BRAZIL Trends and Developments Contributed by: Márcio Pina Marques, Marina Cristina Rios Silveira de Oliveira and Gustavo Assis de Oliveira, Advocacia Bettiol
The Impact of the Regulatory Reinterpretation of Compensation Rules in Transmission Concessions on the Capital Markets In the Brazilian context, the debate regarding the recoverability of assets that have not been fully depre- ciated first gained prominence in 2022 in the frame- work of Public Consultation No 136/2022, conducted by the Ministry of Mines and Energy, which discussed the guidelines for the bidding or extension of electricity transmission public service concessions approaching the end of their term. This process culminated in the issuance of Decree No 11,314/2022, which regulates the bidding and extension of electricity transmission public service concessions nearing expiration. With the initiation of discussions within ANEEL regard- ing the regulation of the decree, Public Consultation No 43/2025 was opened with the objective of engag- ing society – through Regulatory Impact Analysis No 2/2025-STD-SCE-STR-SFF-SFT-SEL/ANEEL – in the discussion of the regulatory framework for Decree No 11,314/2022. Among the topics under discussion are the criteria for compensation of remaining assets. In the Joint Regulatory Impact Analysis Report No 2/2025-STD/ANEEL, when addressing the debate concerning asset compensation, ANEEL took the view that concessionaires would not be entitled to compensation for assets not fully amortised and/or depreciated, without considering the essential legal and regulatory distinction between concession con- tracts executed before and after 2019. The Decree, which addressed only non-amortised assets (without addressing the issue of deprecia- tion), reflects a public policy choice directed at future concessions and contractual extensions by introduc- ing parameters that align asset amortisation with the contractual term of the concession. For concessions granted from 2019 onwards, this logic had already been incorporated into bidding documents and con- cession agreements, allowing investors to price these assumptions in advance and with transparency. The sensitive issue arises, however, when this inter- pretative logic begins to be projected onto earlier con- cessions executed before 2019 under a substantially different regulatory and contractual environment. For
these contracts, the bidding documents and conces- sion instruments did not provide for accelerated amor- tisation linked to the term of the concession. On the contrary, they were structured based on depreciation methodologies anchored in the technical useful life of the assets, as defined in binding regulatory manuals and repeatedly validated by ANEEL over time. For illustrative purposes, the contractual instruments executed prior to 2019 themselves expressly and une- quivocally provided for the compensation of invest- ments that had not been fully amortised or depreci- ated. In the case of the Concession Agreement of Auction Notice No 02/2017-ANEEL, for example, it was expressly established that: “Upon termination of the concession, the assets associated with the ser- vice shall revert to the GRANTING AUTHORITY, and the necessary surveys and valuations shall be carried out to determine the amount of compensation to be owed to the TRANSMISSION CONCESSIONAIRE, in accordance with Article 36 of Law No. 8,987 of 1995” (clause 12, second subclause). The application of the logic incorporated by Decree No 11,314/2022 to these earlier concessions would therefore represent more than a prospective regula- tory evolution. It would imply a substantial alteration of the economic assumptions that underpinned exist- ing investments, with direct repercussions for financial statements, financing structures and risk allocation. From the perspective of the capital markets, this rais- es concerns related to legal certainty and the protec- tion of legitimate expectations – central elements for long-term infrastructure investment decisions. This understanding has also begun to be reflected in Brazilian case law. In the judgment of REsp No 1.969.446/DF, involving the compensation regime applicable to hydroelectric generation assets, the Superior Court of Justice expressly recognised that the methodology for calculating compensation for reversible assets forms part of the economic and financial framework of the concession agreement itself and therefore cannot be unilaterally altered by subsequent legislation or regulation where the con- tract expressly provides otherwise. On that occasion, the court emphasised that changing the compensa- tion methodology “also constitutes a violation of the
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