The Performance Assessment Framework for Economic Regulators (PAFER) was developed by the OECD to help regulators assess their own performance. The PAFER structures the drivers of performance along an input-process-output-outcome framework. This chapter applies the framework to the governance of Brazil’s national electricity regulator (Agência Nacional de Energia Elétrica – ANEEL) and reviews the existing features, the opportunities and challenges faced by ANEEL.
Driving Performance at Brazil’s Electricity Regulatory Agency
The Governance of Regulators
2. Governance of ANEEL
Abstract
Role and objectives
Mandate
ANEEL is the federal economic regulator of the electricity sector in Brazil. ANEEL was established in 1996, replacing the National Department of Waters and Electricity as part of a wave of ten federal regulatory agencies established in Brazil between 1996 and 2005.1 The creation of ANEEL concurred with a broad initiative towards more economic openness, regulatory and institutional reform and stable inflation, spurred by the Real plan (Plano real) in the early 1990s, after a long period of state intervention. In the Brazilian energy market, reform programmes aimed to promote private investment, efficiency, competition and affordable tariffs (OECD, 2008[1]).
ANEEL regulates and supervises the production, transmission, distribution and sale of electricity, in accordance with the policies and guidelines of the federal government (Lei Nº 9.427, de 26 de Dezembro de 1996, 1996[2]). Its establishing decree specifies that ANEEL should aim to provide the right conditions for the electricity market to develop, while keeping a balance between agents and the benefits for society (Decreto Nº 2.335, de 6 de Outubro de 1997, 1997[3]). As defined in the same decree, in executing its tasks, ANEEL should observe a number of so-called “guidelines”:
Prevention of potential conflict between agents of the electricity sector and other agents;
Regulation and inspection carried out with the character of simplicity, based on free competition, meeting the needs of consumers and with full access to electricity services;
Adoption of criteria that avoid anti-competitive behaviour and enable free access to electricity networks;
Creation of conditions for low tariffs, with an emphasis on the quality of services;
Creation of an environment that encourages investment, in order to ensure financial viability;
Adoption of effective measures that ensure the supply of electricity to low-income and low-density areas;
Education and information for stakeholders and agents on policies, guidelines and regulations in the sector;
Promotion of delegation of activities, through an agreement, for which state public bodies are sufficiently trained;2
Transparency and effectiveness in its relation with stakeholders.
Functions and powers
ANEEL’s functions and powers have remained relatively stable over time, while the electricity market has transformed itself. Demand and supply of electricity are increasing dramatically and legislative changes affect the way the market functions, which means the regulator needs to act in a dynamic environment (see Chapter 1). In this playing field, ANEEL has a broad range of functions. In addition to more traditional regulatory tasks such as tariff setting, supervision and enforcement, ANEEL also manages concessions, permits and authorisations, solves disputes and contributes to the legislative process.
As a result of the 2004 electricity market reforms, the ability to grant concessions was transferred from ANEEL to the Ministry of Mines and Energy (Ministério de Minas e Energia – MME). The reasoning behind this change, according to the executive, is that formulation of public policy, including the granting power, should lie with the executive and not with the regulatory agencies (OECD, 2008[1]). This means the MME determines the granting plan and guidelines for the concession auctions. However, the MME delegates tasks that form part of the granting and management of concessions to ANEEL, such as the structuring of the bidding procedure and the management of contracts.
ANEEL has measured the understanding of the public of its functions and power through several surveys. Since 2000, ANEEL conducts a Consumer Satisfaction Index (Índice ANEEL de Satisfação do Consumidor – IASC) survey, which is a broad survey on the perceived quality, consumer satisfaction, trust in the supplier and loyalty of residential electricity consumers. As part of this survey, ANEEL looks into the degree in which the public is aware of ANEEL’s role. The 2019 IASC survey shows that ANEEL’s role is known to only about 12.8% of the sample (ANEEL, 2020[4]).
Table 2.1. Functions ANEEL
* All functions with an asterisk are statutory functions as defined in Law 9.427/1996.
Source: Information provided by ANEEL; Law No. 9.427 of 26 December 1996, Presidência da República, http://www.planalto.gov.br/ccivil_03/leis/L9427cons.htm.
Regulation
ANEEL has the responsibility to implement federal policies and guidelines in the electricity sector for the exploitation of electricity and the use of hydro power (Lei Nº 9.427, de 26 de Dezembro de 1996, 1996[2]). To do so, ANEEL can issue regulatory acts, in order to ensure the sector complies with the rules as established in Law No. 9.074/1995 and other relevant legislation. ANEEL is in charge of regulating service provision by concessionaires, permittees and authorised actors in the generation, transmission, distribution and commercialisation of electricity. For the commercialisation of electricity, ANEEL approves the rules and procedures for both the regulated and free electricity market.
The transformation of the electricity sector, such as sector modernisations and the energy transition, places extra demands on ANEEL. ANEEL has been actively incorporated into regulation topics such as distributed generation, electric vehicle recharging and pilot projects on demand response and energy efficiency auctions. A variable electricity tariff (the “White Tariff”) was introduced in 2018 and the implementation of the Binomial Tariff for low voltage consumers are under study. The introduction of these new tariffs do not require a change in ANEEL’s competences as defined by Law No. 9.427/1996.
Tariff setting
ANEEL has a wide range of tariff setting competences. It determines the tariffs for:
The supply of electricity in the regulated market (ACR) to captive consumers, with differentiated tariffs per consumer class and distribution company;
the supply of electricity to the concessionaires and distribution licensees, including rural electrification cooperatives classified as licensees, whose own markets cover less than 700 GWh/year, and to authorised cooperatives;
the use of international interconnections between Brazil and other countries, for the export and import of electricity;
hydro generation concessionaires that are subject to the quota regime as determined by Law No. 12.783/2013.3
For consumers in the free market, ANEEL does not determine the supply tariffs, but sets the criteria for calculating the transportation price (which includes the costs of transmission and distribution of electricity). Similarly, in collaboration with the National Agency of Petroleum, Natural Gas and Biofuels (Agência Nacional do Petróleo, Gás Natural e Biocombustíveis – ANP), ANEEL defines the criteria for calculating the transportation price of fossil fuels that are used in electricity generation. Finally, ANEEL also approves the revenues of generation concessionaires in the regulated market, based on the results of the generation auctions.
