle of tariff moderation and ignores the more advantageous proposals presented by its consortia.
EPP‘s defense also addresses the statements from competitors such as Eneva and Global, whose projects could benefit from the disqualification of the ION consortia. The company questions the timeliness of their presented counterarguments and criticizes the KPMG analysis presented by Eneva, arguing that the study was commissioned by an interested party and does not constitute an independent audit.
The final decision on EPP‘s appeal will rest with Aneel‘s collegiate board, which will analyze the arguments and evidence presented. The controversy revolves around nine thermal power plants with a total capacity of 1,685 MW that were selected in the LRCap.
