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11. ELECTRIC POWER SECTOR11.1. Structuring of the SectorThe Brazilian electricity sector is basically divided into (i) generators, in charge of generating electricity;(ii) transmitters, in charge of transporting high-voltage electricity from generators to powerconsumption points; (iii) distributors, in charge of delivering electricity to consumers; (iv) retailers, incharge of buying and selling electricity on the free market; (v) free customers, who are free to choosetheir electricity supplier and are today required to have an installed capacity above a certain voltage;and (vi) captive customers, who are allowed to purchase electricity from their local distributor only. Thesector is organized around the following main offices and entities: (i) the Ministry of Mines and Energy(Ministério de Minas e Energia – MME), responsible for establishing policies and granting concessions;(ii) the Energy Research Company (Empresa de Pesquisa Energética – EPE), responsible forplanning and providing studies in the electricity sector; (iii) the Brazilian Electricity Regulatory Agency(Agência Nacional de Energia Elétrica – ANEEL), which regulates and supervises the activities in thissector; (iv) the National Grid Operator (Organizador Nacional do Setor Elétrico – ONS), who controlsthe physical dispatch of electricity; and (v) the Power Trading Chamber (Câmara de Comercializaçãode Energia Elétrica – CCEE), which is responsible for accounting and settlements in the free energymarket.11.2. CompetitionThere are two power trading environments, namely: the Regulated Market (Ambiente de ContrataçãoRegulada – ACR) and the Free Market (Ambiente de Contratação Livre – ACL). In the RegulatedMarket, ANEEL creates and CCEE holds public auctions where distributors purchase the powernecessary to supply their consumers. In these auctions, generators announce the amount of energyand prices and whoever offers the lowest price is the winner. Distributors are allowed to purchaseenergy only in these auctions, and the prices they pay are passed on to their consumers. In the FreeMarket, there is freedom to negotiate the purchase of energy and continuous negotiations are enteredinto between generators, traders and free customers.11.3. Main Segments11.3.1 GenerationBrazil has a very particular power generation situation, inasmuch as it has the largest hydrographicbasin of the planet and a great unexploited hydroelectric potential in the Country.Nevertheless, alternative electric power generation sources are being exploited more and more, be itto minimize the restrictions imposed by irregular rain patterns, or to protect the environment against72