Alerts
- 26 May 2025
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Reform of the Electricity Sector: Provisional Measure that changes important rules of the Brazilian Electricity Sector was published
On 05.21.2025, Provisional Measure No. 1,300/2025 (“MP”) was published with the objective of promoting, according to the Government,
(i) “Tariff Justice“;
(ii) “Freedom for the Consumer“; and
(iii) “Balance for the Sector“. The initiative aims to address the structural and regulatory challenges accumulated over the last decades, promoting an institutional redesign that takes into account the technological, economic, and social transformations of the country.
Below, we highlight the main changes introduced by the MP. Access the full infographic and find out how your company can adapt to the new rules and what precautions need to be taken.
Tariff Justice
The first axis of the reform seeks to expand access to electricity, with the expansion of the Social Tariff for Social Energy and the creation of the Social Discount for Electricity, alleviating the impact of tariffs on low-income families. According to government estimates, about 60 million people will benefit.
Freedom for the Consumer
The second pillar focuses on the consumer’s freedom of choice, proposing, gradually, the total opening of the free electricity market. The objective is to foster competition, negotiation, reduce prices and offer customized solutions for low-voltage consumers.
Balance for the Sector
The third axis would aim to create a stable regulatory and economic environment, with greater equalization between the sectoral charges paid by consumers. However, the MP introduces significant changes in the self-production regime, with stricter criteria on minimum demand, corporate control and shareholding, as well as limitations on the configuration of self-production by mills that are already in commercial operation. In addition, the MP establishes the end of the enjoyment of the TUST/TUSD discount by free consumers for contracts registered with the CCEE, as of 2026.
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The MP has the force of law from now on, but has a period of 60 (sixty) days to be approved by the National Congress, extendable for another 60 (sixty) days. If it is not approved by the National Congress within this period, the MP will lose its effects. As for legal relationships that have had effects during the term of the MP, they may be regulated by means of a legislative decree of the National Congress.
Notwithstanding the importance and merit of several aspects brought by the MP, some issues are already generating debates and doubts among consumers and market players, especially due to
(i) the end of the TUST/TUSD benefit for the consumer class; and
(ii) the restrictions imposed on Self-Production by Equivalence, especially regarding the restriction on new Self-Production structures through plants in commercial operation.
These aspects raise legal, competition, and regulatory questions and may, at the limit, result in unwanted legal disputes, based on possible unconstitutionalities and/or illegalities, the violation of acquired rights, and the lack of equal treatment between the different agents in the sector.
The evolution of the Brazilian Electricity Sector has been necessary and awaited for years by the market and society. But its implementation must always be carried out in accordance with the primacy of Legal Certainty and Regulatory Stability.
Our team specialized in electricity is closely following the changes that affect the sector. If you have questions about the topic or other topics of interest, please contact our professionals.
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