The Energy Regulation and Markets Review - Stikeman Elliott

Brazil
The Brazilian rules divide the country into four sub-regions, interconnected by
the SIN; there is also an isolated region in the north of Brazil. Although there are certain
small restrictions and small differentials in price among the sub-regions, the transmission
lines allow power transactions from the four different sub‐regions that are part of the
SIN.
i Vertical integration and unbundling
Until the 1990s, the BPS was vertically integrated, mainly in view of the fact that there
was no competition or significant private participation. In 1995, however, Law 9,074
started certain important changes to the BPS. The first measures were implemented to
bring competition into the power generation and power trading sectors. Also, the BPS
initiated the privatisation of the state electric power distributors. 11 In other words, the
BPS underwent modification because of the government’s recognition of the necessity to
attract new players in order to attract the required investment in the sector. Consequently,
the state companies that operated in all segments were disaggregated and the majority
of the Brazilian power distributors were privatised. Nevertheless, the legal obligation to
the end of the companies’ vertical integration was only introduced in 2004, by Law No.
10,848/2004, mainly motivated by competitive issues.
Pursuant to the new wording of Article 4, Paragraph 5 of Law No. 9,074/1995,
electric power distribution companies cannot carry out any activity related to electric
power generation and or transmission services. They are only allowed to sell energy to
captive power consumers 12 in accordance with the rate approved by ANEEL.
Moreover, power generation companies cannot be related to power distribution
companies, as explained in Section II.iii, supra.
ii Transmission/transportation and distribution access
In accordance with Law No. 9,074/1995, any electric power agent has the right to
access either the distribution or the transmission systems, upon reimbursement of the
transportation costs; such costs are calculated in compliance with a criteria set out by
the granting authority. ANEEL Resolution No. 281/1999 and ANEEL Normative
Resolution No. 67/2005 regulate the access to the basic grid (transmission) and the
distribution systems.
The agent interested in connecting to the transmission or to the distribution
system must request the access either to the ONS or to the distribution or transmission
concessionaire responsible for the access point where the connection should be made, as
the case may be. 13
The ONS must prepare a technical study of the feasibility of access to the
basic grid. This technical study will determine the best alternative for the envisaged
11 A few generators were privatised, but privatisation occurred mainly in the distribution segment.
12 Captive power consumers are the consumers, with charge lower than 1,500kW, that are obliged
to buy electric power from local distributors.
13 ANEEL Resolution No. 281/1999, Article 7, I and II.
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