Regulatory Environment

Eletric Energy Sanitation

Regulation of Energy Services

The public electricity services provided by the Company are regulated by the National Electric Energy Agency (ANEEL).

This Agency was created in 1996 by State Law No. 9,427, of December 26, 1996, an autarchy under a special regime, linked to the Ministry of Mines and Energy, with headquarters and jurisdiction in the Federal District, with the purpose of regulating and supervising the generation, distribution, transmission and commercialization of electric energy, in accordance with the Policies and Guidelines of the Federal Government.

In 1997, Decree No. 2,335, of October 6, 1997, approved the Regulatory Structure of the National Electric Energy Agency – ANEEL.

And on December 28, 1997, through Ordinance No. 349, of the Minister of State for Mines and Energy, the Internal Regulations of the National Electric Energy Agency – ANEEL were approved, which will exercise its powers according to the specific standards of the Water Code (Decree No. 24,643, of July 10, 1934), of Law No. 8,987, of February 13, 1995, of Law No. 9,074, of July 7, 1995, and subsequent complementary legislation, in the form established in its Internal Regulations.

The services provided by the Company are remunerated in the form of tariffs. ANEEL considers the expenses from the moment the energy is generated until its delivery to the consumer unit. Therefore, to understand the composition of the tariff it is also important to understand how the electricity sector works.

The Electricity Sector and Energy Costs

Generators produce energy, transmission companies transport it from the generation point to the consumer centers, from where distributors take it to citizens’ homes. There are also marketing companies, companies authorized to buy and sell energy to free consumers (generally consumers who need a larger amount of energy).

The Brazilian electrical system allows the exchange of energy produced in all regions, except in isolated systems, located mainly in the North. Energy transit is possible thanks to the National Interconnected System (SIN), a large transmission network with an extension of over 100 thousand kilometers (km). The locations in the isolated system have been gradually interconnected over the years, and currently only about 2% of the national market remains in the isolated system.

It is ANEEL’s responsibility to guarantee that consumers pay a fair rate for the energy supplied and, at the same time, preserve the economic and financial balance of the concessionaires, so that they can provide the service with the agreed quality. To this end, the costs incurred by the distributor must be included in the calculation of the rate. The rate considers three distinct costs:

Energy generated + energy transportation to consumer units (transmission and distribution) + sector charges. In addition to the tariff, the Federal, State and Municipal Governments charge the following taxes on electricity bills: PIS/COFINS, ICMS and Contribution for Public Lighting (CIP), respectively.

Sectoral charges and taxes are not created by ANEEL, but rather established by law. Some are levied only on distribution costs, while others are included in generation and transmission costs.

Therefore, when the bill reaches the consumer, he pays for the purchase of energy (generator costs), transmission (transmitter costs) and distribution (services provided by the distributor), in addition to sector charges and taxes.

For tariff calculation purposes, the distributor’s costs are classified into two types:

• Portion A: Energy Purchase, Transmission and Sector Charges; and
• Portion B: Energy Distribution.

Source: ANEEL (Energy Cost)

Tariff Reviews and Adjustments

Below, we demonstrate information on the Tariff Adjustments/Revisions of the Equatorial Group distributors from 2018 onwards.

Source: ANEEL (Tariff Processes)

State Legislation