Liberalização interrompida

Abstract

The monopoly regime based on service cost tariffs allowed the electrical sector to move up through a virtuous cycle of expansion with decreasing tariffs for decades. That cycle was broken in the last quarter of the past century, when changes in the economic context exerted strong pressures on sector costs. Set in motion during the term of office of President Fernando Henrique Cardoso, liberalization of the electricity market was suspended by the Lula government; and that led to two paradoxes: 1) low technical costs, but with high tariffs; 2) high reserve capacity, but with a permanent risk of energy rationing. Those problems arise from the inconsistencies of the electricity market. Resuming the process of liberalization of the electricity market is a sine qua non condition to move away from the recurring risk of rationing, and to bring the electric system back into operating in a virtuous cycle of expansion.