Abstract
The multilateral nature of operations in the energy market in Brazil has repercussions not only in the regulatory sphere, but also in the scope of Administrative and Procedural Law. The impossibility of determining creditors and debtors when complying with administrative and judicial decisions results in insecurity for the other agents of the Sector, as well as stimulates the entry of new litigation. The disturbed moment of the Brazilian Energy Market should be able to stimulate a deep evaluation of the Government about the way of your interference in Energy Sector, as well as the economic agents, together with ANEEL, redefine or ratify the regulatory rules currently in force in the name of legal safety and regulatory stability.
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Notes
- 1.
As of May 2015, hundreds of lawsuits were filed seeking the limitation of liability of hydroelectric power generators in regard to their respective participation in the Energy Reallocation Mechanism (MRE, in the Portuguese acronym), which is a “condominium” of hydropower generators intended to mitigate individual hydrological risks.
- 2.
In the evolution of the modern State, from the Welfare State (maximalist) and the Liberal State (minimalist), it evolved to the conceptions of the Regulatory State and the Guarantor State. The Regulatory State is that in which the State makes economic and social rules on the performance of public services by the private enterprise, whereas the Guarantor State is that in which the State makes use of its prerogatives (especially monitoring and management prerogatives) to ensure that public services are provided in a regular, continuous, effective, safe, updated, general, kind and low-cost manner.
- 3.
In Brazil, the financial operation of the electricity market is conducted by the Electric Energy Trading Chamber (CCEE). CCEE is a private civil association authorized by Law No. 10,848, of 2004, and regulated by Decree No. 5,177, of 2004. Its purpose is to enable the trading of electric energy of the National Interconnected System (SIN), and it is responsible for the accounting and financial settlement of the operations carried out in the Short-Term Market.
- 4.
Art. 170. The economic order, based on the valuation of the human labour and the free enterprise, aims at ensuring that all persons have a dignified existence, according to the rules of social justice and subject to the following principles: [...] IV—free competition.
- 5.
Under the 1988 Constitution, the economic order establishes an organized market system, understood as that affected by the precepts of the classic public order (Geraldo Vidigal); it opts for the economic process of the liberal kind, which only admits the intervention of the State to restrain abuses and protect the free enterprise from any interferences, from both the State and the economic competition seeking to obtain an arbitrary profit increase; however, in fact, its position corresponds to that of the neoliberalism or social liberalism, based on the defence of the free enterprise (Miguel Reale) (Grau 2015).
- 6.
Federal Constitution: Art. 174. As a normative and regulatory agent of the economic activity, the State will perform, according to the law, the functions of monitoring, incentive and planning, and it is determinant for the public sector and a guideline for the private sector.
- 7.
In addition to the classical forms of delegation, ANEEL created the regulatory category of the “Registration Holder” under which small electricity generation Power Plants are able to operate without any specific grant by only registering the undertaking with the Regulatory Agency. In practice, except for the formalities to obtain the authorization, Registration Holders end up complying with the same rules as those imposed on the agents authorized to operate as independent electric energy producers.
- 8.
The Executive Decree is a Law on the initiative of the President of the Republic, which, after a maximum term of 120 days, needs to be approved by the Legislative Branch, otherwise it will lose its effect.
- 9.
Trading Rules and Procedures are rules specific to the Electricity Sector. They are rules with a substantially technical content that are intended to detail determinations from higher regulatory rules.
- 10.
Two contracting environments coexist in Brazil. They are known as Free Contracting Environment (ACL) and Regulated Contracting Environment (ACR). In the first (ACL), selling and buying agents freely negotiate energy sale and purchase agreements that are registered in CCEE’s computer systems. All conditions, including price, term and amounts, are freely negotiated by the parties. Energy generators, traders and large consumers operate in the ACL market. In the second environment (ACR), Distributors purchase electric energy at Auctions held by the Regulatory Agency with the purpose of purchasing energy at the lowest price possible to supply to its captive consumers (either low energy demand consumers or large energy demand consumers, but that have not made the option to migrate to the ACL market).
- 11.
As of 1 January 2017, under Executive Decree No. 735, of 2016, CCEE will also be responsible for the management of, and transactions in, the Energy Development Account (CDE) and CCEE.
- 12.
