Gabriel Caldiron Rezende of Machado Associados discusses the excise tax (IPI) reduction made by the Brazilian federal government, the steps taken to reach a reduction of 35%, and the controversies on the horizon.
The decision comes as good news for the DNOs involved in the electricity supply to free consumers
The Brazilian energy sector is highly regulated. In general, electricity is supplied by the distribution network operator (DNO) licensed by the government according to the geographic area. The DNO distributes electricity from the transmission grid to homes and businesses under the terms, conditions and tariffs set forth by the National Electric Energy Agency (ANEEL). This is known as the ‘regulated market’.
Nevertheless, consumers that have a high demand for electric power (consumer units with a load greater than or equal to 3,000 kW) may purchase it directly from generators or electricity traders, in negotiable terms, conditions and, especially, prices. This form of electricity marketing is called the ‘free market’.