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The electricity industry in Brazil

It has been almost a decade since Brazil began restructuring its electric energy sector, with the aim of implementing a new model to develop the electricity infrastructure and of encouraging participation by private companies. To ensure this participation, and also to attract and maintain national and international investments, the country needs to have an appropriate regulatory environment in place.

However, this is not the situation in the electricity industry in Brazil at present, and difficulties have arisen in the legal regulatory framework due to flaws in the structure of the national electricity agency (Agência Nacional de Energia Elétrica, ANEEL) the body which regulates the sector.

It is interesting to note that in general ANEEL has acted in an efficient way in defence of the rights of customers, but is still far from meeting its objectives when it comes to the areas of control and regulation. ANEEL has failed to constrain the abuse of economic power and does not stimulate the expansion of the generation sector.

The existing legal framework makes it difficult to introduce competition in the generation and transmission sectors, and jeopardises ANEEL’s ability to stimulate such competition. It also hinders ANEEL´s ability to expand its role in this area.

To ensure its continued existence, ANEEL receives an income from the taxes paid by the sectoral agencies, which is recovered through the tariffs charged to consumers. The total amount has, however, been reduced over the past few years, because the government is using a portion of it as a contribution to its primary goal of achieving a surplus.

In addition to the issue of income, there are other points to consider in order to achieve a stable regulatory environment.

  • ANEEL’s autonomy
  • Impartiality in decision-making
  • Transparency in the formulation of regulations
  • Criteria used in tariff revisions
  • Quick and efficient decision-making processes
  • Communicating ANEEL’s objectives to the public
  • Capable in-house technical staff

Despite this background, ANEEL has achieved several important milestones since it was established. For example its ability to conduct tariff revisions and/or readjustments has been confirmed in several spheres of the Brazilian judiciary, despite the interest shown by certain ministries (in particular Mines and Energy and Public Finances) in participating in and influencing these processes.

Improved performance of the agency in future depends on reduced interference by the government, and the filling of some regulatory gaps. The need for a well-established legal framework is very important, and ANEEL must have security and stability in all its decisions.


The regulatory model adopted by the Brazilian state is known as ‘regulation of results’. This means that ANEEL does not dictate ‘how to do it’, but establishes the goals that must be achieved by the agencies. The electricity metering system is treated in a similar manner, and among other things ANEEL has established that:

  • Utilities must install metering equipment for all customers.
  • The meter and other metering equipment will be supplied and installed by the utility at its own expense, except for users known as ‘free customers’, who have the option of buying energy from any supplier.
  • Utilities may choose the meters and other metering equipment, as well as establishing the timeframe for reprogramming or replacement, observing the criteria established in metrology legislation.
  • The replacement of metering equipment will be communicated through specific correspondence with consumers, who will be given information regarding the reading of the meter that is being removed, as well as the one being installed.
  • The non-availability of metering equipment cannot be used by the utility as an excuse to deny or delay the installation and provision of energy supply.
  • The periodic verification of installed electricity meters must follow the criteria laid down in the metrology legislation, and the consumer must ensure free access to the equipment.
  • The consumer may ask the utility to check the electricity meter at any time, and measurement results can not exceed the admissible limits.
  • Consumers who opt to buy electricity in the free market, and the generators connected to the transmission and distribution systems, must obey the proprietary metering rules, using specific electronic equipment with an online metering data transmission system, i.e. remote meter reading in real time.

The main requirements in the metrology legislation have been established by the Instituto Nacional de Metrologia, Normalização e Qualidade Industrial (National Institute for Metrology, Normalization and Industrial Quality, INMETRO) in Act No. 262 of 30 December 2002:

Art. 2: New electronic electricity meters, produced in Brazil or imported, will be subject to model approval from the date of this Act.

For a period of a year from the date of this Act, the installation of electronic electricity meters which have not yet been approved by INMETRO will be accepted, subject to the condition of repair in the case of non-conformity being encountered during this period, and that in such cases they will be adapted to conform with the respective models, when approved.

Art. 3: Electronic electricity meters already installed can remain in use if they do not exceed the admissible maximum errors for their class and do not show defects that cannot be corrected.”

There are still very few deployments of electronic metering systems in Brazil for electric energy metering. The installations today consist mainly of electromechanical meters, which are outdated and have a low degree of reliability.

The main regulatory advance in metering, following the general rules outlined above, is that utilities are free to adopt and install new and modern metering systems. The biggest obstacle to the renovation of the Brazilian metering system is the cost involved, because the meters are an integral part of the fixed service assets and are one of the key elements in utilities’ remuneration, which in turn influences the electricity tariffs applied by the utilities.


Considering all the above aspects, in both the general regulatory field and the electricity energy metering field, ANEEL must seek consistent regulation and efficient supervision in order to satisfy consumers and the regional agencies of its prime mission: “to provide prosperous conditions for the electricity energy market to develop, with harmony between the agencies and to the benefit of society.”

ANEEL is constantly striving to fill the role for which it was established. This will make Brazil a more trusted country from an economic perspective, and will make the electricity sector a secure point in the national development process.