Concession management and licencing
While the MME is responsible for granting concessions in its role of granting authority, it can delegate a number of processes and tasks in the execution of auctions to ANEEL through resolutions. ANEEL acts as a representative of the granting authority to:
define bidding procedures and organise public auctions for concessions, within the guidelines and granting plan set by the MME;
award an authorisation to generators to sell electricity in the free market, or a concession and authorisation following a bidding procedure for a generator to sell its electricity in the regulated market;
approve hydro power inventory studies for hydro generation;
award new transmission projects through concessions based on bidding processes;
grant authorisations for reinforcements and maintenance to existing transmission concession holders;
grant concessions to distribution companies to operate distribution networks, through bidding processes;
grant permits for smaller distribution cooperatives;
set rules for obtaining and transferring concessions;
manage concession agreements for generation, transmission and distribution;
manage authorisations, permits and registrations.
Although ANEEL defines the bidding procedures and organises the auction, the auction is executed by the Electric Power Trading Chamber (Câmara de Commercialização de Energia Elétrica – CCEE) through an IT tool.
With the aim to promote competition, ANEEL establishes restrictions, limits or conditions for companies, business groups and shareholders regarding the acquisition and transfer of concessions, permits and authorisations.
Dispute resolution
ANEEL collects consumer complaints through its Superintendence of Administrative Mediation, Sectoral Ombudsman and Public Participation. At the administrate level, ANEEL provides dispute resolution and mediation between regulated companies, as well as between these companies and their consumers. ANEEL also provides first instance decisions in administrative processes as an arbitrator in disputes between regulated companies and/or consumers. Finally, jointly with ANP, ANEEL arbitrates in frustrated negotiations on the transportation price of fossil fuels used in electricity generation.
For more information about complaints, mediation and arbitration, see the section titled “Appeals and complaints”.
Promotion of universal access
ANEEL establishes the annual goals for distribution companies with regard to the universal access of electricity, taking into account the technical, economic and financial capacity required to reach the goal. ANEEL monitors compliance with the periodic goals by the distribution companies at regular intervals. ANEEL sets the annual goals based on proposals by the distribution companies, which are reviewed by ANEEL and consulted with society through a public hearing instrument. ANEEL can reduce tariff levels of distribution companies that fail to meet their universalisation targets (ANEEL, 2003[5]).
Supervision
ANEEL supervises the service provision by concession, permit and authorisation holders, as well as for the service provided to consumers in the free market (Ambiente de Contratação Livre – ACL). ANEEL can inspect the distribution and transmission segments for compliance with technical, operational, economic and financial standards. In the generation segment, ANEEL’s inspections focus on technical and operational issues and implementation deadlines, but not on economic and financial issues. In its supervisory actions, ANEEL is empowered to inspect regulated companies, and ANEEL can enforce compliance (Lei Nº 9.427, de 26 de Dezembro de 1996, 1996[2]) (Resolução Normativa 846/2019, 2019[6]). The instructions to disclose data are set in the Electric Sector Accounting Manual (MCSE), which ANEEL approved through Normative Resolution No. 605/2014 (Resolução Normativa 605/2014, 2019[7]).
ANEEL approves and supervises the contracts that result from the auctions for the regulated market (ACR). In addition, ANEEL ensures compliance with antitrust laws within the electricity sector, by monitoring and analysing the market practices of the regulated entities. ANEEL established a co-operation agreement with the Administrative Council for Economic Defense (Conselho Administrativo de Defesa Econômica – CADE), the Secretariat for Economic Development (Secretaria de Direito Econômico – SDE) and the Secretariat for Economic Monitoring (Secretaria de Acompanhamento Econômico – SEAE). Mergers are approved through an approval process which requires the approval of both ANEEL and CADE.
Enforcement
ANEEL can independently enforce compliance with sectoral legislation and concession and permission agreements and authorisations. ANEEL imposes penalties for infraction within the rules set by law, and penalties are proportional to the severity of the infraction.
ANEEL’s approach to enforcement is described in greater depth in the section “Enforcement and inspections”.
Contribution to legislation
ANEEL monitors the bills being discussed in Congress through its parliamentary advisory team within the Institutional Advisory Board (Assessoria Institucional da Diretoria – AID). With the input from the relevant technical departments, the parliamentary advisory team can define an institutional position on bills relating to the electricity sector, which ANEEL may present in public hearings if the legislature invites ANEEL to do so. ANEEL may also discuss its position with other relevant stakeholders. ANEEL’s position on proposed bills are discussed in board meetings, which are public (see Transparency). Taking advantage of ANEEL’s expertise in the electricity sector, and usually upon request by the executive, ANEEL can provide input and propose text suggestions for bills or relevant international agreements.
Co-ordination
ANEEL frequently interacts and collaborates with the other public bodies active within the electricity sector, although not all these relationships are formalised in contracts or resolutions (see Table 2.2). ANEEL established a number of joint resolutions and co-operation agreements with other regulators and agencies with complementing or overlapping competences within the electricity sector.
Table 2.2. Bodies involved in the electricity sector
ANEEL co-ordinates with ANA, the Mining Agency (Agência Nacional de Mineração – ANM) and the environmental agency (IBAMA) in the area of dam safety. Together with these bodies, ANEEL entered into a Technical Co-operation Agreement to execute the National Dam Safety Policy (Lei nº 12.334, de 20 de Setembro de 2010, 2010[18]) and the National Protection and Civil Defence Policy (Lei nº 12.608, de 10 de Abril de 2012, 2012[19]). The agreement formalises the sharing of information on dams under the agencies’ responsibility, such as registration data, safety level, risk classification, immediate risks, and other technical information. The agreement also involves interactions with civil defence agencies, in order to engage in a dialogue with the owners of dams about preventative and emergency actions. The National Secretariat of Protection and Civil Defence provides 24/7 monitoring. The agencies formed a management group, consisting of at least one representative from each participating body, led by a rotating co-ordinator. The group prepares an annual work plan and report on its work.
