December 12, 2022
Tariff-Structure Subsidy and the New CDE GD Charge Due to MMGD
Starting now, users of the Energy Tariff Estimation Service (SETE) can quantify consumers' annual spending on subsidies for micro and mini distributed generation (MMGD) projects, as well as the CDE GD charge's impact on application tariffs.
This is the subject of Public Consultation No. 50/2022 (CP 50), opened by the National Electric Energy Agency (ANEEL) through 12/12/2022 to gather input for regulating the use of Energy Development Account (CDE) funds to cover the costs of the Electricity Compensation System (SCEE)1 for MMGD projects, as required by Law No. 14,300/2022.
The SCEE lets MMGD holders avoid paying grid-usage costs when consuming energy their system previously injected into the grid. These costs are shared among all consumers through the electricity tariff, as a subsidy. This billing used to happen only through the tariff structure, but now part of it will happen through the new CDE GD charge.
With the new SETE version, TR Soluções' standard tariff-projection scenario now factors in the proposals presented in CP 50. When accessing the system, users have the option to disable the new charge.
Figure 1 - Structure and CDE GD Subsidy Due to MMGD (BRL)
Source: TR Soluções.
Check out more details on the topic below.
Regulatory Proposal for CDE GD
The new MMGD-related charge will be set annually as part of the CDE's budget, but with its own dynamic. Once quantified, equivalent quotas will be calculated for captive agents in the consumption segment, called CDE GD. The subsidy billing's tariff impacts, in turn, will be shown by distribution-grid connection voltage range and by submarket.
Figure 2 - Trajectory of CDE GD Reference Tariffs
Source: Technical Note No. 192/2022-SGT/ANEEL.
That is, CDE GD quotas aren't tied to the origin of the costs, and will be borne by all captive consumer units, except those classified as Low-Income.
To quantify CDE GD quota values, information is needed on the average tariff benefits previously applied to MMGD, a growth forecast for that system's market (incoming consumers), and the estimated tariff variation.
These quotas, in the TE, will define CDE GD's economic coverage, as shown in the figure below.
Figure 3 - TE Cost Functions and Tariff Components
Source: Technical Note No. 192/2022-SGT/ANEEL.
As a new economic TE item, CDE GD will have all the associated financial components: CVA; CVA to be compensated; and Neutrality.
Regulatory View on Cost Origin
CDE GD will fund, through 2045, the tariff components not tied to energy cost and not remunerated by the consumer-generator, applied to electricity compensated by consumer units participating in the SCEE. So the application tariff used to fund CDE GD will not factor in TE-Energy, TE-Transport, or the tariff flag, for any consumer group.
Figure 4 - Classification of Tariff Components
Source: Technical Note No. 192/2022-SGT/ANEEL.
Per CP 50, the benefit applies to compensated energy, factored into the application tariff by unit of energy (BRL/MWh).
Figure 5 - Breakdown of the Application Tariff and Compensated Energy
Source: Technical Note No. 192/2022-SGT/ANEEL.
For consumers joining starting January 2023 (Article 27 of Law No. 14,300/2022), the TUSD_FIO_B portion must follow this transition schedule for billing:
I - 15% (fifteen percent) starting in 2023;
II - 30% (thirty percent) starting in 2024;
III - 45% (forty-five percent) starting in 2025;
IV - 60% (sixty percent) starting in 2026;
V - 75% (seventy-five percent) starting in 2027;
VI - 90% (ninety percent) starting in 2028;
VII - the rule set out in Article 17 of this Law starting in 2029 (all tariff components not tied to energy cost)
CDE GD will fund tariff benefits for the consumer-generator of distribution companies with a market smaller than 700 GWh/year2 (existing and incoming) and incoming consumers of other distribution companies. ANEEL's current estimate of CDE GD costs tied to the SCEE in 2023 is BRL 1.4 billion.
Costs arising from existing consumer-generators of other distribution companies, given the lack of a legal command, will continue being recovered the current way, that is, through distribution companies' tariff structure.
Figure 6 - Subsidy Estimate for 2023
Source: Technical Note No. 192/2022-SGT/ANEEL.
So, tied to the transition rules that split SCEE-participating consumer units into distinct groups, Law 14,300/22 (Articles 26 and 27) brings three different billing formats.
Article 26 covers the billing format and transition period for existing consumers or those requesting access within 12 months of the Law's publication date. Article 27, meanwhile, covers the billing format and transition periods for new consumers requesting access between the 13th and 18th month after the Law's publication (transition through Dec/2030) or requesting access after 18 months from the Law's publication (transition through Dec/2028).
Summary of the Rules
The flowchart below summarizes the rules proposed under CP 50 for determining CDE GD's costs, as well as the beneficiaries of the subsidies owed for energy compensation.
Figure 7 - Operationalizing CDE GD
Source: TR Soluções, with information from Technical Note No. 192/2022-SGT/ANEEL.
The CDE GD Charge in SETE
To make it easier to operationalize this charge in users' estimates, it's treated in SETE separately from the current CDE Usage, as follows:
- A new cost component was set up under Menu/Tools/Step 2: Flags and CDE, called CDE GD.
Figure 8 - New Tool for Calculating CDE GD in SETE.
Source: TR Soluções.
- For this component, annual cost projections will factor in expectations for tariff evolution and annual growth in installed MMGD capacity.
Figure 9 - CDE GD Tool
Source: TR Soluções.
Annual cost figures will be calculated for subsidies related to SCEE-participating consumer units (existing and incoming).
Tied to these annual projections generating the new charge's costs, there will be a quota and tariff projection by region.
Users can, at their discretion, set their own annual quota scenarios for CDE GD.
Costs from SCEE-participating consumer units will be broken down into two groups, factoring in units existing through December 2022 and those incoming from that point on.
Since there's an expectation that the deadline defining existing vs. incoming units could be pushed back (Bill No. 2,703/2022), users also have the option to change that date.
Should that date be changed, the TUSD_FIO_B billing transition schedule will be adjusted.
Figure 10 - MMGD Subsidy at Distribution Companies With Consumption Above 700 GWh/Year
Source: TR Soluções.
- For the group with costs tied to existing units, costs will also be split by market size, that is, one cost group for distribution companies with a market below 700 GWh/year and another for those above.
Figure 11 - MMGD Subsidy at Distribution Companies With Consumption Below 700 GWh/Year
Source: TR Soluções.
- A new economic TE tariff component will also be set, called CDE GD.
- For informational purposes, the amounts borne through the tariff structure will also be shown, both in terms of annual economic-fund volume and in tariff terms.
Figure 12 - MMGD Subsidy in SETE.
Source: TR Soluções.
- In TR Soluções' standard tariff-projection scenario, the proposals presented under CP 50 will be factored in. Either way, users will have the option to disable this new charge.
Should you have any questions, we're at your disposal!