Laura Souza and Thiago Cantareli

MP 1,055/21 created the Chamber of Exceptional Rules for Hydropower Management (CREG), which will last until December 30 of this year, to establish emergency measures for optimizing the use of hydroelectric resources, in view of the water shortage. The objective is to prevent scenarios of water shortage or insufficient power generation.

Brazil has suffered from a shortage of rain since 2020, according to the Ministry of Mines and Energy (MME). From September to March of this year, the National Interconnected System (SIN) registered the worst index of water inflow into its reservoirs since 1931. This picture is aggravated by the prospect of little rainfall in the coming months, which coincides with a typically dry season.

Due to the multiple uses of water, such as human consumption, recreation, transportation, generation of energy, and agriculture, in addition to its environmental role, the scenario of water scarcity demands attention and measures for the optimization of this resource to increase the security of its availability, even in pessimistic water scenarios.

To respond to this situation, CREG was given the competence to:

  • define mandatory, exceptional, and temporary guidelines to establish limits on the use, storage, and flow of hydroelectric plants and eventual mitigation measures;
  • determine the deadlines for adoption of these guidelines by the federal public administration, the National Electric System Operator (ONS), the Electric Energy Trading Chamber (CCEE), and generation concessionaires; and
  • request and establish deadlines for forwarding information and technical supporting documents to the Federal Public Administration, ONS, CCEE, and the generating concessionaires.

Another competence of the CREG is to decide on the ratification of the deliberations of the Monitoring Committee of the Electric Sector (CMSE) related to the measures for the security of the electric energy supply. With the approval by the CREG, compliance with the CMSE's resolutions will be mandatory for the direct and indirect federal public administration, ONS, CCEE, concessionaires, and authorized parties of the electric power sector, as well as concessionaires, permissionaires, or authorized parties of the oil, natural gas, and biofuels sector. These decisions may include contracting reserve capacity through simplified competitive procedures.

The operating costs incurred by electricity generators and resulting from the measures under MP 1,055 will be reimbursed by charges to cover the costs of the system’s services. To this end, they must be recognized by the National Electricity Agency (Aneel) and must not be covered by the terms of the concession contracts.

The rules of operation of the chamber were approved by the CREG on July 8, 2021, through Resolution No. 1, in the form of its exhibit. The CREG is composed of the ministers of Mines and Energy (chairman); of Economy; of Infrastructure; of Agriculture, Livestock, and Supply; of Environment; and of Regional Development. The chairman of the body may make decisions on matters within the competence of the CREG, which shall be subject to referendum by the plenary at the earliest opportunity. In addition, the chairman may invite experts, authorities, and representatives of other bodies and entities, public or private, to advise the CREG.

The ordinary meetings of the plenary will occur monthly, usually at the MME. Special meetings may be convened by the chairman on his own initiative or that of the members of the chamber. The CREG shall decide by means of decisions or informative acts, which shall be published or forwarded to the addressees within three business days of the meeting, if no shorter period is decided. The decisions will be disclosed through minutes, published on the MME website within two business days of approval. All acts issued shall receive wide publicity from the CREG Executive Board.

It is expected that the CREG will be able to promote the measures necessary to ensure a sufficient volume of water in the reservoirs and adequate energy generation, even in a scenario of unfavorable rainfall.