Issue 71 • November 2012

Is a 20% reduction in tariffs viable? And other FAQs of MP 579

OPINION

In this issue, we analyze three frequently asked questions (FAQs) related to MP 579: (i) will it be possible to reduce tariffs by 20% even without total accession to the proposed advance ? (ii) would the regulatory uncertainties allegedly created by the MP scare investors to the point of threatening supply security ? and (iii) would the use of regulated contracts (ﬁO&Mﬂ) to reduce tariffs affect the investment capacity of the electricity sector ?

REGULATIONS

This section addresses the following issues: (i) public hearing for checking the performance of plants contracted by quotas according to MP No. 579; (ii) public hearing on the initial allocation of the physical guarantee quotas resulting from MP No. 579; (iii) public hearing on the methodology for recalculating the TUST according to the provisions of MP No. 579; (iv) normative ruling on physical guarantee quotas contracting; (v) and what if there is no ﬁA-1ﬂ auction this year? (update: there will be no ﬁA-1ﬂ auction in 2012); and (vi) determination of the quotas of Angra 1 and 2.

JURIDICAL

The main theme of this section is the valuation of assets by ﬁbook valueﬂ, or VNR.

ENVIRONMENTAL

This month we revisit the issue of the interrelationship between navigation and hydroelectric plants, going beyond a purely environmental scope and addressing the importance of an integrated infrastructure planning for Brazil.

SUPPLY

This section presents an overview of the electric energy supply in Brazil.

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Electronically published since 2006, the PSR Energy Report is a monthly newsletter developed by PSR, whose main objective is to present a comprehensive and current analysis of regulatory, legal issues, water resources and environment and supply of the electricity sector in Brazil.