Despite the co-operation agreement between the agencies in dam safety, in 2020 TCU argued that inspections of smaller hydro dams were not conducted. TCU concluded in its audit that there was confusion about whether ANEEL or ANA was responsible for the inspections of small hydro dams with a capacity below 5 000 kW, and judged that the responsibility for these inspections lay with ANEEL (TCU, 2020[20]).
Hydro generation at the federal level requires the approval of IBAMA, ANEEL and ANA. IBAMA has to approve the project in terms of its environmental impact (Gonenc, 2014[21]), ANA issues a declaration on the water reserve availability (ANA, n.d.[22]) and ANEEL has to approve the feasibility study on the optimal use of hydro potentials (Lei Nº 9.427, de 26 de Dezembro de 1996, 1996[2]). For some hydro projects at the state level, ANEEL engages in technical co-operation agreements with the state environmental agencies and water regulators at the state level. ANEEL collaborates with state environmental agencies in the states of Mato Grosso do Sul, Parà, Rio Grande do Sul and Santa Catarina in order to facilitate better participation from state environmental agencies in the analysis of the feasibility study, and to improve consistency in the analysis and approval of studies.4
In promoting competition in the sector ANEEL works together with CADE, the Secretariat for Economic Development (Secretaria de Direito Econômico – SDE) and the Secretariat for Economic Monitoring (Secretaria de Acompanhamento Econômico – SEAE). A co-operation agreement formalises this relationship. The agreement outlines the framework for sharing competences and defines the roles played by each entity to protect competition in the sector.
Co-operation with state-level regulatory agencies
While electricity regulations are issued on the federal level, ANEEL can delegate certain supervisory, sanctioning and arbitral activities to state authorities to support the regulation, control and inspection of electricity services (Lei Nº 13.848, de 25 de Junho de 2019, 2019[23]). The co-operation can create benefits for ANEEL in terms of more efficient operations, while the state regulators can benefit from the expertise developed through the co-operation.
To delegate activities to state regulators, three levels of agreements are necessary: an interest agreement, a co-operation agreement and a goals contract. In total, ANEEL has agreements with state regulators in 13 states. ANEEL used to have a co-operation agreement with the state of Pará, but the agreement was suspended in 2015 due to a change in the governance structure of the state regulator which decreased its autonomy (ANEEL, 2019[24]). The purpose of the different agreements, as well as the level of collaboration at which the different state regulators are at, is summarised in Table 2.3.
There is not one uniform process in which delegated tasks such as inspections are performed by the state regulators. The state regulators differ in terms of quality of their autonomy, decision-making process, regulatory instruments at hand and training level of the staff (Correa et al., 2006[25]). This in turn can create differences in terms of quality. ANEEL sets the rules concerning the delegation of activities to state regulators in Resolution No. 417/2010 (ANEEL, 2010[26]).
Table 2.3. Co-operation with state regulators
Note: The co-operation agreement is signed for an indefinite period, and the existence is linked to the fulfilment of the requirements of Resolution No. 417/2010, while the goals contract is signed for a specific period. Therefore, in case the goal contract is terminated, the co-operation agreement can still exist, as is the case for the state of Alagoas. However, the opposite is not possible, as goals contracts cannot exist without a co-operation agreement.
Source: ANEEL (2016), Descentralização de Atividades, https://www.aneel.gov.br/descentralizacao-de-atividades; ANEEL (2010), Resolução Normativa Nº 417, de 23 de Novembro de 2010, http://www2.aneel.gov.br/cedoc/ren2010417.pdf.
ANEEL is a member of the Brazilian Association of Regulatory Agencies (Associação Brasileira de Agências de Regulação – ABAR), which is a forum for co-operation between regulators in Brazil. Next to the federal regulators ANEEL, ANP, the water transport agency (Agência Nacional de Transportes Aquaviários – ANTAQ) and the cinema agency (Agência Nacional do Cinema – ANCINE), the association also includes 28 state regulators. All regulators which hold an agreement with ANEEL are also part of ABAR.
International co-operation
ANEEL’s International Affairs Advisory Division co-ordinates the participation of ANEEL in international bodies and fora. ANEEL participates in several multilateral bodies of regulators. ANEEL is active in the Iberoamerican Association of Energy Regulators (Asociación Iberoamericada de Entidades Reguladoras de la Energía – ARIAE), of which it is the chair until 31 May 2021. ANEEL also chairs the Association of Portuguese Speaking Energy Regulatory Entities (Associação de Reguladores de Energia dos Países de Língua Oficial Portuguesa – RELOP) until 2021. Furthermore, ANEEL participates in the International Confederation of Regulators (ICER), the OECD Network of Economic Regulators, and the International Energy Agency.
ANEEL can negotiate and sign its own international co-operation agreements, and participates in a range of international co-operation activities. ANEEL enters into bilateral technical co-operation agreements with regulators, universities or other public institutions with the aim of exchanging information, sharing experiences and collaborating on activities related to training and benchmarking. ANEEL has a memorandum of understanding with the Chilean National Energy Commission and the Portuguese Energy Services Regulatory Authority to consolidate partnerships in promoting activities such as exchange of research and studies, training and internships. In addition, ANEEL signed a memorandum of understanding with the Florence School of Regulation to collaborate and offer training sessions for energy regulators in Brazil.
ANEEL has participated in work with international co-operation agencies in order to develop joint studies and organise technical visits, such as with the UK-Brazil Prosperity Partnership and the German Agency for International Cooperation, and training by the Japan International Cooperation Agency.
