In times of excess supply it is better to buy energy. But the scenario can change suddenly
Prudential regulation permeates our lives: “keep your seatbelts fastened”, “past profitability is no guarantee of future profitability”. Prudential measures are expensive and restrictive, but the misfortunes avoided are worth it.
The market for electricity requires prudential regulation, as it provides an essential service where sudden changes can cause serious harm.
The sources from which electricity is produced have great price variability, both due to the fluctuation in fuel costs for thermoelectric plants and the variation in rain, wind and solar radiation that power renewable plants.
Examination of average weekly prices since 2001 reveals changes of more than 20% and occasionally more than 100%. “Normal” is the exception: the average price over the last 22 years has been R$167 per megawatt hour (MWh), but in most cases prices have prevailed 75% above or below of the average price (below R$42 or above R$292). per MWh).
This volatile price behavior is challenging and has already led to the collapse of energy traders which has threatened the health of the entire market. This risk is even greater in the context of market opening, where consumers choose for the first time to purchase energy at their own expense and risk from another supplier.
In times of oversupply, like the current one, prices fall, making short-term energy purchases profitable. But the landscape can change suddenly, causing market exposures that exceed the ability of unprepared agents to pay.
That said, the relative lack of prudential regulation in the energy market attracts attention. Aware of this vulnerability, the Chamber of Electricity Commerce (CCEE) proposed measures to allow prudential monitoring of the market, which were accepted by Aneel after Public Consultation no. 11/2022.
The so-called 12-month “shadow period” begins on November 1st, the period in which CCEE agents must transmit the requested information. On the basis of these data, the parameters to be applied in prudential monitoring pursuant to Aneel Regulatory Resolution no. will be established. 1.072/2023. Furthermore, the adoption of a guarantee system is being studied, which will be the subject of another public consultation by Aneel.
The discussions are promising, but we need to move quickly, before the next crisis occurs.
Richard Hochstetler and Claudio Sales are, respectively, director of Economic and Regulatory Affairs and president of the Instituto Acende Brasil.
Source: Terra
Rose James is a Gossipify movie and series reviewer known for her in-depth analysis and unique perspective on the latest releases. With a background in film studies, she provides engaging and informative reviews, and keeps readers up to date with industry trends and emerging talents.
