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Regulatory Process December 8 th, 2005 Rio de Janeiro – RJ JERSON KELMAN Head of ANEEL LATIN ENERGY 2005.

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Presentation on theme: "Regulatory Process December 8 th, 2005 Rio de Janeiro – RJ JERSON KELMAN Head of ANEEL LATIN ENERGY 2005."— Presentation transcript:

1 Regulatory Process December 8 th, 2005 Rio de Janeiro – RJ JERSON KELMAN Head of ANEEL LATIN ENERGY 2005

2 Which institution is in charge? Policy Congress National Council of Energy Policy – CNPE Long Term Planning (supply and demand balance) Ministry of Mines and Energy – MME Energy Research Company – EPE Regulation Brazilian Electricity Regulatory Agency – ANEEL

3 Which institution is in charge? System Operation National Operator of the Power System – ONS Monitoring and coordination Electric Sector Monitoring Committee – CMSE Accounting and clearing Chamber of Commercialization of Electric Power – CCEE

4 Independent decision-making by the Board in public meetings Administrative autonomy Board members are approved by the Senate and have mandates Responsibilities: Legislative: regulation (rules) Judiciary:settling disputes Executive:auditing, authorizations & auctions ANEEL

5 ANEELs equilibrium ANEEL Reasonable tariffs Quality of service Guarantee of rights Reasonable tariffs Quality of service Guarantee of rights Adequate remuneration Contracts honored Predictable and clear rules Adequate remuneration Contracts honored Predictable and clear rules Strategic interests Development model Universal service Strategic interests Development model Universal service Consumers Government Agents

6 Annual readjustment of the tariffs Periodic revision of the tariffs Signature of the contract Distribution tariffs Annual Readjustment & Periodic Revision Extraordinary revision of the tariffs

7 Distribution tariffs Who pays? Service Revenue B3 Distribution network charge (taxes) TE Distribution network charge (infrastructure) Distribution network charge B2B4B1A4A3A2 captive consumers A3 Distribution network charge A4A2 Free consumers Distribution network charge (taxes) Distribution network charge (infrastructure)

8 RS = Pass-through Costs + Controllable Costs Distribution tariffs Composition Energy Purchase + Transmission Cost + Public Charges O&M + Investors Payment + Assets Depreciation

9 Controllable Costs x Investors´ Payment ($) Reintegration of depreciation Expenses ($) + Net Asset-base value value Net Asset-base value value Rate of return return O&M Costs ($) + x GrossAsset-baseValueGrossAsset-baseValue DepreciationRateDepreciationRate ReferenceFirmReferenceFirm Distribution tariffs Controllable Costs

10 Asset base value Gross 0% 20% 40% 60% 80% 100% 120% 140% % Gross/IPCAMedium IPCA = % Gross/IGPMMedium IGPM = 79.86% Brazilian Index: IGP-M = General Market Price Index IPCA = Broad Consumer Price Index

11 Asset base value Net Brazilian Index: IGP-M = General Market Price Index IPCA = Broad Consumer Price Index

12 Generation Distribution 26,43% Public Charges & Taxes 34,00% Transmission 7,80% Anatomy of the Electricity Rates Electricity Rates Composition 31,77%

13 Distribution tariffs Domestic consumers R$/MWh November 29, 2005

14 Legal, institutional and macroeconomic stability Environmental Licensing Regulatory stability (ANEEL) Risks of investments in infrastructure

15 ANNELs challenges Achieve administrative autonomy Maintain technically capable staff (presently underpaid) Improve regulation methodology based on the first cycle of tariff reviews Establish a better connection between quality of service and cost (consumers desire X ability to pay)

16 Thank you ! Phone: (+55) Fax: (+55)


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