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Regulated, deregulated and the "flags" in Brazil

Rafael Herzberg's picture
Consultant energy affairs, Self employed

Rafael Herzberg- is an independent energy consultant, self-employed (since 2018) based in São Paulo, Brazil* Focus on C level, VPs and upper managers associated to energy related info, analysis...

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  • Dec 1, 2021

Regulated, deregulated and the "flags" in Brazil

Our regulation for the electricity sector establishes that regulated energy users accounts pay the costs of the flags. Not the deregulated ones!

Is it fair?

The flags have nothing to do with how energy is contracted, but with the level of the reservoirs that feed our hydroelectric plants.

It's a physical issue!

Regardless of whether customers are regulated or deregulated if the reservoirs are "low", it is necessary to dispatch the thermal plants to keep the system viable, as decided by the national system operator.

With the prevailing trend of enabling small consumers to also access the deregulated market, how will this issue be treated?

Imagine if everyone migrated to the deregulated market? Who will pay the cost of the flags?


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