BRAZIL Trends and Developments Contributed by: Márcio Pina Marques, Marina Cristina Rios Silveira de Oliveira and Gustavo Assis de Oliveira, Advocacia Bettiol
characterisation of regulatory indirect expropriation. Once regulation ceases to represent a general bur- den equally shared by society and instead becomes a specific restriction that deprives a particular owner of the economic utility of the asset, the sacrifice imposed must be compensated by the State (RE 361127 AgR, Reporting Justice Joaquim Barbosa, May 15, 2012). In light of these precedents, both in comparative law and in Brazilian case law, there is a growing consolida- tion of the understanding that the exercise of regula- tory power, although legitimate and inherent to State action, encounters limits when its effects go beyond the mere regulation of property use, and begin to pro- duce the substantial deprivation of its economic value or the frustration of legitimately established expecta- tions. Thus, the potential suppression of the right to com- pensation for assets that have not been fully depreci- ated, when disconnected from the legal framework in force at the time the concession was granted, may be understood not merely as a regulatory change, but as an intervention in property rights producing effects equivalent to indirect expropriation. In such circumstances, the economic impact falls directly on the core of property rights, affecting not only concessionaires but also creditors, investors and other stakeholders whose decisions were based on consolidated regulatory expectations. From this perspective, the discussion regarding compensation at the end of concessions cannot be reduced to a technical debate about amortisa- tion criteria or to the mere redefinition of regulatory parameters. Rather, it engages broader legal con- cepts developed over decades in comparative law, which recognise that the exercise of regulatory pow- er – although legitimate – encounters limits when its effects approach the equivalent of uncompensated appropriation. International experience demonstrates that the stabil- ity of long-term infrastructure arrangements depends on the preservation of legitimate expectations formed
through consistent regulatory practices and on main- taining the balance between the public interest and the protection of private investment. Otherwise, the predictability and credibility of the institutional frame- work that sustains infrastructure investment in Brazil may be compromised. Conclusion Considering the constitutional, statutory, contractual and regulatory framework analysed, it becomes clear that the right to compensation for assets not fully amortised or depreciated in concession contracts executed up to 2019 constitutes a structural element of the economic and financial framework governing electricity transmission concessions. This regime was expressly provided for in bidding documents and con- cession agreements, operationalised through binding accounting manuals (the MCSE and MCPSE), and repeatedly validated through ANEEL’s own supervi- sory activities, thereby shaping legitimate legal and economic expectations. The retroactive application of an accelerated amor- tisation logic – conceived for later contracts and expressly incorporated only from 2019 onwards – would imply a substantial alteration of the original assumptions underlying the bidding processes, with direct repercussions for financial statements, financ- ing structures, leverage levels and the valuation of regulated assets. Such reinterpretation would amount to a genuine modification of the contractually defined allocation of risks, in violation of the principles of vest- ed rights, objective good faith, protection of legitimate expectations and the economic-financial equilibrium of concession contracts. In this context, the regulatory framework resulting from Public Consultation No 43/2025 must preserve the coherence of the Brazilian regulatory model by properly distinguishing between different contractual regimes and ensuring compensation for non-amor- tised or non-depreciated balances in earlier conces- sion contracts. The institutional stability of the elec- tricity sector and the credibility of the infrastructure investment environment depend on the strict obser- vance of these principles.
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