The approval of notices by Aneel maintains the existing submarket model in energy auctions, sparking debates about financial risks and reflections on consumer tariffs.
Aneel (National Electric Energy Agency) has defined the rules for the upcoming bidding rounds in the Brazilian electricity sector, maintaining a format that raises concerns among clean and regulated energy market stakeholders. By a majority vote, the regulatory agency’s board approved the bidding notices for the A-1, A-2, and A-3 Existing Energy Auctions, scheduled for November 13.
The main controversy revolves around maintaining energy delivery in the submarket indicated by the seller. With this structure, the National Interconnected System continues to deal with geographical mismatches between where generation is contracted and where the load of distributors is actually located, leaving room for financial volatility.
The financial impact and geographical mismatch
The debate gained momentum following distortions observed in previous contracting rounds, when most of the energy was allocated to specific regions, such as the Northeast, while purchasing companies operate in various areas of the country. A simulation by CCEE (Electric Energy Trading Chamber) indicated potential significant losses for utilities due to differences in the PLD (Difference Settlement Price).
If the imbalance between submarkets persists and mitigation mechanisms fail, the excess cost could end up being passed directly on to the tariffs paid by end consumers. This financial exposure motivated internal disagreements within the regulatory agency’s own board.
Maintaining the current rules in existing energy auctions transfers significant operational and financial risks to the distribution end, requiring caution and urgent regulatory reviews by the Executive Branch.
New guarantees and future prospects
To try to shield the process against potential contract defaults, the new notices introduced a stricter requirement. The financial guarantees required from sellers jumped from three months to the equivalent of one year of sales revenue, although generators with their own plants may be exempt from the security deposit if they meet specific criteria.
The auctions will take place sequentially, covering supplies that will start taking effect between 2027 and 2029. While the MME (Ministry of Mines and Energy) evaluates structural changes to the legal framework via decree, the electricity sector is closely monitoring the developments of these rules to ensure the competitiveness of the auctions without compromising tariff affordability.
