Free energy market decree comes amid crisis in the sector, and security becomes a challenge

On Wednesday (12), the Lula (PT) government signed a decree with the rules so that residential customers and small businesses can transition to this model, in which supply deadlines and volumes are negotiated directly with suppliers, without depending on the local distributor.

In the opinion of experts, the decree is generic and lean, making little progress in relation to the law approved in November last year. The text detailed some issues, but still delegates to Aneel (the sector's regulatory agency) the role of resolving points considered sensitive, such as tariffs, charges and other requirements.

Therefore, according to members of the sector, the current scenario still presents regulatory and security challenges for the end consumer.

Luiz Fernando Leone Vianna, institutional and regulatory vice-president of Grupo Delta Energia, says that the signing of the decree opening the free market represents progress towards the modernization of the electricity sector. "But the main challenge will be to transform this right to choose into a safe, efficient and understandable operational reality for the consumer", he states.

According to Vianna, the low voltage consumer does not have the same technical structure as a large industrial consumer. "He will need to understand what he is contracting, what risks he assumes, what guarantees he has and who responds in extreme situations."

For him, the next phase of the free market will require attention to aspects such as the solidity of retail companies.

This is one of the sensitive points, as some companies are going through a downturn today in Brazil - despite the market growth. As shown in a report in Folha de S. Paulo, companies that operate in the energy resale sector for large customers are experiencing an unprecedented financial crisis, with debts and judicial recoveries that already exceed R$6 billion.

In recent years, trading companies have grown rapidly. From 2024 onwards, however, they began to collapse in a domino effect.

The scenario is attributed to what would be a "perfect storm", with volatility in energy prices, demands for financial guarantees and mismatches in negotiated values. Many of these traders sold energy to their customers at prices that would soon prove to be derisory to cover the costs assumed in their contracts with the generators.

The security of retail traders is an important point in this new phase of the free market, as they may be responsible for managing the energy of millions of consumers. Today, the free market has around 80 thousand customers. The captive market responds to the demand of 90 million consumers.

"When we talk about retail sales, the problem is different, because there are thousands of consumers who could be left without energy. We are not talking about more than 15 or 20 large industries that have a cash flow problem, loans to be able to pay. We are talking about thousands of small consumers who have nothing to do", says Alexei Vivan, partner and head of the energy area at CGM Advogados.

According to him, a fundamental point is the legal responsibility of the retail company, which acts as a type of guarantor for the consumer. Unlike the wholesaler, the retailer is responsible for the default of its customers before the CCEE (Energy Trading Chamber).

Ana Karina, partner at Machado Meyer Advogados and specialist in infrastructure and energy, also assesses that the crisis scenario in some trading companies is a point of attention in this expansion of the free energy market.

For her, opening up to low voltage requires that the current model be improved to guarantee consumer protection. The success of this transition will depend on intense regulatory work by Aneel, he states. According to the decree, the agency must develop a communication plan to raise consumer awareness about what it means to switch to the free market.

"These consumers will need a retail company, which is not the distributor they know, in a market they don't know what it is. If this customer does not meet their financial obligations, they could have their contract terminated and return to another model that is not that of the distributor, but of the Last Resort Supplier. So, this is a big concern, because we are talking about individuals", he states.

Given this complexity, experts argue that Aneel requires more robust financial guarantees from retailers in this new phase of the market.

However, requirements such as taking out insurance can imply a higher cost in the free market rate, reducing the savings margin that currently attracts consumers to this modality.

Absolar (Brazilian Photovoltaic Solar Energy Association) also defends that the expansion of the market is accompanied by a process of education and information for consumers.

For CEO Rodrigo Sauaia, the measure will be important for people, small businesses and rural producers, who do not necessarily have technical knowledge about the electricity sector.

"The decree takes important steps to transform consumers' freedom of choice into a reality, but it is not yet possible to fully assess the economic benefits of this migration," he says.

Alexandre Becker, coordinator of special projects at Ludfor, states that opening the market to low voltage customers is important from the point of view of the energy transition.

"The most important thing is the consumer's position: it stops being just passive and becomes a prominent position", he says. "This tends to increase the demand for renewable sources and help drive investments in an increasingly cleaner matrix", he adds.

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