ANEEL and the Regulatory Process of the Electricity Sector

1. VI WORKSHOP ANEEL – USEA/USAID ANEEL and the Regulatory Process of the Electricity Sector Alvaro Mesquita Superintendet of Institutional Relations August, 9th, 2005 Brasília – DF

2. Sumary • Institutional roles of the Power Sector • Regulatory Process • Performance, attributes and descriptionof ANEEL • Regulator’s challenges

3. Institutional Roles of the Power Sector • Policies and directives: • National Congress • National Council of Energy Policy – CNPE – approval by the President of the Republic • Chamber of Infra-structure Policies of the Government Council • Planning and assurance of the balance between supply and delivery: • Ministry of Mines and Energy – MME Research and studies for the planning of the energy sector • Energy Research Company - EPE • Regulatory Body and Delegation of Power • Brazilian Electricity Regulatory Agency – ANEEL

4. Institutional Roles of the Power Sector • Overview, control and operation of the systems: • National Operator of the Power System – ONS •  Monitoring and evaluation to assure the reliability and security of the supply: • Electric Sector Monitoring Committee – CMSE •  Accounting and clearing • Chamber of Commercialization of Electric Power – CCEE •  Execution and service delivery to the costumers: • Entities G, T, D e C FOCUS: Public Interest

5. ANEEL’s performance Consumers/society • Resonable tariffs • Quality of service • Guarantee of rights ANEEL Employees Government • Adequate remuneration • Contracts honored • Predictable and clear rules • Strategic interests • Development model Universal service

6. Regulatory Process Draft of Law Law Decree Federal Government National Congress Provisory Act Draft of Law ANEEL Monitoring and Control Technical Discussion Regulatory Official Public Position of the ANEEL Public Audience or Consult Mediation

7. ATTRIBUTIONSMonitoring the performance of the power sector Where necessary - following the legal framework and specific policies REGULATORY AUDITING Energy auctions Auctions for new enterprises (G/T)(*) Authorization(*) Delegation of authority (*) Guide and advise – enforce penalties when unavoidable ION MEDIATION Dispute settlement (*) Delegation of authority by Federal Government, through MME, responsible to assure the supply of electricity

8. Characterization of ANEEL • Decision-making independence • Administrative, financial and property management • autonomy • Staggered terms for Commissioners – nominated by • the President, approved by the Senate • Commissioners – cannot be fired without good cause • “Quaranthe” • Decision Collegiate Board • No hierarchy subordination • Final administrative option • Technical discretionary power

9. External control • Sub-commission of the CFC of the Senate • Public Hearings (~70) • Request information • National Accounting Tribunal • (accounts approved from 1997 to 2002) • Legislative Body • Judiciary (Review of the acts) • Public Ministry • Secretary of Federal Control • Contract Management • Fulfillment of PPA goals • Executive Body • Consumer Advocate - (organized by the Civil Society)

10. Transparency and improvement of the society’s participation Transparency improves the efficiency and social control and promotes better regulation to the benefit of society.

11. Transparency and society’s participation - Decentralization To make the regulation, auditing and mediation actions closer to the consumers and sectorial agents To expedite the regulatory process, monitor service quality, mediation and delegation To adjust the regulation, auditing and mediation actions to local circumstances To minimize or to solve the problems of the relationship between consumers and concessionaires at local level

12. DECENTRALIZATION ARSEP (MA) Agência Reguladora de Serviços Públicos Maranhão ARCON (PA) Agência Estadual de Regulação e Controle de Serviços Públicos ARCE (CE) Agência Reguladora de Serviços Públicos Delegados do Estado do Ceará ARSEP (RN) Agência Reguladora de Serviços Públicos do Rio Grande do Norte ARSAM (AM) Agência Reguladora dos Serviços Públicos Concedidos do Estado do Amazonas AGEEL (PB)Agência Estadual de Energiada Paraíba ASTINS (TO) Agência de Serviços Públicos Delegados do Tocantins ARPE (PE) Agência Estadual de Regulação dos Serviços Públicos Delegados de Pernambuco AGEAC (AC) Agência Reguladora dos Serviços Públicos do Estado do Acre ARSAL (AL) Agência Reguladora de Serviços Públicos do Estado de Alagoas AGER (MT) Agência Estadual de Regulação dos Serviços Públicos Delegados do Mato Grosso AGERBA (BA) Agência Estadual de Regulação de Serviços Públicos de Energia, Transporte e Comunicações da Bahia AGEPAN (MS) Agência Estadual de Regulação de Serviços Públicos de Mato Grosso do Sul AGESP (ES) Agência Estadual de Serviços Públicos AGR (GO) Agência Goiana de Regulação, Controle e Fiscalização de Serviços Públicos ASEP (RJ) Agência Reguladora de Serviços Públicos Concedidos AGERGS (RS) Agência Estadual de Regulação dos Serviços Públicos Delegados do Rio Grande do Sul CSPE (SP) Comissão de Serviços Públicos de Energia Agreements signed (13) Agencies created without delegation (06) ARCO (SC) Agência Catarinense de Regulação e Controle In negotiation (08) November//2004

13. Transparency and society’s participation • Relationship with the Legislative – more then 70 public hearings and thematic meetings • Public Director’s meetings: since October, 2004 • Ethics Code – consolidation, approval and Implementation(Ethics Commission)

14. Transparency and society’s participation • 1 Council of Consumers in each 64 distributors of energy • 2003 – ANEEL’s Home Page: easy access to the process for consumers and regulatory agencies (Ex.: authorization of contracts, monitoring reports, tariffs and quality indices ) • Petitions and public hearings – regulation and auditing (more then 150)

15. Public Hearings Society’s participation in the regulatory process • Democratization of the regulatory process • Transparency • Publicity • Advance preparation of the Consumer’s Council and Organizations of Consumers and Stakeholders – looking for improvement • Local meetings and by teleconference • Publicize results - Improvement

16. Administrative and Decision-making proceedings • Decision-making Process • Decision – Board of Directors • Public Directors meeting • Report Director (draw) – Technical and • Judicial Support (Fact and Law) • Broad Defense – Appeal with or without a stay • Regulation supported by the Law 9.784/99 • Clarity, Transparency and Publicity of the Acts • Rights and Duties of Consumers

17. Regulator’s challenges • Achieve autonomy • Skilled and adequatelypaid in-house staff • Reduce asymmetry of information • Completion of the new regulation model • To support and enhance energy policies, to identify improvements and to fill gaps

18. Regulator’s challenges • To be recognized as a “State Institution” that takes care of public interest • To look for continual improvement of ANEEL • To strive for the reduction of charges and tariffs

19. Main Regulator’s challenges • To consolidate the process of Periodic Tariff Review:(develop guidelines for the basis of cost recovery) • To expand the mechanisms of interface with the public and agencies: workshop`s about specific themes; disseminate a regulatory agenda • To guarantee the consumers rights and take care of the compliance of the obligations and the rights of agencies

20. www.aneel.gov.br Phone: (+55) 61 2192-8906 Fax: (+55) 61 2192-8705 institutional@aneel.gov.br