Energy spending to fall by almost 20 percent, says Mines and Energy Ministry

Recent measures approved by Congress are expected to reduce Brazilians’ spending on energy by an average of 19.5 percent, according to a statement from the Mines and Energy Ministry. 

The ministry’s calculation takes three measures into account, the first being a new 18-percent ceiling for ICMS goods and services tax levied on energy tariffs, ratified by President Jair Bolsonaro at the end of June. 

Another part of the drop is also anticipated with the return of taxes paid in excess by energy consumers in recent years, part of a law enacted by the government two weeks ago. Finally, the privatization of Eletrobras, which occurred last month, is also set to have a positive impact on the bill.

The measures are part of an offensive by parliamentarians and the government to mitigate electricity bill hikes during the election year. However, experts are skeptical of the true weight these measures will have in reducing the costs — and for how long the reduction will be maintained.

Regarding Eletrobras’s privatization, for instance, analysts point out that the tariffs will remain the same in the best-case scenario. As per the ICMS tax ceiling — highly criticized by state governments, who say it will result in revenue losses — the reduction will not be uniform, as states may still charge different tax rates.

And regarding the return of excess taxes, the National Electric Energy Agency (Aneel) approved reductions of up to 5.26 percent in the energy tariffs of ten distributors throughout the country. 

The adjustments applied to the electricity tariffs of these distributors ranged from 9.72 to 24.85 percent and took effect between February and May this year. However, the processes of another four electricity distributors that would also undergo the tariff review were withdrawn from this Tuesday’s agenda.

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