The New Governance Structure of the Brazilian Electricity Industry: How is it possible to introduce market mechanisms?

摘要

During the 1990s, the regulatory model of the Brazilian Electricity Supply Industry (ESI) started to be restructured with the aims to promote competition and to attract investments to the sector. The first market-oriented reform ran into trouble, leading to insufficient investment in generation expansion and higher consumer tariffs. As consequence, from June 2001 to February 2002, Brazil faced a supply crisis. The federal government established the Chamber of Management of the Electricity Crisis, with the aim to overcome short-term supply problems, to explain its causes, and to propose urgent corrective measures. Although the "reform of the reform" has made structural changes to improve the model, many problems still occurred and brought out the need to revise the institutional model of the Brazilian ESI. Under Lula's administration (started in 2003), this revision was implemented and a new governance structure of the Brazilian ESI was created, based on two energy trading markets: a Free Contracting Environment (FCE), where free consumers and generators can freely negotiate their own bilateral contracts; and a Regulated Contracting Environment (RCE), where a pool of distribution utilities purchase energy contracts from generators through public auctions under cap prices set by government. This paper presents the main problems that occurred in the restructuring of the Brazilian ESI since the first reform and gives an overview of the current model, in order to explore the possibility of implementation of market mechanisms especially in FCE.