President edits MP to address impacts on the electricity sector

President edits MP to address impacts on the electricity sector

President Jair Bolsonaro edited, in an extra edition of Official Diary of the Union published this Monday (13), a provisional measure (MP) that allows the structuring of credit operations to cover the additional costs of electricity distributors arising from water shortages to be amortized with funds from the Energy Development Account (CDE) . These costs will be paid with the creation of a specific tariff charge for this purpose.President edits MP to address impacts on the electricity sector

The increase in energy distributors’ costs is due to the most severe water shortage faced in the country in 91 years, together with increases in fossil fuel prices. This increase results in an increase in energy generation costs in Brazil, which puts pressure on the cash of electricity distribution concessionaires.

To mitigate the impacts of this increase on the final consumer, the MP allows the structuring of financial operations by energy distributors to address these additional costs. It also provides that such credit operations are amortized over time through a specific tariff charge, whose resources will be allocated to the CDE, and without implying costs to the Federal Government, allowing for smaller tariff readjustments in the short term while guaranteeing preserving the balance of concession contracts.

The provisional measure also provides for the possibility of establishing an extraordinary tariff flag to cover extraordinary costs arising from the situation of water scarcity. The institution of this brand aims to reduce the amount to be raised through loans, and thus the period in which the tariff charge will be charged, and will not be applied to low-income consumers registered in the Social Electricity Tariff (TSEE).

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