Decree 5,163, of 2004. Art. 56. All electric energy purchase and sale agreements executed by the agents, either in the ACR environment or the ACL environment, must be registered with CCEE, according to the conditions and terms provided for in a specific trading procedure, and must further be registered, approved or ratified by ANEEL, where applicable.
- 13.
According to art. 2, Law No. 10,848, of 2004: The concessionaires, licensees and holders of authorization to provide energy distribution services under the National Interconnected System (SIN) shall ensure the supply to 100% of its market upon a regulated contracting by means of a bidding process, according to regulation, which, subject to the guidelines established in the paragraphs of this article, shall provide as follows: (...)
- 14.
The issue of the administrative discretionary power is not an exception to the principle of legality. Quite the contrary, it only exists by means of the rule itself, that is, the discretionary power exists as a consequence of the (express or tacit) normative wish. In this regard, see Poltronieri (2002).
- 15.
Concerning the control of the administrative discretionary power, see Poltronieri (2002, p. 184): “It is necessary to point out that Administrative Acts liable to general control within the Rule of Law are not purely discretionary nor, on the contrary, connected acts. The two forms of acting of the Administration converge to the essential administrative act of the Administration and mutually affect its elements to the extent that they are faced with the actual fact. The good democratic and republican policy reduces, in theory, the possibility of performance of acts that surpass the zones of legality, finality and legitimacy, even the acts performed under the discretionary Power, by means of a diffuse and specific jurisdictional political control, for instance. In this regard, it is no longer justifiable to engage in the partial examination of the merits of the discretionary administrative acts. (...) a control of the reason for, and the nature of, administrative acts strengthens more than weakens the deep and respected action of the Administration. The lack of control inexorably conducts to the arbitrariness.”
- 16.
Date of Approval: Full Bench on 3 December 1969; Source of Publication: Judiciary Gazette of 10 December 1969, p. 5929; Judiciary Gazette of 11 December 1969, p. 5945; Judiciary Gazette of 12 December 1969, p. 5993. Republication: Judiciary Gazette of 11 June 1969, p. 2381; Judiciary Gazette of 12 June 1969, p. 2405; Judiciary Gazette of 15 June 1970, p. 2437. Legislative Reference: 1967 Federal Constitution, art. 150, § 2, § 3. Constitutional Amendment No. 1, of 1969, art. 153, § 2, § 3. Decree No. 52,379, of 1963. Decree No. 53,410, of 1964. http://www.stf.jus.br/portal/jurisprudencia/listarJurisprudencia.asp?s1=473.NUME.%20NAO%20S.FLSV.&base=baseSumulas.
- 17.
It is important to quote the doctrine of Teixeira (2000) that was the basis for our brief comments on the theme.
- 18.
See the principle of efficiency positivized by the administrative reform: Constitutional Amendment No. 19 and articles 37 head section and 41, III and § 4 of the 1988 Federal Constitution, concerning the substantive law and Law No. 9,784, of 1999, that provides for the administrative procedure at the federal public Administration level, with reference to the procedural law.
- 19.
According to Poltronieri (2002, p. 202), “this study understood that the competence is, and is only, determined by the positive legal rule and that the Legitimacy to act is always a generic element of the Administration. The administrator has competence or not according to the positivized Law, which is exactly the provision in the specific legal rule. If a certain authority of the Administration is not charged with, by this specific rule, the Act performed by it, then, this will represent an illegality due to the authority’s lack of competence and not a lack of Legitimacy, because the Legitimacy will always be of the Administration as a whole.”
- 20.
