A bill currently moving through the Senate, originally intended to provide irrigation discounts, has been amended with provisions for compulsory power generation contracts and new subsidies, threatening to significantly increase energy costs and directly impact consumer electricity bills.
A bill that was initially designed to provide electricity tariff discounts for activities such as irrigation, aquaculture, and the operation of semi-artesian wells has undergone major changes during its progression through the Federal Senate. Bill 5.017/2019, which was approved by the Infrastructure Services Committee in July, now incorporates measures that have raised serious concerns within the power sector, particularly regarding the potential for higher energy costs.
The most significant and controversial aspect of the substitute text is the inclusion of mandates for compulsory power generation contracts and the creation of new subsidies. Experts warn that these changes could have a direct and significant impact on the Brazilian consumer’s electricity bill, drifting entirely away from the proposal’s original intent and undermining the efficiency and long-term planning of the national power sector.
Crucial Debate at Smart Energy 2026
The implications of these measures for electricity bills, system capacity requirements, and energy procurement criteria will be central topics at Smart Energy 2026 – International Conference on Smart Energy. The event is scheduled for September 22-23 at the Federation of Industries of the State of Paraná (Fiep) campus in Curitiba, Paraná.
One of the most anticipated panels, titled “Capacity Reserve in the Form of Power: System Needs, Procurement, and Impacts for the Consumer,” will feature key figures from the sector, including Fernando Machado Silva from the National Electric System Operator (ONS); Ivo Sechi Nazareno from the National Electric Energy Agency (Aneel); Luiz Eduardo Barata from the National Front of Energy Consumers (FNCE); and Reinaldo da Cruz Garcia from the Energy Research Office (EPE). The discussion will be moderated by Ricardo Vidinich, coordinator of the Energy Technical Chamber of the Engineering Institute of Paraná (IEP), who also represents Abrace (the association representing large energy consumers).
Compulsory Contracts: A Multi-Billion Risk
For Daniela Coutinho of Abrace, the core of the problem with the substitute text is the transformation of procurement processes—which should be the result of careful sector planning based on real needs—into mandatory legal obligations. These legally imposed requirements can lead to inefficient and expensive choices.
Daniela Coutinho states:
“The bill’s compulsory contracts, which have no relation to the project’s original scope, create long-term obligations to purchase energy at a high cost, disregarding all the technical alternatives that sector planning could evaluate for more efficient procurement.”
Among the proposed measures is the contracting of 2.5 GW of natural gas thermal power plants with a 70% inflexibility factor. Abrace estimates that the annual cost of this procurement could reach R$ 12 billion, with an accumulated impact of hundreds of billions of reais over the duration of the contracts. Inflexibility means that the plants must generate energy for a specified period regardless of the system’s momentary demand. According to Daniela Coutinho, this does not align with the current operational challenge: meeting peak demand in the late afternoon when solar generation declines.
Daniela Coutinho explains:
“To meet this demand, you need a flexible, fast-response power plant, not an inflexible one.”
Furthermore, there is a risk of increased curtailment, a situation where part of the available renewable energy is wasted because the system cannot fully absorb it. This scenario would be counterproductive to the expansion of clean and sustainable energy in the country.
Amazonian Natural Gas and Ignored Alternatives
Another point under scrutiny is the requirement to contract natural gas thermal power plants of Amazonian origin, linked to major hydroelectric plants in the North region. While the proposal argues for complementarity to hydroelectric generation, Abrace assesses that the pre-definition of the source and location of the plants restricts the search for more efficient alternatives for the Brazilian energy matrix.
Daniela Coutinho criticizes:
“The big problem is not necessarily using natural gas, but mandating by law that this must be the adopted alternative.”
Even if studies from the Energy Research Office (EPE) indicate a need for thermal power plants, the expert highlights the importance of evaluating different options regarding location, infrastructure, and contract duration. Solutions such as battery energy storage or pumped-storage hydropower, which offer greater flexibility, could be considered. Abrace estimates that contracting the Amazonian gas-fired thermal plants could cost R$ 31 billion annually, adding to the set of costs that will pressure electricity bills.
Infrastructure and System Planning
Ricardo Vidinich, of the IEP, emphasizes that infrastructure is one of the biggest bottlenecks in the proposal. He questions the logic of building structures to transport natural gas to regions that already have efficient transmission lines to distribute energy from other sources.
Ricardo Vidinich explains:
“It is much more logical to build a thermal plant in Rio de Janeiro, in Campos dos Goytacazes, where gas from Petrobras‘ offshore exploration platform arrives, than to build one there and run a gas pipeline all the way to Foz do Iguaçu, in Paraná.”
The expert also reminds us that the electricity bill is a sum of components including generation, transmission, distribution, charges, and taxes. Therefore, any new contract must be analyzed for its total impact on the tariff. For Ricardo Vidinich, the crucial point is that decisions on energy and power procurement must stem from the real technical needs of the power sector, not from pre-existing legal determinations.
The Transformation of the Bill: From Irrigation to Charges
The origin of Bill 5.017/2019 reveals the scale of its shift in scope. Proposed in 2019, it focused on special discounts for irrigation, aquaculture, and the operation of semi-artesian wells. Ricardo Vidinich explains that the benefit for irrigation, originating from post-2001 energy crisis policies, could make sense today given the increasing solar generation in the Brazilian energy matrix, which provides a higher energy supply during the day.
In this context, making hours flexible for irrigation could optimize the use of available solar energy. However, the problem, as Vidinich points out, was the inclusion of other measures:
He states:
“The problem is that they inserted these riders into a subject that was about irrigation—discounts for irrigation—and added other things that have nothing to do with irrigation itself.”
The substitute text approved by the Infrastructure Services Committee on July 14 dramatically expanded the project’s reach, adding generation contracts and other mechanisms that, ultimately, could impact consumers with new charges. The text now awaits deliberation in the Senate Plenary.
Conclusion
The progression of Bill 5.017/2019 in the Senate represents a critical turning point for the future of energy costs in Brazil. The transformation of a proposal focused on targeted subsidies for agriculture into a project that imposes compulsory contracts for thermal power plants—many of them inflexible and high-cost—signals a potential significant increase in electricity bills for all consumers.
This scenario reinforces the urgency of an in-depth technical debate, such as the one that will take place at Smart Energy 2026, where the priority should be power sector planning based on efficiency and the best alternatives for a cleaner and more sustainable energy matrix. Following the evolution of this bill is essential to ensure that future decisions do not compromise the competitiveness of Brazilian energy or the citizen’s wallet.
Participate in Smart Energy 2026
Promoted since 2012 by the Federation of Industries of the State of Paraná (Fiep) and organized by Rede Paraná Tecnologia e Metrologia, Smart Energy is an essential forum for dialogue on innovation, technology, investment, and sustainable development in the energy sector.
Registration for Smart Energy 2026 is open and can be completed via the official website: https://smartenergy.org.br/smart-energy-edicao-2026-inscricoes/.
