The analysis of the precautionary measure request discussed during the 42nd Ordinary Public Meeting of the Board of the National Electric Energy Agency (ANEEL) has generated significant interest. The reason for this lies in the main issue adjacent to the case filed by AM Torres Ltda.: the division of solar power generation plants with the (alleged) intent to classify them as smaller plants. However, what is at stake here goes far beyond the specific case—it is possible that we are facing the establishment of criteria and object parameters for when and how a division of generation plants may be considered irregular.
To manage expectations, the objective of this article is to deeply analyze the referred case and attempt to extract the possible path to be followed by ANEEL in its judgment, as well as the criteria used so far as justification for one decision or another. In other words, the purpose of this text is to situate the reader regarding the factors being considered in making decisions on what might point to the potential existence of an irregular division of generation plants into microgeneration or minigeneration and which elements are not being considered relevant or reasonable.
In this case, ENEL/RJ canceled eight connection budgets, claiming that the requests of José Luiz Pires, Vinicius Oliveira de Araujo, Agustinho Amancio da Silva Filho, and Fábio Oliveira Moulin fell under the prohibition of dividing generation plants into smaller units, as stated in Article 11, paragraph 2 of Law 14.300/2022.
Among the arguments presented by AM Torres Energia in its petition, which ultimately requested the precautionary measure to recognize the “nullity of the cancellations of its connection budgets,” the following stand out: i) José, Vinicius, Amancio, and Fábio are presented as independent individuals, operating small businesses and investing their own resources in shared solar generation projects; ii) they would not have legal ties between them and their goal would be to develop shared solar generation projects for small consumers—therefore, the intention would not be to sell the energy produced in the Free Contracting Environment (ACL); iii) the idea of the projects would be to generate a passive or supplementary source of income to complement the retirees’ pensions, indicating a personal financial sustainability aspect; iv) the proposed projects would align with the purpose of Law 14.300/2022, aiming to facilitate small consumers’ access to the Electric Energy Compensation System (SCEE), without distorting the objectives of the legislation; v) they accuse ENEL/RJ of abuse of economic power and creating barriers for small consumers to access the SCEE; vi) they argue there is a risk of irreparable damage and loss of classification as GD I; vii) they state that the presence of a common representative for all applicants is not enough to indicate the configuration of an irregular division of plants; and viii) each applicant would have only two generating units, which could be divided into different formats—five plants of 1MW, fifty of 100kW, two of 2.5MW—and still be classified as minigeneration.
When casting his vote, Director-Reporter Fernando Luiz Mosna Ferreira da Silva decided to acknowledge and, on merit, grant the precautionary measure to suspend the cancellations of the connection budgets issued by Enel/RJ until the final judgment of the annulment request. Essentially, the reporter understood that, without objective criteria defined by the norm or regulation, it is necessary to evaluate the specifics of each case to determine whether a division of plants exists.
For the reporter, the crux of the issue was “the fact that the generation plants, considering more than one joint applicant, exceed the 5MW limit”—however, for him, “even if the projects are located in contiguous areas, whether in the same municipality or a different one, this fact, assessed individually, does not characterize an attempt to divide.” Therefore, in his view, without an objective criterion establishing “what constitutes the prohibited division, an absolute presumption cannot be made that a division is occurring.”
Regarding the requirements for granting the precautionary measure—the risk of damage and probability of the right—he highlighted that “the denial of the precautionary measure will result in the non-construction of the generation plants and, consequently, delay the enjoyment of the benefits arising from the energy injection by the projects.”
During the mentioned 42nd Public Meeting of ANEEL’s Board, when the discussion was opened to other directors, Director Sandoval de Araújo Feitosa Neto disagreed with the vote given by the rapporteur, emphasizing that there was indeed an objective criterion, because, in the case under analysis, there would be 20MW to be injected in the same place—”so, from a physical, engineering point of view, there is no reason not to consider it a single project. It is unequivocally a single project.” For this director, the evaluation should be restrictive and not expansive—i.e., in doubt, the “benefit” should not be granted. Furthermore, he pointed out that “the areas are totally contiguous and connect at a single point.”
At this point, Director Hélvio Neves Guerra disagreed with Director Sandoval, stating that the fact that the plants connect at the same point should not be a criterion for assessing the division or non-division of the project. The Director-Reporter Fernando then pointed out that the issue of the contiguity of areas and connection had been discussed and considered not robust during the analysis of Technical Note No. 2/2023-SRD/SGT/SRM/SRG/SCG/SMA/SPE/ANEEL, which dealt with contributions from Public Consultation No. 051/2022 and the improvement of rules applicable to micro and minigeneration. The debate then shifted to whether the risk of damage was present, especially if it was truly existent until the decision on the merits. In the end, Director Agnes requested a deferral of the matter.