Independence
The autonomy of regulatory bodies has traditionally been a political and controversial topic in Brazil. Brazil returned to democracy in 19855, after a military regime that lasted more than twenty years. In the years to follow until 1994, Brazil experienced hyperinflation and recessions (OECD, 2018[27]). The move to more economic openness in the 1990s changed how markets operated, but there was a lack of political consensus on the organisation of the state apparatus within the new economic order. Therefore, the notion of delegating significant regulatory powers to independent regulatory agencies, outside the direct supervision of the executive, was not without opposition. ANEEL’s founding legislation defines the agency as an autonomous body under a special regime linked to the MME (Lei Nº 9.427, de 26 de Dezembro de 1996, 1996[2]). ANEEL is a legal entity under public law with legal, administrative and financial autonomy and it is not subordinate to the authority of the MME (Decreto Nº 2.335, de 6 de Outubro de 1997, 1997[3]).
In a context characterised by the fight against corruption in infrastructure sectors in Brazil, with scandals such as the Odebrecht case6 and the SBM Offshore case7, ANEEL has focused on building a reputation for integrity. In general, it made a significant contribution to the development and improvement of the regulatory framework in the electricity sector (OECD, 2008[1]). However, as for all independent regulatory authorities, there can be a discrepancy between de jure independence by law and de facto independence experienced in practice (de Souza Vieira, 2019[28]). Given the context of significant public ownership and a strong presence of social policy in the sector, there may be moments of increased political or societal scrutiny of ANEEL’s decision-making.
In order to ensure a culture of independence, ANEEL has explicitly linked one of its strategic objectives to the independence of the authority. Objective 16 in the 2018-2021 Strategic Map is to “ensure decision-making, administrative, budgetary, financial and people management autonomy” (ANEEL, 2017[29]), stressing especially the independence in terms of human resource management. Further information on ANEEL’s code of ethics, approved in Ordinance 1.235/2009, also stresses the importance of independence, listing as one of ANEEL’s values “autonomy – to make decisions with autonomy and freedom, based on its technical skills” (ANEEL, 2009[30]). More information about the code of ethics can be found in the Code of conduct section.
The independence of ANEEL has been covered in a number of recent studies by ANEEL. While a 2015 study found that 61.5% of consumers agreed partly or entirely with the statement that ANEEL is independent, a 2017 study found that among an audience of journalists, investors, associations and executive directors of electricity companies, 72.2% agreed that ANEEL is actively enhancing its institutional autonomy. Of this same sample, 66.1% agreed that ANEEL’s decisions were impartial, 76.5% that ANEEL is open to dialogue, 70.4% that it bases its decisions on technical and legal knowledge, and 77.1% that its processes were transparent. Similarly, as part of the 2018 consumer satisfaction index (IASC) among residential consumers, ANEEL found that the independence and isonomy8 of ANEEL were the best rated values among six items,9 with respectively 57.3% and 58.2% of respondents attributing these traits to ANEEL. The OECD Indicators on the Governance of Sector Regulators also provide a comparison of ANEEL’s de jure independence safeguards against those in other countries (see Figure 2.1). ANEEL’s composite independence score is the lowest across the sample of energy regulators in OECD and non-OECD countries,10 indicating a high number of independence arrangements regarded as good practice.
Figure 2.1. ANEEL’s low independence score indicates it has a relatively high number of de jure independence arrangements regarded as good practice
Source: 2018 OECD Indicators on the Governance of Sector Regulators.
More on the independence safeguards of ANEEL can be found in the following sections:
The legal framework designed to preserve the independence of the board of ANEEL is discussed in The Board.
Provisions on ANEEL’s independence in terms of financial resources can be found in Managing financial resources.
Human resource management arrangements are discussed in Human resources.
Relationship with government and regulated sector
As it to be expected, there is considerable interaction between ANEEL and the government at the interface between public policy and regulation. The government defines the broad policy framework and policy objectives that ANEEL operates in. ANEEL has opportunities to contribute to the policy making progress, an attribution provided for by law, by defining positions on bills related to the electricity sector and attending public hearings (see Functions and powers). In some cases, ANEEL also has a more active role in the design of specific regulations within the policy sphere. A frequently mentioned example of this is ANEEL’s regulation of net-metering and distributed generation, with the aim to encourage small-scale distributed generation from renewable sources (Gucciardi Garcez, 2017[31]) (ANEEL, 2010[32]). The ANEEL resolution on distribuited generation is currently under review by the agency (ANEEL, 2020[33]).
In general, market players regard ANEEL as a strong regulator, with its main strengths being its technical capacity and transparency. Market players particularly mention the board meetings, which are public and livestreamed on the regulator’s website. More information on ANEEL’s relationship with the regulated sector can be found in the following sections:
The way in which ANEEL aims to improve the transparency of the regulatory process is discussed in Transparency.
The different consultation methods ANEEL uses to collect information and input from stakeholders are discussed in Stakeholder engagement.
The role of co-operation with state regulatory agencies in order to bring regulation closer to regulated companies and consumers is discussed in Co-operation with state-level regulatory agencies.
The role of legal procedures in the regulatory process is discussed in Appeals and complaints.
Strategic and operational objectives
ANEEL illustrates its strategic framework in strategic maps, which are a visual representation of the strategic objectives of ANEEL and its mission and vision. ANEEL is currently in its third strategic mapping cycle, which is set for the period 2018-2021. ANEEL sets strategic objectives regarding three perspectives (results, processes, and people and resources) to fulfil its mission “to provide favorable conditions for the electric energy market to develop with balance among agents and for the benefit of society”,11 and achieve its vision “to be essential to ensure the quality and sustainability of the electricity service” (ANEEL, 2017[29]).12
In developing the 2018-2021 strategic objectives, a first step was made by reviewing the planning method used in the strategic planning process for the 2014-17 strategic cycle, which provided input and lessons learnt for the new strategic planning cycle and its methodology.13 The methodology for the new planning cycle was discussed through a technical meeting and approved by the board of ANEEL in November 2016.
Through three strategic workshops, guidelines on the new planning cycle were collected from the board. The board formulated these guidelines as strategic challenges that provided guidance for the planning process. As part of the strategic planning process, ANEEL also developed a plan to communicate the results of the strategic planning process and organised training sessions. Throughout the process, it collected input for the strategic planning through interviews and two surveys with external stakeholders (sector associations and entities, sectoral bodies and former directors), as well as interviews and surveys among ANEEL’s staff members.
