The National Electric Energy Agency (ANEEL) recently concluded Public Hearing No. 37/2017, which sought support for the proposed alteration of the power limit for minigeration distributed from a water source, as provided in Normative Resolution (REN) No. 482/2012.

REN 482/2012 established the legal framework for distributed generation in Brazil and created the Electric Energy Compensation System. It allows a consuming unit to receive credits from the local distributor for the surplus energy it produces based on renewable sources, qualified cogeneration, or hydroelectric sources. This credit can be used to offset future debits in the energy consumption account.

Despite industry criticisms that the amendment in question should be made within a broader review of the regulatory framework of the Electric Energy Compensation System, the public hearing resulted in the publication of Normative Resolution No. 786, of October 17, 2017.

The changes introduced by REN 786/2017 are summarized in amendment 2 of article 2 of REN 482/2012, in order to: (i) increase the installed capacity of power plants from renewable sources to between 75 kW and 5 MW, differentiation between hydroelectric sources and other renewable sources, connected in the distribution network through facilities of consuming units; (ii) prohibit classification as microgeneration or as distributed minigeration of generating plants that have already been registered, granted, licensed, or authorized, or have entered into commercial operation or have their electric energy accounted for under the CCEE or committed directly with a concessionaire or permission holder of electric power distribution, and it is up to the distributor to identify these cases; and (iii) ensure that the foregoing prohibition does not apply to projects that have filed a request for access prior to the publication of this regulation, pursuant to Section 3.7 of Module 3 of Prodist (Procedures for Distribution of Electric Power in the National Electric System).

Considering only the proposal to change the limits imposed on hydroelectric power plants in order to standardize them with other renewable sources, it is important to say, first, that the concept of a power plant in the form of distributed mini-installed capacity was originally characterized by installed generation capacity of greater than 100 kW and less than or equal to 1 MW for hydroelectric sources. However, REN 687, of November 24, 2015, extended the power range to 75 kW up to 3 MW for hydroelectric sources. The same resolution also sought to ensure legal certainty by providing for a revision of REN 482/2012 by December 31, 2019, the main reason for the criticisms presented at the public hearing.

The proposed regulatory change followed the legislative change implemented by Federal Law No. 13,360/2016, which amended article 8 of Federal Law No. 9,074/1995 by increasing from 3 MW to 5 MW the power limit of concessions, permissions, or authorization, a scenario that would require mere notice to the Ministry of Mines and Energy and Aneel.

However, despite the legislative effort to facilitate the development of electric power generation projects of up to 5 MW, reinforced by Federal Law No. 13,360/2016, popular participation in Public Hearing No. 37/2017 pointed to the need to maintain regulatory stability. Of the 91 contributions received from 51 stakeholders, private individuals, and public entities, 50 of them emphasized this topic, trying to avoid having a change in the potential of admitted hydroelectric power be characterized as urgent. The idea was to await the broader reform of the Electric Energy Compensation System, scheduled for 2019.

In reviewing the contributions presented at the public hearing, Distribution Services Oversight Board - SRD/Aneel concluded, as expressed in Technical Note No. 0098/2017-SRD/Aneel, of September 6, 2017, that: (i) despite the need for mere registration of a generation project of up to 5 MW established by the new wording of Federal Law No. 9,074/1995, the Electric Energy Compensation System created by REN 482/2012 would not be bound to the power limit defined for waiving a grant; (ii) raising the hydroelectric distributed minigeration limit does not require distributors to adapt their systems to accommodate such plants or reduce their market; and (iii) it is necessary to create transition rules for existing or registered power plants or those that have had their energy accounted for in CCEE or committed to distributors that are not entitled to fit within the systematic framework brought in by REN 786/2017.

Other issues that went outside of the topic of the public hearings were disregarded, totaling 37% of the contributions submitted to ANEEL.

In short, the priority given to meeting specific demand by changing the power dedicated to distributed minigeneration has gone beyond the expectations of some industry participants and interested parties as regards the moment and form of implementation. They preferred for this change be made in the context of a broader reform of the regulatory framework of the Electric Energy Compensation System. Broadly speaking, however, the change pleased many participants engaged in distributed generation projects.