BRAZIL Law and Practice Contributed by: Débora Yanasse, Bruno Salzano and Luisa Tortolano Barreto, Tauil & Chequer Advogados in association with Mayer Brown
power supply are assessed by two indicators called the “DEC” ( Duração Equivalente de Interrupção por Unidade Consumidora ) and “FEC” ( Frequência Equiv- alente de Interrupção por Unidade Consumidora ), which measure the duration and frequency of the interruptions, respectively. ANEEL Normative Resolution No 1,000/2021 estab- lishes the directives related to the general conditions of the supply of power to consumers by distribution companies. 5.4 Eminent Domain, Condemnation or Expropriation Rights to Construct and Operate Electricity Distribution Facilities Similarly, in relation to power generation and transmis- sion facilities, if the proponent fails to reach an amica- ble agreement with landowners over compensation for the construction and operation of power distribution facilities on their land, the proponent may request the issue of a DUP by ANEEL, in accordance with ANEEL Normative Resolution No 919/2021, which entitles the proponent to easement or expropriation rights over the land. Based on the DUP, the proponent may judicially obtain injunctions against landowners to access the land, and the court will define the fair compensation due to landowners, usually based on market value. 5.5 Monopoly Rights for Electricity Distribution Entities The power distribution concessionaires and permis- sionaires have the exclusive right to construct and operate distribution facilities within a specified geo- graphical territory. The concession or permission agreement indicates the areas subject to the conces- sionaire’s or permissionaire’s monopoly rights. 5.6 Electricity Distribution System Charges and Terms of Service The principal laws governing the provision of distri- bution services, as well as distribution charges and terms of service, are the same as those governing transmission services. See 4.6 Transmission Charges and Terms of Service . Distribution Tariffs ANEEL adopts the WACC methodology to review the distribution tariffs. The definition of remuneration base
considers only the value of the assets which are effec- tively rendering services to the customers, compared to the referential models established by ANEEL, spe- cific to each company, which reflect the economic and geographic conditions of their respective concession or permission areas and the efficiency levels in services. In 2026, the WACC of distribution companies is 8.1% (after taxes, in real terms), as defined by ANEEL. The updated WACC was published on 4 March 2026, with an additional adjustment approved on 5 May 2026 fol- lowing the incorporation of debenture emissions not previously included in the cost of debt database. The new WACC applies to tariff review processes con- ducted from 1 March 2026 onwards and represents an increase of 0.07% relative to the previous cycle. Power distribution tariffs are subject to adjustments and reviews as provided in the concession or permis- sion agreements. Annual adjustment In the annual tariff adjustments, non-manageable costs are fully passed on to the consumers and man- ageable costs are adjusted in line with inflation, based on the IGP-M or IPCA index, reduced by a factor – the so-called “X Factor” – determined by ANEEL so that distribution companies can share the gains of produc- tivity with their consumers. Periodic tariff review Every four or five years, there is a periodic tariff review to ensure the necessary revenues to cover efficient operational costs and adequate compensation of investment. There is also an extraordinary tariff review, on a case-by-case basis, to compensate for unpre- dicted costs, including taxes and charges which sig- nificantly change the cost structure of the distribution company. In the process of review of the tariffs, ANEEL takes into account the costs and the company’s markets, comparing them and other similar companies abroad; the company’s efficiency; and the need for fairer tar- iffs and appropriate returns to shareholders. The tariff review process follows a procedure of public hearing, where the company, consumers and any other party may submit contributions to ANEEL prior to definition of the new tariffs.
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