The process co-ordinators (chief of staff and representatives from the technical units) worked together to draft a proposal for the strategic map, according to a SWOT analysis. This proposal was discussed with the ANEEL unit heads, and meetings were held with all directors to collect their input. The agreed-upon objectives were debated by the board in a final workshop, after which the strategic map was ratified.
ANEEL monitors the progress on its strategic objectives through strategic indicators, which are used with the aim to translate the objectives into tangible (and measurable) targets. The indicators are coupled with strategic initiatives and reviewed annually (see “Assessing the performance of the regulator”). The 61 strategic indicators that ANEEL developed are the result of thematic meetings with all units within ANEEL, although some technical indicators are already provided in regulation. At the end of this process, the initiatives are ratified by the board. To set the operational targets, the annual management plan sets out the main operational actions for the year.
The board can review the strategic objectives at any time, and engages in an annual review. In practice, the annual reviews usually affect indicators and initiatives, but not the objectives. As part of this review, ANEEL assesses the continued relevance of all strategic indicators and initiatives. ANEEL discontinues those indicators with low relevance or those involving a large commitment with little effect, and can change initiatives.14 The technical areas assist with the review. ANEEL’s board can vote upon ordinances approving specific revisions to the strategic objectives, initiatives and indicators.
ANEEL’s technical areas report on a quarterly basis on their progress towards goals and objectives to the General Directors Office. In addition, ANEEL monitors progress towards goals and objectives in the strategic plan and the annual business plans through an internally developed strategic management system (Sistema de Gestão do Planejamento Estratégico da ANEEL – SIGEA).
Table 2.4. ANEEL 2018-2021 Strategic Map
Source: ANEEL (2017), Portaria n° 4.823, de 28 de Novembro de 2017, http://www2.aneel.gov.br/cedoc/prt20174823.pdf.
Input
Financial resources
ANEEL’s main source of revenue is the Electric Energy Services Supervisory Tax (Taxa de Fiscalização de Serviços de Energia Elétrica – TFSEE), set by the legislative branch at a level that will provide sufficient revenues to maintain ANEEL’s operations.15 Concessionaires, permit and authorisation holders pay the fee, and ANEEL calculates the total fee per company.The fee is based on the annual revenue of the company, and is currently set at 0.4% of a company’s annual ”economic benefit” (the calculation differs between sector segments, involving revenue minus energy and access charges).
The level of the TFSEE is set in law (Lei Nº 9.427, de 26 de Dezembro de 1996, 1996[2]). Changes to the law can be made through bills proposed to Congress. In certain cases (notably, in case of urgency), the president may also adopt a provisional measure to change the TFSEE that is immediately effective, after which the provisional measure must be submitted to Congress.
Following a legislative change in 2013, the fee was decreased from 0.5% to 0.4% of the economic value added of the company (Lei nº 12.783, de 11 de Janeiro 2013, 2013[34]).16 Despite this lower fee percentage, an increase over time in agents’ economic benefit , spurred by an expanding electricity sector, means fee revenues are rising. ANEEL’s operating budget increased from EUR 44.5 million in 2016 to EUR 57.5 million in 2019 (see Table 2.5).
While ANEEL also collects fines and public assets utilisation fees (Uso de Bem Público – UBP), these revenues are not part of ANEEL's resources as they are transferred to the Energy Development Account (Conta de Desenvolvimento Energético – CDE) managed by the CCEE. The UBP makes up the largest proportion of ANEEL’s revenue (49% in 2019), while the fee accounts for 41% and sanctions, fines and penalties account for nearly 10%.
Not all resources raised through the TFSEE are used to fund ANEEL’s operations, and in practice there is a substantial difference between resources raised and ANEEL’s budget allocation. The resources raised are subject to mechanisms of “contingency”, in which the Ministry of the Economy can retain a share of the resources to promote fiscal balance (described further in the following section). Based on information provided by ANEEL, ANEEL’s operational budget amounted to 55 – 62% of the total revenues raised through the TFSEE in the period 2016-19 (see Table 2.5).
Table 2.5. ANEEL’s annual revenue and budget, 2016-19
Note: Figures presented in euros, based on the exchange rate of 1 BRL = 0.151809 EUR.
Source: Information provided by ANEEL, 2019.
When dividing by activity, most of ANEEL’s budget goes towards personnel expenditure (52%) and administrative services (21%). The next greatest category of expenditure is inspection of energy services (9.5%), followed by the activities of the ombudsman (7%) and public participation (4%). Public concessions accounts for 2% of expenditure, regulation of energy services accounts for 1.45%, and training is only 1% of ANEEL’s budget.
When dividing by macroprocess (excluding personnel expenditure), the largest portion of ANEEL’s budget in 2020 was devoted to Planning and administrative management (21.36%). This is followed by Inspection of electricity services and facilities (9.22%), Relations with Society (7.51%), Management advisory and control (5.42%), Economic regulation of the market and stimulus to competition along with Technical regulation and service standards (0.58%), and Grants and hydraulic potential management (0.27%).
Managing financial resources
ANEEL’s annual business plans, drafted in co-operation with all units, form the basis of ANEEL’s budgeting process. The Superintendence of Administration and Finance (SAF) is the department in charge of drafting the business plan, based on proposals of budgetary needs from all units within the organisation. The elaboration of the business plan starts with each team submitting an action plan with desired expenditures for the next fiscal year. The business plan consolidates the budget proposal for the coming year, presented in terms of the organisation’s objectives. After approval by the board of ANEEL, the business plan is sent to the Ministry of the Economy.
