BRAZIL Law and Practice Contributed by: Débora Yanasse, Bruno Salzano, Luisa Tortolano Barreto and Julia Braga, Tauil & Chequer Advogados in association with Mayer Brown
In summary, the first pillar refers to the expan- sion of certain electricity tariff exemptions for low-income customers. The second pillar introduces a gradual expan- sion of the free market by establishing that: (i) after 1 August 2026, all industrial and com- mercial customers served at low voltage will be able to migrate to the free market; and (ii) after 1 December 2027, this right will be extended to all customers, including residential ones. To support the full opening of the power market, the MP 1,300 also introduces the supplier of last resort ( Supridor de Última Instância or SUI), a new agent responsible for supplying electricity to customers who lose their contracted supplier, and new tariff modalities to better reflect market dynamics and customer profiles, including the full segregation of energy costs and transmis- sion and distribution services in the tariffs for all customers. The SUI and the new tariffs must be regulated in 2026 according to the MP 1,300. The third pillar addresses several measures to rebalance the burden of the sectoral charges between the free and captive markets, reallocati ng certain charges to the free customers. The MP 1,300 also imposes restrictions to self- production structures, specifically for the self- production by equivalence structure, aiming to reduce the self-production incentive of exemp- tion from sectoral charges. Another relevant change is the extinction of the discounts applied to transmission and distribu- tion tariffs (TUSD/TUST) for certain renewable energy customers, provided that such discounts will be maintained for customers with power purchase agreements (PPAs) for contracted
amounts and supply periods duly registered with CCEE by the end of 2025. The MP 1,300 also changes the name of the CCEE to the “Chamber of Energy Commerciali- sation” (excluding the reference to Electric) to allow the CCEE to act in other energy markets, including gas, biofuel and hydrogen markets. The MP 1,300 also authorises the CCEE to con- tract companies and natural persons to monitor market agents and operations and it provides that such companies and persons, as well as the managers of the market agents are directly liable, civilly and administratively, for damages resulting from wilful misconduct or gross negli- gence, as well as violations of laws and regula- tions. Finally, the MP 1,300 also provides for a mecha- nism for the settlement of the remaining amounts under dispute regarding hydrological risks. Most provisions of the MP 1,300 come into force immediately and remain in force for 60 days, which may be extended once for an additional 60-day term. The MP 1,300 may be amended by the Brazilian Congress and it must be voted on, approved by the Brazilian Congress and by the president prior to 1 October 2025, in order to become law. Otherwise, the MP 1,300 will become ineffective. On 11 July 2025, Provisional Measure No 1,304 ( “MP 1,304”) was published, establishing a cap for the Energy Development Account (Conta de Desenvolvimento Energético or CDE) equivalent to the CDE’s 2026 budget. The CDE is a secto- ral charge that supports several energy policies, including the electricity tariff exemptions for low-income customers. If there is a shortfall in the CDE’s budget due to the cap, a new charge called the “Resource Complement Charge ” will
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