In her vote, Director Agnes disagreed with the Director-Reporter, rejecting the request for the precautionary measure. She argued that the probability of the right was not present as a requirement for granting the requested injunction. Besides highlighting factual elements, such as the contiguity of the area where the photovoltaic plants would potentially be installed, the uniqueness of the connection budgets’ representation, the submission of the requests on the same day, the manner in which the lease contracts were signed, and the same power to be installed, Director Agnes Maria de Aragão da Costa focused on stating that the procedures adopted by the distributor, at least in a preliminary analysis, were in line with current regulations. Enel/RJ would have merely fulfilled “the obligation imposed on it by the current regulation.”
Included on the agenda at the 45th Ordinary Public Meeting of ANEEL, Director Agnes presented her divergent vote, and during the debates, Director-Reporter Fernando brought up the current ruling of the Federal Court of Accounts (TCU) No. 2353/2023 (which we will discuss at another time) to point out that ANEEL, even in the case of distributed generation, should analyze the matter regarding the criteria for determining whether an irregular division exists. The Director-Reporter also emphasized and disagreed with the absence of probability of the right, mentioning that, if the analysis of irregular divisions had been delegated to distributors, ANEEL could well reassume this responsibility and examine the case at the preliminary stage.
For his part, Director Sandoval maintained his position contrary to the rapporteur’s and agreed with Director Agnes’ divergent vote, further stating that, for him, there was a clear attempt at irregular division. In a vote, the rapporteur’s position prevailed, and the cancellations of the connection budgets were suspended until the final judgment.
Upon reviewing the current regulation, it is evident that ANEEL granted distributors the authority to analyze specific cases, and without defining which criteria or parameters would be more or less important, it granted them the prerogative to decide when a division of plants would be considered irregular. This does not mean that ANEEL cannot, when requested, analyze specific cases and diverge from distributors.
Both Law No. 14.300/2022, in its paragraph 2 of Article 11, and Resolution No. 1.059/2023, in its Article 655-E, provide that the division of generation plants into smaller units to fit within the installed power limits of micro or minigeneration is prohibited. Furthermore, paragraph 1 of the latter article states that “the distributor is responsible for identifying cases of division of generation plants […] and may request additional information for verification” and, if an irregularity is found, may not issue or may cancel the connection budget.
The text and its prohibition are clear. However, what constitutes a criterion or not for assessing irregular division remains a gap in the system—a gap that is currently filled by the opinions and judgments of those analyzing the respective cases. Sometimes, the contiguity of areas matters, sometimes it does not. Sometimes the same ownership of the projects is relevant, sometimes it is not. Sometimes the presence or absence of a legal relationship between the parties requesting the connection budget matters, sometimes it does not. Currently, it all depends on who performs the analysis.
Nothing could be worse than this. Without clear criteria, economic agents (investors, project developers, consumers) face significant uncertainties regarding the legality of their operations. This can lead to hesitations in investments, delaying the development of new projects and negatively impacting the renewable energy market.
Moreover, the lack of clear parameters can increase transaction costs, as the parties involved may need additional legal consultations, technical assessments, and possibly litigation to determine whether a specific project configuration is compliant with the law. By leaving the responsibility for identifying irregular divisions solely in the hands of distributors without clear guidelines, discretion is introduced, which can lead to inconsistent and potentially arbitrary decisions between different distributors, undermining confidence in the regulatory system.
Turning back to the case at hand, it is clear that the path is still long before objective criteria regarding the division of generation plants
into micro or minigeneration can be predicted. However, it is hoped that this demand reaching ANEEL will serve as an example that it is worse to fail to establish parameters for not considering them robust than to establish no criteria at all. The lack of clear criteria can result in challenges for both distributors in implementing the rule and for energy producers in compliance, leading to divergent interpretations and potentially legal disputes.
In the end, the case of AM Torres Ltda. highlights a crucial issue in the regulatory landscape of renewable energy in Brazil: the urgent need for objective criteria for classifying irregular divisions of generation plants. ANEEL’s decision to suspend the cancellation of connection budgets, despite the controversy and differing opinions among its directors, reflects the complexity and ambiguity that permeate current regulations. This scenario, where subjective interpretation predominates, not only generates legal uncertainty but also stagnates progress, discourages investment, and fosters legal disputes. The debate raised by this case is emblematic and should serve as a catalyst for broader regulatory change, where transparency and predictability should be the guiding principles for decision-making.