As a public agency, ANEEL’s budget is part of the fiscal and budgetary planning instruments imposed by the Constitution and the Fiscal Responsibility Law (Lei Complementar nº 101, de 4 de Maio de 2000, 2000[35]). The planning process is set in the Multiyear Plan (Plano Plurianual – PPA), the Budget Guidelines Law (Lei de Diretrizes Orçamentárias – LDO) and the Annual Budget Law (Lei Orçamentária Annual – LOA). The PPA is the instrument for longer-term planning, establishing a four-year plan that includes regulations, objectives and goals for fiscal spending. The LDO sets the guidelines for the annual budget by defining goals, priorities, and capital expenditures for the upcoming year. The LOA estimates revenues and establishes the federal government’s budget for the upcoming year, and also sets the investment budget for state-owned companies (Tesouro Nacional, n.d.[36]).
The budget proposals from all agencies and ministries are consolidated into a draft LOA by the Ministry of the Economy. The Ministry of the Economy has the power to adjust ANEEL’s budget proposal in the draft LOA, which it subsequently sends to Congress. Through a vote on the law, Congress has the power to increase or decrease the proposed budgets. After approval by Congress, the President will sign budget implementation decrees.
In light of tax revenues and fiscal policies, the President and the Ministry of the Economy have the ability to adjust the budget of ANEEL during the year, by issuing new decrees, which happens frequently.17 The government can make cuts through “contingency decrees” to preserve fiscal balance. This occurs when the government adjusts a budgetary imbalance during a fiscal year, responding to tax revenue being lower than expected, expenses being higher than expected, or fiscal goals being compromised, A significant share of the government budget goes towards mandatory expenses that can only be adjusted through laws or even constitutional amendments. As changes to agency budgets require only a decree from the President or Ministry of Economy, a common way to reduce expenditures is by cutting government agency budgets. There are no guidelines determining the “share” of budget cuts that any one agency shoulders.
ANEEL cannot always anticipate changes from new decrees, and defines potential courses of actions for different budgetary scenarios in its risk management plan to adapt to unanticipated changes. Certain expenditures, such as salaries for government employees, cannot be amended through decrees during the year (Lei Complementar nº 101, de 4 de Maio de 2000, 2000[35]). Although ANEEL’s budget has increased in recent years, ANEEL has had experience with significant budget cuts in recent years. . In 2016, two budget cuts reduced ANEEL’s operating budget from 120 million reais (around EUR 18 million) to 44 million reais (around EUR 6.7 million) (Veja, 2016[37]). Cuts forced the agency to suspend certain services, such as face-to-face sessions of public hearings, and threatened other services (Teixeira, 2016[38]). However, ANEEL reports that it has successfully advocated the Ministry of Economy to maintain a healthy budget in recent years.
Within the budget as set by Congress and through additional decrees, ANEEL’s board decides the share of the overall budget each unit receives based on the different priorities. The law provides an opportunity to apply for additional funding on specific dates if necessary, such as if a regulator needs additional resources in the face of major unanticipated litigation. The dates and rules for application are set in ordinances (Portaria nº 1.295, de 11 de Fevereiro de 2019, 2019[39]). The Ministry of Economy analyses requests and may authorise additional funding up to the limit established the LOA. The Ministry of Economy may also send a draft law to Congress, in order to amend the LOA. ANEEL cannot carry over unused budget from one year to the next, with a few minor exceptions. These include “balances payable”, commitments made in previous years but paid for in the current fiscal year (Lei 4.320/1964, 1964[40]). SAF co-ordinates ANEEL’s internal financial management processes and approves expenses.
Human resources
ANEEL has a stand-alone department dedicated to human resources (Superintendência de Recursos Humanos – SRH), an unusual configuration among federal regulatory agencies. ANEEL reports that this arrangement gives the superintendent of SRH a higher level of managerial autonomy and ability to co‑ordinate staffers within the department. SRH is separated into three workstreams: i) personnel and payroll co-ordination; ii) career development, health and wellbeing; iii) training and knowledge management (ANEEL, n.d.[41]).
ANEEL’s workforce can be separated into three broad categories: civil servants approved in public personnel selection, commissioned staff, and support staff. Most staffers are career civil servants who have passed public competitive civil service exams and who can only be dismissed if they violate certain laws. Almost 80% of senior managers are civil servants. These civil servants fall under three job titles depending on the focus of the role and the level of educational attainment of the employee:
1. Administrative technicians have at least a high school education. This category of civil servants conducts administrative and logistical activities on an intermediate level.
2. Administrative analysts have at least a university education. This group exercises functions related to administrative and logistical activities on a higher level than the category of administrative technician.
3. Specialists in regulation of public energy services also have attained higher education. This category has attributions focused on the regulatory activities of ANEEL. The greatest number of civil servants are hired within the specialist in regulation category, followed by administrative analyst and administrative technician.
The civil servants that make up the bulk of ANEEL’s workforce tend to have attained a high level of education and experience. Civil servants are further divided into class (A, B and “special”) and sub-level (I-V), which denote the basic salary and the amount of the performance bonuses defined in law. To hold a class B position, the civil servant must have more than 5 years of relevant experience and 360 hours of specialised training, or 8 years of experience and 240 hours of training. For a “special” class position, a civil servant must have at least 14 years of experience and have completed a specialisation course of at least 360 hours, hold a master’s degree and at least 12 years of relevant experience, or hold a doctorate and have at least 10 years of relevant experience (Presidência da República, 2004[42]). ANEEL has few staffers in the A class; the class with the greatest number of civil servants is the “special” class (Table 2.6).
Table 2.6. Number of ANEEL civil servants by category
Source: Information provided by ANEEL, 2020.
Commissioned staff are selected at a senior level through a different process that does not include public service examinations, and they can be appointed or removed at any time. The average service time of the current commissioned staff is 7 years 4 months in the same position. ANEEL does not have to post a public notice to hire a commissioned staffer. Support staff are outsourced professionals, and the contractor is ultimately responsible for this staff. Of the 1 020 staff working at ANEEL in 2019, 598 are permanent civil servants, 88 are commissioned staff or staff on loan from government institutions, and 339 are support staff.
