BRAZIL Trends and Developments Contributed by: Márcio Pina, André Serrão, Thiago Furtado and Gustavo Oliveira, Advocacia Bettiol
itself is the object of the contract, and not a spe- cific quantity of energy. The risks associated with insufficient load are related to generation and not capacity. Therefore, generation reduction for energy reasons cannot affect capacity contracts. Finally, the same reasoning applies to self-pro- duction – the situation in which the agent sup- plies energy for its own load – and it seems ille- gitimate to attribute the system’s load risk to it. In this case, the agent offers load and generation to the system. In view of this, burdening reserve contracts and available energy or self-production due to insuf- ficient load constitutes an erroneous application of sectoral regulation, as it goes against the allo- cation of risk and the scope and nature of such contracts. Judicial discussions on the subject In the judicial sphere, many agents question the legality of ANEEL Normative Resolution No 1,030/2022 for limiting financial compensation due to power generation cuts to events classi- fied as “external unavailability”. Energy genera- tors claim that Law No 10,848/2004 and Decree No 5,163/2004 state that the regulatory frame- work must assure that charges cover the costs of system services, including power generation cuts. On 18 December 2024, the Regional Federal Court of the 1st Region partially granted Instru- ment Appeal No 1045204-79.2023.4.01.0000, establishing the following rule: “1. ANEEL Normative Resolutions No 1,030/2022 and No 1,073/2023 exceeded regulatory limits by restricting financial compensation for power generation cuts (constrained-off) only to events classified as ‘external unavailability reason’ and
by establishing hourly allowances for payment to wind power generators, violating the principle of administrative legality. 2. The legislation governing the electricity sector (Law No 10,848/2004 and Decree No 5,163/2004) ensures compensation for all gener- ation cuts, regardless of classification or hourly allowances, and there is no regulatory innovation that alters this right. 3. Provisional urgent relief is justifiable in situa- tions of serious economic and financial risk for companies in the renewable energy sector, as well as impact on the sustainability of the nation- al energy matrix.” This ruling was replicated in Instrument Appeals No 1031185-34.2024.4.01.0000 and 1031910- 23.2024.4.01.0000. However, on 22 January 2025, the aforemen- tioned decisions were suspended as a counter- precautionary measure, in which the Superior Court of Justice ( Superior Tribunal de Justiça or STJ), in the proceedings of SLS No 3546/DF analysed only the impact of the judicial decisions on public order and losses to the public econo- my. The court did not analyse the merits regard- ing the unlawfulness of the undue allocation of risks related to generation cuts. The analysis of the merits of the lack of compensation for gen- erators that do not cause operation problems in Brazil’s interconnected system will still be car- ried out by lower courts. Due to the suspension of these court decisions, generators continue to risk big financial losses, despite having no legal responsibility for factors that require energy generation cuts. This situa- tion could become unsustainable for some gen- erators.
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