Restructuring Energy Market

Brazil: Restructuring energy market

Under the new policy two energy trading markets were created: a regulated pool which buys power from generators and shares the costs between distributors under set prices; and a free-market environment where distributors and generators can negotiate their own contracts. Three new bodies were created: the Company for Energy Research (Empresa de Pesquisa Energetica -EPE), responsible for long term research and planning of the power sector; the Chamber of Electric Energy Commercialization (Camara de Comercializacao de Energia Eletrica - CCEE), to oversee trading in the pool; and the Electric Sector Monitoring Committee (Comite de Monitoramento de Setor Electico -CMSE), responsible for overseeing the security of supply in Brazil. These three bodies are expected to afford the government additional influence on the country’s electricity sector. Finally, electricity pricing will be determined by pooling cheaper hydroelectricity with more expensive thermoelectric plants (natural gas), hopefully reducing electricity tariffs and ensuring power is purchased from the newly constructed thermal plants. All of Brazil’s 64 distributors will now buy power at a single price generated from the new pricing formula.

Date Implemented: 2004