Table 2.7 shows the number of staff in support and professional positions over time, and Table 2.8 shows the number of male and female staff by category. ANEEL employs a total of 1 020 professional staff (including permanent civil servants, commissioned staff, and seconded government employees) and support staff as of September 2019. The number of employees has risen slightly overall in recent years. An increase in the number of support staff is behind this change, with the number of professional staff falling in recent years. A 2018 decree is behind the increase in the number of support staff. The decree encourages the use of outsourcing for certain activities, in line with the government’s goal of reserving the time of public servants for more strategic and complex activities (Presidência da República, 2018[43]).
When separated by gender, the figures show a relative minority of female staff members, especially in senior management positions (Table 2.8). Around 37% of ANEEL’s staff is female across all categories. The relative proportion of women in ANEEL’s workforce is highest in the support staff category and the category of civil servants in administrative departments, where nearly half of staffers are women. The proportion is lowest in the category of senior management, where only slightly over a quarter of staffers are female. ANEEL has made early efforts focused on gender equality and diversity such as the addition of diversity training to its training programme, but it does not have an internal integrated diversity and inclusion policy or plan. ANEEL is involved in a public sector diversity committee. Since 2018, ANEEL has served on the Standing Committee for Issues of Gender, Race and Diversity of the Ministry of Mines and Energy and Related Entities (Ministério de Minas e Energia, 2018[44]) As of 2019, ANEEL had plans to create an internal Committee on Gender, Race and Diversity as required by the ordinance creating the Standing Committee (Falcão et al., 2019[45]; Ministério de Minas e Energia, 2018[44]).
Table 2.7. ANEEL staff by category, 2016-2019
Note: All categories of staff other than support staff are considered professional staff. Data from 2019 is from September, and does not include contracts providing IT services.
Source: Information provided by ANEEL, 2019.
Table 2.8. Male and female staff by category
Note: The table above displays three categories of staffer: senior management, technical staff and support staff. These are described further here:
1. The category of senior management includes commissioned staff: the Directors, the Ombudsman, the Permanent Commission of Disciplinary Administrative Procedures President, the Board Advisors, Chiefs, Coordinators and their adjuncts.
2. Technical staff are all civil servants (apart from commissioned staffers). These staffers may be in roles spanning ANEEL’s functions, divided broadly into technical areas and administrative areas. Technical areas are those departments whose work is related to the regulation of the electrical sector and the Relations with society area. Administrative departments are those dealing with human resources, communications, IT, budget, bids, and internal audits, as well as the federal attorney and those areas who support the Board of Directors.
3. Support staff are outsourced professionals in activities as secretarial and documents management.
Source: Information provided by ANEEL, 2019.
In recent years the number of professional staff has lagged behind the number allowable by law, which is felt hardest in certain staff categories and departments. Law No. 10.871/2004 specifies the allowed number and type of career civil servants serving as professional staff in the independent federal agencies, including ANEEL (Lei Nº 10.871, de 20 de Maio de 2004, 2004[46]). The law allows for 765 professional employees, but ANEEL only has around 680 employed. Some units in particular feel they are understaffed. The deficit is greatest in the category of administrative technician (a category composed of staffers with administrative and logistical functions (Presidência da República, 2004[42])), where ANEEL has filled only about 60% of allowed positions. ANEEL reports that the deficit particularly affects certain departments, notably the inspections departments. While the law specifies the allowed number professional staff in each category, the number is restricted by the availability of public exams.
ANEEL is subject to federal guidelines and rules with regard to its headcount, enforced by the Ministry of Economy. Like other public agencies, ANEEL must file a request for public exams with the Ministry of Economy to fill the professional positions that make up the bulk of its workforce. The Ministry of Economy has authorised few public exams with the justification of maintaining fiscal balance. Recent requests for exams have been denied, even though ANEEL staffers have met with officials in the ministry to make them aware of personnel issues at ANEEL. Furthermore, an ordinance by the Ministry of Planning, Development and Management, one of the predecessors of the Ministry of the Economy, restricts the movements of personnel across agencies (Portaria nº 193, de 3 de Julho de 2018, 2018[47]). While 16 ANEEL staffers have been assigned to other organisations, it has only received 6 from other entities.
The staffing deficit creates overload in some departments, which in turn can encourage overburdened staffers to leave these departments. ANEEL reports that studies of internal movement show that the workload in certain departments drives some staffers to move to other units seeking better quality of life. While ANEEL tries to accommodate requests for internal transfers, it has to balance staffers’ requests with the needs of the agency.
Other federal restrictions on career progression based on experience and academic training have been lifted. The decree regulating the progression of civil servant careers states that experience and academic training can be justifications for career progression, but the Ministry of Economy did not apply this provision of the decree. With other agencies, ANEEL pushed back on the decision. The Ministry of Economy has suspended this practice in 2019, deciding that experiences and academic titles could be used to motivate progression (UnaReg, 2019[48]). However, the possibility remains that the executive could freeze automatic career progression and salary increases according to the length of service. The Ministry of the Economy published an ordinance in 2019, which threatens to demote the position of directors of the regulator to second-level public executives (Portaria nº 121, de 27 de Marçoo de 2019, 2019[49]). Along with other regulatory bodies, ANEEL raised the consequences of this measure to the Ministry of the Economy (Globo, 2019[50]).
ANEEL has had to employ strategies to handle its duties with a limited workforce. First, it delegates activities, maintaining co-operation agreements with state regulatory agencies. Without these partnerships, ANEEL would be unable to monitor all of the regulated industry. Second, ANEEL accredits companies to assist the organisation in activities such as inspections, auditing, making reports, and analysis of projects. Finally, ANEEL staffers started an innovation committee with board representation to use technology and innovative methods to help departments improve processes and efficiency. For example, geotagging programmes help ANEEL’s enforcement extend their capacity, enforcing with fewer onsite visits.
Recruitment of senior management
The heads of departments must meet the same standards established in law for commissioned staff. They must be of good moral character and reputation and have professional profile or academic education related to the position. The law spells out certain criteria for ineligibility, according to the rules of Complementary Law No. 64/1990. The board of directors appoints the heads of departments. While these positions are open-ended, they can be discharged at any time following a board decision. The board of directors appoints the heads of departments.
