The Energy Regulation and Markets Review - Stikeman Elliott

Brazil
connection, considering the technical alternatives and the lowest costs involved in the
implementation of the access.
With respect to the access to a distribution system, a technical study of the
feasibility of access must be performed by the local distributor, which will determine the
best point of connection.
Prior to the implementation of the access to the transmission system, the user must
enter into the transmission system use agreement (‘CUST’) with the ONS, establishing
the technical conditions relating to the use of the transmission lines. The ONS signs the
CUST on behalf of all the transmission companies, representing such concessionaires
with the user. The user must also sign and the transmission connection agreement
(‘CCT’) with the local transmission concessionaire responsible for the point of access,
establishing the responsibilities for the implementation, operation and maintenance of
the point of connection and its corresponding charges. The ONS signs the CCT as an
intervening party.
With respect to the connection to the distribution system, the user shall enter
into the distribution system use agreement and the distribution connection agreement
with the local distributor concessionaire. These agreements have similar characteristics to
the CUST and the CCT.
iii Rates
Transmission and distribution concessionaires are entitled to be compensated for the
connection services to either the transmission or distribution system and for the use of
the transmission and distribution lines.
The costs for the use of the transmission or distribution systems are owed by all
users in connection with either the contracted or verified volume of energy and the rate
due by the use of the transmission or distribution systems. With respect to consumers,
the calculation of the costs for the use of the transmission or distribution systems are
based on such rates due during both peak and off-peak hours and the volume of energy
consumed during these hours.
The rate for the use of transmission system is calculated by ANEEL and annually
adjusted taking into consideration the concessionaire’s permitted annual revenue. In the
same way, the rate for the use of distribution system is calculated by ANEEL with respect
to each distributor, and revised every three years. The calculation takes into account the
investments made by the distributor with the distribution lines and the costs incurred by
the distribution activity.
IV
ENERGY MARKETS
i Development of energy markets
In 2000, Brazil suffered with a severe power supply crisis, mainly caused by a halt in
contracted investment in the electric power generation together with a severe dry season
that adversely affected the hydroelectric basins. This crisis demonstrated weaknesses in
the electric power sector and led to changes, mainly introduced by Law No. 10,848/2004.
The current energy market’s structure seeks to ensure expansion, securing the
sale of energy derived from new power plants and, consequently, a return of the capital
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