According to Medauar (2000, p. 458), “created by Ruy Barbosa in 1890, the Court of Accounts is an independent State institution, because its members enjoy the same guaranties as those given to the Judiciary Branch (Federal Constitution, art. 73, §3). For this reason, it is impossible to consider it subordinated to, or inserted in, the structure of the Legislative Branch. If, on the one hand, its function is that of supporting the Legislative Branch, in view of the own constitutional rules, on the other, its nature is that of an independent body, not connected with the structure of any of the three branches of the State. The words court and to judge the accounts, used concerning this controlling agent do not entail the jurisdictional nature of its functions. The Court of Accounts is a technical and not a jurisdictional body, according to the teachings of Silva (1996. p. 690). The Federal Constitution indicates the measures the Court of Accounts may take; in cases of illegal accounts or expenses, art. 71, VII, allows the application of sanctions provided for in law that will establish, among other sanctions, a fine proportional to the damage to the Public Treasury; once the illegality is determined, the Court of Accounts may set the term for the body or entity to adopt measures necessary to the exact compliance with the law (art. 71, X); if said term is not met, the Court of Accounts will suspend the contested act and inform the decision to the Legislative Branch; in regard to the contracts, the act of suspension is incumbent on the Legislative Branch that will immediately ask the Executive Branch not to take the provided measures within a 90-day term. The Court of Accounts will decide on the matter (art. 71, § 2). The Federal Constitution provides for the Court of Accounts’ performance and organization in arts. 33, § 2; 49, XIII; 52, III, b); 71, I to III; 73, § 1, I a IV, § 2, I and II, § 3; 74, I to IV, §§ 1 and 2; 84, XV; 102, 161 and 235. In addition, we should mention arts. 16, 26, and 35 of the Act of Temporary Constitutional Provisions of the 1988 Federal Constitution (ADCT-CF/88). It is also opportune to mention (i) Legislative Decree No. 6, of 22 April 1993, which regulates the election of the Justices of the Federal Court of Accounts by the Brazilian Congress; (ii) Decrees Nos. 3,589, 3,590 and 3,591, all of them of 6 September 2000, that respectively provide for the Federal Accounting System, the Federal Financial Administration System, and the Federal Executive Branch’s Internal Control System; (iii) the Federal Court of Accounts’ Normative Instruction No. 44, of 2 October 2002, which provides for the sending of, and access to, information necessary for the Federal Court of Accounts’ examination and registration of the acts for personnel admission and retirement granting and pension reform; (iv) Law no. 8,443, of 16 July 1992, which provides for the Organic Law of the Federal Court of Accounts and the Internal Regulation of the Federal Court of Accounts; Administrative Resolution No. 155, of 14 December 2002; (v) Legislative Decree No. 6, of 22 April 1993, that provides for the election of Justices of the Federal Court of Accounts; and (vi) Supplementary Law No. 73, of 10 February 1993, that provides for the competence of the Attorney General’ Office on the activities of legal consulting and advice to Executive Branch, particularly for the matters in which the Court of Accounts participates.
- 21.
Proceeding No. 0043562-25.2013.4.01.3400—6th Federal Court.
- 22.
See Law No. 9,307, of 1996, especially articles 1, 7 and 18 thereof: “Art. 1 Persons able to contract may resort to arbitration to settle litigation cases related to alienable property rights. §1 The direct and indirect public administration may resort to arbitration to solve conflicts related to alienable property rights. (Included by Law No. 13,129, of 2015) §2 To enter into an arbitration agreement, the authority or the competent public administration body is the same as that competent to enter into agreements and transactions.” “Art. 7 In case of existence of an arbitration clause and any resistance to the establishment of arbitration, the party in interest may request the service of process on the other party with an order for it to appear in court to register the commitment, and the judge shall set a special hearing to such end.” “Art. 18. The arbitrator is the judge of fact and of law, and his or her decision is not subject to appeal or ratification by the Judiciary.”
- 23.
Established by ANEEL’s Normative Resolution No. 109, of 2004.
- 24.
Regulated by Decree No. 6,353, of 2008, the Reserve Energy mechanism may be considered the second most significant public policy intended to foster the increase in clean and renewable sources in the Brazilian energy portfolio. The first program, called Incentive Program to Encourage the Development of Alternative Sources of Electric Power (PROINFA), was the subject of much criticism. Nonetheless, at least, it had the merits of launching the discussion and giving momentum to several projects, especially of Small Hydroelectric Power Plants (PCHs).
- 25.
The National Council of Energy Policy’s Resolution No. 03, of 2013, established the internalization of mechanisms of aversion to risk in the computing programs for energy studies and price formation as well as changed the form of proration of the System Service Charges (ESS).
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Gomes, R., Poltronieri, R. (2018). The Electricity Sector and the Structure of the Short-Term Market in Brazil. In: Fontoura Costa, J., Rosado de Sá Ribeiro, M., Xavier Junior, E., Rocha Gabriel, V. (eds) Energy Law and Regulation in Brazil. Springer, Cham. https://doi.org/10.1007/978-3-319-73456-9_6
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