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Aneel enacts new rules for the application of penalties for lack of fuel

24Ago2018Aug24,2018
Infrastructure and Energy

The National Electric Energy Agency ("Aneel") enacted last Thursday (August 23, 2018), Normative Resolution No. 827/2018 ("Resolution No. 827/2018"), updating the guidelines to be observed in relation to penalties imposed on thermal power plants for lack of fuel. 

Among its provisions, Resolution No. 827/2018 removes the connection between the amount of the penalty applicable to thermal power plants and the Difference in Settlement Price - Preço de Liquidação de Diferenças or PLD, price calculated by the Energy Trading Chamber (CCEE) which appraises transactions for the sale and purchase of power, carried out on the spot market -, and establishes that fines will be calculated based on the Unitary Variable Cost (Custo Variável Unitário or “CVU”, amount expressed in R$/MWh required to cover all operational costs of a power plant) of the plant.

Furthermore, Resolution No. 827/2018 permits power producers and fuel suppliers to freely negotiate the penalty to be applied in the event of lack of fuel.

1. Non-mandatory transfer of the penalty to the supplier 

Resolution No. 827/2018 amends articles 5 and 6, and revokes article 25, of Normative Resolution No. 583/2013, which regulates obtaining and maintaining the operational status of power plants (“Resolution No. 583/2013”).

In broad terms, Resolution No. 583/2013 established that penalties imposed on fuel suppliers must be calculated in accordance with the amount of energy not delivered by the power plant (due to an event of lack of fuel) estimated on the basis of the PLD.

However, Resolution No. 827/2018 waives the obligation to establish a penalty clause in contracts entered into by power producers and fuel suppliers, as previously required by Resolution No. 583/2013. 

As of the enactment of Resolution No. 827/2018, the Trading Rules and Procedures issued by the Energy Trading Chamber (CCEE) will govern the penalty to be imposed on thermal power producers and the parties have the right, but not the obligation, to transfer the penalty to fuel suppliers by stipulating such transfer in the relevant contract (article 6, §9 ). Accordingly, energy producers and fuel suppliers are now free to negotiate the applicable penalty in the event of supply failure.

2. Calculation of the fine and exceptions to the rule

With respect to the calculation of the fine applicable to thermal power plants, the CVU standard will be adopted. In accordance with Resolution No. 827/2018, penalties are defined as a percentage of the Energy Not Supplied in the month (ENSm) and the CVU of the thermoelectric plant, depending on the number of days the plant is not operating.

Please note that Resolution No. 827/2018 distinguishes thermoelectric plants powered by liquid fuel (oil and diesel) from other plants for the purposes of calculating penalties. 

This distinction is based on the provisions of article 21-B of Law No 10,488/2004 and article 1 of Resolution No. 18/2017, of the National Energy Policy Council – CNPE. The adoption of the CVU, instead of the PLD, as the standard under Resolution No. 827/201 demonstrates the focus on the specific characteristics of the source of energy.

Furthermore, the penalties established in Resolution No. 827/2018 are not applicable to coal-fired thermoelectric plants, which benefit from the Energy Development Account – CDE (article 6, §5, item I) because the guarantee of supply in this case is based on public policy.

Similarly, under certain conditions, CCEE will not impose penalties on plants that use fuel supply failures to carry out maintenance works, as long as such works are approved by the ONS. 

Also included in the list of exceptions from the application of fines stipulated in Resolution No 827/2018 are plants whose fuel supply contracts were signed prior to 2006 and have not been amended (Article 6, §5, subsection II).

In view of the above, it is noted that Resolution No. 827/2018 follows the evolution of the dispute between Aneel and the National Oil & Gas Agency (ANP), and take into account the importance of the integration of thermoelectricity with fossil fuel markets, as well as specific conditions and logistics for the supply of liquid fuels.

We remain available for any further clarification required.

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