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This is the subject to a public hearing that goes to early August

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The free energy market may be extended to small load consumers in Brazil. The proposed amendment to the electric industry regulatory framework was published on July 6, 2017. The idea is to gradually ease the requirements for joining the free market starting in 2020, so that by 2028 the load requirement will be only 75 KW. Currently, consumers must have contracted demands of 500 kW or over to purchase electricity from generators or traders. Over a longer, and as yet unspecified period, the government plans to propose that residential, low voltage consumers also have the possibility of exiting the captive market.

In addition to expanding the free market, the government is proposing a series of changes, including possible changes in how the PLD (Price for Settling Differences or Spot Price) is calculated, new roles for the CCEE (Electric Energy Trading Chamber), and a maybe even an end to reserve energy auctions, among other topics. These proposals may be found in Public Hearing 33, which is open to contributions through August 4, 2017.  Before they can be implemented, these changes require either a provisional measure or a bill of law, approved by the National Congress.

The free market for energy in Brazil

Free consumers can create their own strategy, and are able to freely negotiate the commercial terms under which they contract electricity. They can negotiate price, terms, adjustment rates and the volume contracted monthly. The main advantages the free market offers, in addition to cost savings, are more predictable budgets and the freedom to choose a supplier, including sourcing from renewable sources that have government incentives.

Current legislation stipulates that consumers with contracted demand of 500 kW or more per facility or in aggregate form, so long as they all share the same taxpayer number of CNPJ) or are located on the same site, may purchase energy from renewable sources such as small hydros (PCHs), biomass-fired thermal plants, wind or other similar sources. Companies with contracted demand of 3,000 kW or more can purchase energy from any source, including large hydro plants and the more modern thermal plants and wind farms.

Brazil created the free energy market in 1995. By now it has some 5,000 consumers who combined use about one-quarter of all the energy generated in the country.

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