On April 8, the Executive Branch published two executive orders to alleviate the impacts of the covid-19 crisis on the electricity sector. MP 949 opens an extraordinary credit of R$ 900 million in favor of the Ministry of Mines and Energy (MME). MP 950, on the other hand, provides for temporary emergency measures for the sector to tackle the state of public calamity resulting from the coronavirus pandemic, recognized by Legislative Decree No. 6/20.

The funds from MP 949 are allocated to the Energy Development Account (CDE) to cover the rate discounts provided for in Law No. 12,212/10. They refer to the rate for the supply of electricity to final consumers who are members of the Low Income Residential Subclass, introduced by MP 950.

MP 950 amends some laws concerning the electrical sector. Law 12,212/10 now contains article 1-A so as to provide that, from April 1 to June 30, 2020, a 100% discount will be given for the portion of electricity consumption less than or equal to 220 kWh/month for final consumers belonging to the Low Income Residential Subclass. For the portion of electricity consumption exceeding 220 kWh/month there will be no discount.

Article 13 of Law No. 10,438/02 comes into force with a new item, which includes among the CDE's objectives the promotion of funds exclusively by means of a rate charge and permission for the amortization of financial transactions linked to measures to confront the impacts of the state of public calamity in the electricity sector, recognized as provided for in article 65 of Complementary Law No. 101/2000, to assist electricity distributors.

The same article 13 of Law No. 10,438/02 is amended in its paragraph 1, which now also includes the items paragraph 1-D and paragraph 1-E. The first item authorizes the Federal Government to allocate to the CDE funds limited to R$ 900 million to cover the rate discounts provided for in article 1-A of Law No. 12,212/10. The second item indicates that the Executive Branch may establish conditions and requirements for structuring the financial operations and for making available and collecting the funds. The objective is to allow the amortization of financial operations linked to measures to confront the impacts of the state of public calamity on the electricity sector.

MP 950/2020 also establishes, in its article 4, that the consumers of the regulated market environment who exercise the options provided for in paragraph 5 of article 26 of Law No. 9,427/96 and in articles 15 and 16 of Law No. 9,774/95 must pay (by means of a rate charged in proportion to the consumption of electricity) the remaining costs of such measures. This charge will be regulated by the Executive Branch and may be moved by the Electric Energy Trading Chamber (CCEE).

The executive orders seek to mitigate the effects of the coronavirus pandemic and preserve the sustainability of the electricity sector, given the drop in revenue for distributors caused by the increase in consumer defaults and decrease in consumption of electricity.