BRAZIL Law and Practice Contributed by: Débora Yanasse, Bruno Salzano and Luisa Tortolano Barreto, Tauil & Chequer Advogados in association with Mayer Brown
sumed in the country. The opening will occur in two stages: (i) within 24 months from the Law’s effective date, for all industrial and commercial consumers; and (ii) within 36 months from the Law’s effective date, for all remaining consumers. The implementation is sub- ject to prior compliance with regulatory requirements, including the regulation of the supplier of last resort ( Supridor de Última Instância or SUI), tariff transparency mechanisms segregating ACR and ACL costs, the defi- nition of standardised products and reference prices, and the regulation of involuntary overcontracting and involuntary exposure by distribution concessionaires. The Law introduces the SUI or supplier of last resort into the statutory framework. The SUI is a new agent responsible for supplying electricity to customers who lose their contracted supplier, including in cases such as the termination of a consumer’s representation by a retail trading company. The SUI will be authorised and supervised by ANEEL and will be remunerated through specific tariffs to be set by the regulator. The costs and financial effects of any involuntary defi- cit incurred by the SUI will be allocated among free market consumers through a specific tariff charge, as regulated by ANEEL. Regarding the discussion about self-production struc- tures, the Law has also revised the corresponding applicable rules. A self-producer is now defined as a consumer holding a generation project authorisation to produce electricity for its own account and risk. Self-production by equivalence is subject to new requirements, including a minimum aggregate con- tracted demand of 30,000 kW, composed of consum- ing units with individual demand of at least 3,000 kW, in addition to specific corporate requirements, includ- ing direct or indirect participation in the share capital of the entity holding the concession, or common cor- porate control with the relevant companies. The Law preserved the previous legal regime for self- producers by equivalence with contracts submitted to the CCEE before the Law’s publication, and established a transition period for new self-producers by equiva- lence to follow the previous legal regime as long as their self-production share purchase agreements were signed and submitted to the CCEE within three months
after the Law’s publication and the relevant transac- tions are closed within 36 months after signing. The Law terminated the discounts applied to distri- bution and transmission tariffs (TUSD/TUST) paid by customers who purchase incentivised renewable energy. In general terms, the Law determined that the discount will not apply to: (i) new customers who migrate to the free market after its publication; and (ii) customers who have already migrated and who increase their use of distribution and transmission systems after publication of the Law, provided that the discount continues to apply to the amount already contracted on that date. As from 1 January 2027, the Law limits the CDE annu- al budget to the budget approved in 2025, adjusted by the IPCA (the inflation index observed by the Central Bank of Brazil). The CDE is a sectoral charge that sup- ports 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 imposed by the Law, the new Resource Supplement Charge or ECR will be applied and paid by the CDE beneficiaries (except for certain beneficiaries, including low-income customers). Additionally, as from 1 January 2026, the Law revises the allocation of the CDE by voltage level, setting 50% of the low-voltage unit cost for consum- ers connected at voltage equal to or higher than 69 kV and 80% for consumers connected between 2.3 kV and 69 kV. The Law authorises ANEEL to regulate and supervise electricity storage as a sectoral activity, which may involve standalone operations, integration with gen- eration, transmission or distribution concessions, or operation by customers. The Law also changes Law 14,182/2021 (the Eletro- bras privatisation law) relating to the compulsory con- tracting of gas-fired thermal power plants, cancelling the regional power auctions previously mandated for that purpose. The Law also establishes a new frame- work for the contracting of hydroelectric plants with installed capacity of up to 50 MW, including Small Hydropower Plants ( Pequenas Centrais Hidrelétricas or PCHs), in the form of capacity reserve auctions, providing for the contracting of up to 3,000 MW of
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