LATIN ENERGY 2005
Regulatory Process
December 8th, 2005
Rio de Janeiro – RJ
JERSON KELMAN
Head of ANEEL
Which institution is in
charge?
Policy
•
•
Congress
National Council of Energy Policy – CNPE
Long Term Planning (supply and demand balance)
•
Ministry of Mines and Energy – MME
•
Energy Research Company – EPE
Regulation
•
Brazilian Electricity Regulatory Agency – ANEEL
Which institution is in
charge?
System Operation
•
National Operator of the Power System – ONS
Monitoring and coordination
•
Electric Sector Monitoring Committee – CMSE
Accounting and clearing
• Chamber of Commercialization of Electric Power
– CCEE
ANEEL
• Independent decision-making by the Board in public
meetings
• Administrative autonomy
• Board members are approved by the Senate and
have mandates
• Responsibilities:
Legislative:
regulation (rules)
Judiciary:
settling disputes
Executive:
auditing, authorizations &
auctions
ANEEL’s equilibrium
Consumers
• Reasonable tariffs
• Quality of service
• Guarantee of rights
ANEEL
Agents
Government
• Adequate remuneration
• Contracts honored
• Predictable and clear rules
• Strategic interests
• Development model
Universal service
Distribution tariffs
Annual Readjustment & Periodic Revision
Signature
of the contract
1999
Annual readjustment
of the tariffs
2000
2001
2002
Periodic revision
of the tariffs
2003
2004
Extraordinary revision
of the tariffs
Distribution tariffs
Who pays?
Service Revenue
captive consumers
A2 A3
A4
B1
Distribution network
charge
Distribution
network charge
(infrastructure)
Distribution
network
charge
(taxes)
B2
B3
TE
B4
Free consumers
A2
A3
A4
Distribution network
charge
Distribution
network charge
(infrastructure)
Distribution
network
charge
(taxes)
Distribution tariffs
Composition
RS = Pass-through Costs
+
Controllable Costs
Energy Purchase
O&M
+
+
Investors’ Payment
+
Assets Depreciation
Transmission Cost
+
Public Charges
Distribution tariffs
Controllable Costs
Net Asset-base
value
x
Gross
Asset-base
Value
Rate of
return
Investors´ Payment ($)
+
x
Reference
Firm
Depreciation
Rate
Reintegration of depreciation
Expenses ($)
Controllable Costs
+
O&M Costs ($)
Asset base value
Gross
140%
120%
100%
80%
60%
40%
20%
0%
% Gross/IPCA
Medium IPCA = 103.24%
% Gross/IGPM
Brazilian Index: IGP-M = General Market Price Index
IPCA = Broad Consumer Price Index
Medium IGPM = 79.86%
Asset base value
Net
140%
120%
100%
80%
60%
40%
20%
0%
%Net/IPCA s/ ADM
Medium IPCA = 89.13%
%Net/IGPM s/ ADM
Brazilian Index: IGP-M = General Market Price Index
IPCA = Broad Consumer Price Index
Medium IGPM = 68.07%
Anatomy of the Electricity Rates
Electricity Rates Composition
Generation
Transmission
31,77%
7,80%
Distribution
26,43%
Public Charges &
Taxes
34,00%
Distribution tariffs
Domestic consumers
R$/MWh
November 29, 2005
Risks of investments in
infrastructure
• Legal, institutional and macroeconomic stability
• Environmental Licensing
• Regulatory stability (ANEEL)
ANNEL’s challenges
• Achieve administrative autonomy
• Maintain technically capable staff (presently
underpaid)
• Improve regulation methodology based on the
first cycle of tariff reviews
• Establish a better connection between quality
of service and cost
(consumer’s desire X ability to pay)
Thank you !
www.aneel.gov.br
Phone: (+55) 61 2192-8603
Fax: (+55) 61 2192-8711
[email protected]