Brazil pushes electricity sector reform amid consumer cost concerns

Brazil's electricity sector is under pressure to modernise its regulatory framework, which critics say still reflects a 1990s, generation‑focused model that treats consumers as passive. Subsidies such as the CDE and LRCAP have grown without offset, increasing tariffs for captive users while the rapid expansion of distributed generation highlights gaps in current rules. Experts argue that the reform must place the consumer at the centre, incorporate new technologies like batteries and AI‑driven demand services, and remove outdated barriers to renewable sources and flexible market arrangements.

Energisa tested a time‑of‑use pricing scheme called “Tarifa Melhor Hora” under the ANEEL sandbox in several states from 2025. After a year and participation of about 4,000 residential and commercial customers, the pilot showed limited impact on peak demand: nearly 40% of households did not change behaviour, and those who did mainly shifted high‑consumption appliances or altered usage timing. The company concluded that price signals alone are insufficient and that additional demand‑response mechanisms will be needed to manage loads as distributed generation continues to grow.