Energisa

Regulatory Environment

Rate Adjustments/Reviews

Energy rates are set by ANEEL via periodical procedures established in concession agreements, supported by mechanisms that aim to establish an adequate rate level to guarantee the economic and financial equilibrium of companies at the minimum cost to consumers.

The main rate regulation mechanism is the so-called Periodical Rate Review, which takes place every four or five years at Energisa Group‘s distribution companies. This mechanism essentially aims to re-determine the efficient level of operating costs and investment remuneration.

In addition to this mechanism, every year Ordinary Rate Adjustments are made to adjust rates for inflation and to capture part of the efficiency obtained by the companies as a result of the market growth observed in the period.

In 2016 and 2018 the National Electricity Regulatory Agency (“Aneel”) ratified the 4th Cycle of the Periodical Rate Reviews (“4CRTP”) of nine subsidiaries of Energisa S/A.

The effects for consumers deriving from the latest adjustment process and rate review of each Energisa Group distribution company were as follows:

Tariff Events – Average Effects

Distribution company % Tariff Events Effective date
Energisa Minas Gerais + 9.10 Tariff Review – 5thC 6/22/2021
Energisa Nova Friburgo + 4.95 Tariff Review – 5thC 6/22/2021
Energisa Sergipe + 8.90 Annual Adjustment 4/22/2021
Energisa Borborema + 5.21 Tariff Review – 5thC 2/4/2021
Energisa Paraíba + 4.28 Annual Adjustment 8/28/2020
Energisa Mato Grosso + 8.90 Annual Adjustment 4/22/2021
Energisa Mato Grosso do Sul + 8.90 Annual Adjustment 4/22/2021
Energisa Tocantins + 4.04 Annual Adjustment 7/4/2021
Energisa Sul-Sudeste + 9.84 Tariff Review – 5thC 7/12/2021
Energisa Rondônia – 11.29 Annual Adjustment 12/13/2020
Energisa Acre + 2.95 Annual Adjustment 12/13/2020

Regulatory Remuneration Base

The process of valuing assets of the regulatory remuneration base uses the VNR – New Replacement Value, which denotes the value at current market prices of an identical, similar or equivalent asset subject to replacement, which provide the same services and have the same capacity as the existing asset, including all the expenses necessary to install it.

The Regulatory remuneration base consists of the values of the following items:

  1. Property Plant and Equipment in Service (AIS)
  1. Intangible Assets – Easements
  2. Operations Warehouse
  3. Special Obligations

The net remuneration bases (BRL) of Energisa Group‘s distribution companies and the dates of the next Rate Reviews (RT) are as follows:

Net Remuneration Base (BRL) – Amounts in R$ million

Prices at the Rate Review date

Distribution company 1st Cycle 2nd Cycle 3rd Cycle 4th Cycle 5th Cycle
Energisa Minas Gerais 148.6 170.8 218.3 308.0 518.7
Energisa Nova Friburgo 42.4 56.5 69.2 95.0 122.0
Energisa Sergipe 233.0 328.6 497.6 797.3
Energisa Borborema 32.6 41.0 67.0 117.7 160.7
Energisa Paraíba 370.1 508.2 827.3 1,318.4
Energisa Mato Grosso 490.8 1,032.8 1,693.5 3,459.8
Energisa Mato Grosso do Sul 600.3 835.7 1,152.6 1,864.5
Energisa Tocantins 179.0 238.9 257.1 596.2 1,370.5
Energisa Sul-Sudeste 296.4 320.3 491.5 1,102.6
Energisa Rondônia 226.1 335.6 382.6 1,566.9
Energisa Acre 83.3 171.9 230.2 596.0
Total 2,609.3 4,016.4 5,715.7 11,211.3 3,274.5
WACC 17.07%  15.08% 11.36% 12.26% 11.10%

Dates and technical notes of the rate reviews

1st to 5th Cycle

Distribution company 1st Cycle 2nd Cycle(2) 3rd Cycle(3) 4th Cycle(4) 5th Cycle(1)
Energisa Minas Gerais jun/04 jun/08 jun/12 jun/16 jun/21
Energisa Nova Friburgo jun/04 jun/08 jun/12 jun/16 jun/21
Energisa Sergipe apr/03 apr/08 apr/13 apr/18 apr/23
Energisa Borborema feb/05 feb/09 feb/13 feb/17 feb/21
Energisa Paraíba ago/05 ago/09 ago/13 ago/17 ago/21
Energisa Mato Grosso apr/03 apr/08 apr/13 apr/18 apr/23
Energisa Mato Grosso do Sul apr/03 apr/08 apr/13 apr/18 apr/23
Energisa Tocantins jul/04 jul/08 jul/12 jul/16 jul/20
Energisa Sul-Sudeste may/04 may/08 may/12 may/16 jul/21
Energisa Rondônia nov/05 nov/09 nov/13 dec/20 dec/23
Energisa Acre nov/05 nov/05 nov/13 dec/20 dec/23

WACC – Before tax
(1) BRL not ratified by ANEEL, distribution companies have not yet had the rate review in the cycle.
(2) Technical notes of the distribution companies of the 2nd Cycle Rate Review.
(3) Technical notes of the distribution companies of the 3rd Cycle Rate Review.
(4) Technical notes of the distribution companies of the 4th Cycle Rate Review.
(5) Technical notes of the distribution companies of the 5th Cycle Rate Review.

Parcel B

(R$ million)

Distribution company DRA (1) DRP (2) Change
(R$ million)
Change
(%)
Case
Review
Energisa Minas Gerais 245.9 265.2 19.3 + 7.8 Tariff Review – 5thC
Energisa Nova Friburgo 50.4 51.9 1.5 + 3.0 Tariff Review – 5thC
Energisa Sergipe 455.2 582.4 127.2 + 27.9 Annual Adjustment
Energisa Borborema 84.8 88.4 0.1 + 0.1 Tariff Review – 5thC
Energisa Paraíba 763.3 820.4 57.1 + 7.5 Annual Adjustment
Energisa Mato Grosso 1,817.4 2,384.1 566.7 + 31.2 Annual Adjustment
Energisa Mato Grosso do Sul 1,018.0 1,338.7 320.7 +31.5 Annual Adjustment
Energisa Tocantins 660.0 709.6 49.6 + 7.5 Annual Adjustment
Energisa Sul-Sudeste 409.1 450.3 41.2 + 10.1 Tariff Review – 5thC
Energisa Rondônia 435.3 654.7 219.4 + 50.4 Annual Adjustment
Energisa Acre 228.1 287.8 59.7  +26.5 Annual Adjustment
Total 6,171.1 7,633.5 1,462.4 + 23.7

(1) DRA – Previous Reference Date: defined as the date the last rate process ratified by Aneel is effective from, be it an adjustment or rate review, which includes the costs incurred and revenue earned in the twelve months relating to the rate process.
(2) DRP – Processing Reference Date: the DRP is defined as the date the rate process under analysis to be ratified by Aneel is effective from, be it an adjustment or rate review, which includes the costs and revenue projected for the twelve months relating to the rate process.