Tariff flags are a system created by ANEEL (National Electric Energy Agency) in 2015 to signal to consumers the real cost of energy generation. They are activated in times of water scarcity, such as the one we are currently experiencing.
In September, red flag 1 was activated, indicating to consumers an increase of R$4,463 for every 100 kilowatt-hours consumed (kWh). This was not encouraging news for the population that already has to live with Brazil's high energy rates.
The reasons were clear: the forecast of little rain and the dry climate with high temperatures led the ONS (National System Operator) to activate the thermoelectric plants, increasing the operating costs of the electricity sector.
For educational purposes, imagine that your distributor charges R$1,00 per kWh and you consumed 250 kWh in September. With the green flag, which does not apply additional charges, your bill would be R$250,00. However, with the red flag 1, this amount would rise to R$261,16, representing an increase of 4,46%.
The news was only not worse for consumers because ANEEL corrected an error that could have led to the activation of red flag 2, which would represent an increase of R$7,877 for every 100 kWh consumed. Considering the invoice in the example above, our electricity bill would cost R$269,67, an increase of approximately 7,87%.
We consulted expert Daniel Luz, Director of Energy and Regulation at Nextron, a distributed solar energy marketplace, to explain how the tariff flag is defined. The executive said that the flag color is triggered according to the PLD trigger, which is calculated based on the CMO (Marginal Cost of Operation).
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