1E9Ct5D

the impact of flooding caused by the hydroelectric plant's dam reservoirs. A number of incentives havebeen offered to encourage energy generation through alternative sources, including, but not limited to,discounts on the use of and connection to systems that transport energy from alternative sources andreductions on the minimum installed capacity required for consumers to be allowed to freely purchaseenergy directly from such sources. The possibility of conducting energy auctions according to theenergy source is also being considered.Electric power plants may be isolated (i.e., not connected to the National Interconnected System –Sistema Interligado Nacional - SIN), integrated (electrically interconnected to the System and withpower dispatched by the National System Operator (Operador Nacional do Sistema – ONS) andinterconnected (interconnected to the SIN, without dispatch by the ONS).The feasibility of the construction of new plants is managed by ANEEL, which avails itself of the grantsdisciplined by the Administrative Law for this purpose, which can be summarized as follows:(i) exemption of grants for small-scale activities;(ii) need of an authorization grant for medium-scale activities, and(iii) need of a concession grant for large-scale activities.The agents that operate in the electric power generation sector include the (i) Independent ElectricPower Producer (PIE) figure, which can be both a corporate entity or a group of companies united in aconsortium that receives a concession or authorization from the federal government (Granting Power)to produce electric power to be partially or fully commercialized, at its expense and risk; and the (i)Electric Power Self-producer figure, which is a corporate entity or individual or companies united in aconsortium that receives a concession or authorization to produce electric power for its own exclusiveuse and has the right to sell the unused, excess electricity, subject to certain rules.Also concerning generation, it is relevant to mention: (i) the existence of mechanisms for theoptimization of the system's operation, by means of the guaranteed and secondary electric power ofthe plants, and (ii) the existence of the Electric Power Reallocation Mechanism (Mecanismo deRealocação de Energia - MRE), which operates in the compensation of electric power among thegenerators, and also, (iii) the strong growth in the generation of alternative electric power sources,notably co-generation, principally from biomass, wind generation, solar power, and power from SmallHydroelectric Centers (Pequenas Centrais Hidrelétricas – PCHs), which are hydropower plants with acapacity of less than 30MW. As stated above, the federal government has been actively encouragingthe use of alternative energy sources by reducing the burdens on those who buy alternative energy,73