Like other Brazilian regulatory authorities, an embedded ouvidor, or internal ombudsman, is created to hold the authority accountable to the public. A 2019 law harmonised the appointment and procedures of the ombudsman across regulatory agencies (Presidência da República, 2019[51]). It states that the ombudsman is appointed by the president for a three-year, non-renewable term. The ombudsman must have knowledge in public administration or in the regulation of the relevant sectors. Previously, appointment procedures varied between agencies; in ANEEL the appointment of the ombudsman fell to one of the directors (OECD, 2008, p. 225[52])
Just like the directors of ANEEL, senior managers (including superintendents, their adjuncts, the ombudsman, the Permanent Commission of Disciplinary Administrative Procedures president, and some Board Advisors) face post-employment restrictions (Presidência da República, 2013[53]). Most notably, during six months after leaving their position, senior management may not engage in work or become a counsellor or administrator for persons or companies linked, even indirectly, to the regulators. , or enter into a contract or consultancy relationship, or use their position to intervene within ANEEL to support their private interests. Exceptions must be authorised by the Public Ethics Committee (Comissão de Ética Pública) or the Ministry of Transparency, Supervision and Control (Ministério da Transparência, Fiscalização e Controle).
Recruitment of staff
Most of ANEEL’s workforce is composed of career civil servants approved in a selection process for public personnel that involves public civil service exams, as described above. A staffer within this category has a permanent position within the civil service (they can change positions within the public administration and maintain this benefit) after a probationary period of thirty-six months. The selection process for permanent staff begins with a posting of the selection notice for available positions in the Official Gazette and ANEEL’s website at least four months before the exams. The selection procedure includes a written exam testing knowledge of Portuguese and English, computer skills, electricity sector regulation and public administration. To conclude the selection process, the results of the selection are published, including the name and scores for the selected applicants.
Other ANEEL staffers are commissioned staff or support staff. Commissioned staff are civil servants who do not apply through the selection procedure with the exam. These employees can be appointed or removed at any time. A notice may be published to hire a commissioned staffer, but this is not necessary. Requirements to become a commissioned staff member are good moral character and reputation and a professional profile or education related to the position. Complementary Law No. 64/1990 defines other criteria for ineligibility, including illiteracy, conviction of certain crimes, and dismissal from the public service as a result of administrative or judicial proceedings (Lei Complementar Nº 64, de 18 de Maio de 1990, 1990[54]). Support staff are outsourced professionals, selected through a bidding procedure.
All employees are subject to requirements to be a civil servant set in law. Civil servants must 1) possess Brazilian nationality, 2) enjoy political rights,18 3) not be limited by military and electoral obligations, 4) possess the education level required for the position, 5) be at least eighteen years old, and 6) be physically and mentally able to fulfil their functions.
Remuneration
The remuneration regime for civil servants working for the regulatory agencies is defined in law (Lei Nº 10.871, de 20 de Maio de 2004, 2004[46]; Lei No. 13,326, de Julho 29, 2016., 2016[55]). Salary ranges for each position and level of career development are fixed by the Ministry of Economy. The monthly salary is commensurate to an employee’s level of career development, and the grade received by an employee during their annual performance measurement dictates when the employee can ascend to a new career level.
ANEEL’s salaries for technical positions is attractive when compared to other federal public administration positions, but is less competitive when compared to private sector jobs, according to the regulator. ANEEL believes that the attractiveness of salaries decreases at the senior management level, where remuneration is lower than that of the private sector. Public servants receive additional benefits beyond salary, including job security, nursery education, food and transportation aid, and healthcare aid. ANEEL invests in capacity and training, which helps retain in-house talent. ANEEL employees benefit from additional benefits, such as a flexible workweek. ANEEL launched its own Life Quality Programme, putting in place an action plan designed to improve staff welfare following a staff survey. The current action plan includes actions such as a health program; an internal relocation policy; an accessibility programme; health and dental insurance; and activities and programmes for employees. A permanent civil servant job offers its own benefits, such as job stability and a supplemental pension plan for civil servants.
Training
ANEEL has a training programme in place to contribute to the continued education of its staff, 26% of whom possess a master’s degree and 5% a doctorate. ANEEL’s training policy aims to develop the organisation’s human capital and offer non-salary benefit to attract and retain staff. With an annual training budget of 3 million reais (more than EUR 500 000), around 95% of staffers have been able to take advantage of training. ANEEL offers two categories of training: 1) fundamentals, which are common to all employees and 2) management, which are for professional development of employees in leadership roles. The fundamentals include technical content specific to each unit. They are organised around five categories of content:
Systemic View: perform duties observing the institutional objectives and the internal and external context of ANEEL.
Integrity: act in accordance with the fundamental principles of conduct of the civil servant, respecting the rules that discipline their acts, demonstrating transparency and social responsibility.
Management methods: manage work processes and projects, planning daily activities and managing time focused on results.
Digital Transformation: integrate technologies, innovation and data for digital application in processes and services, seeking their diffusion in the organisational culture.
Relationship: perform group activities integrating individual efforts to reach a common goal, expressing themselves simply and objectively and respecting diversity.
Managers can receive further training on strategic communication, human performance management, strategic management, mediation of internal conflicts, negotiation, and change and innovation orientation. ANEEL has invested in targeted training on regulatory impact assessment. Training offered in this area is extensive, including an offer of a specialisation course on RIA. In some cases, ANEEL will sponsor further education for employees. The specialisation course on RIA, developed in partnership with the University of Brasília, trained 35 ANEEL civil servants between 2015 and 2017.
ANEEL plans its training annually, based on assessed development needs. A 2019 decree imposes the procedure for workforce development applying to ANEEL (Presidência da República, 2019[56]). The agency must develop a People Development Plan (Plano de Desenvolvimento de Pessoas – PDP) and a Consolidated Development Action Plan (Plano Consolidado de Ações de Desenvolvimento) to guide the training programme. The PDP must identify development needs that are aligned with the agency’s strategy. It should be preceded by a diagnosis of competences. An annual Training Needs Assessment (Avaliação de necessidades de capacitação – ANC) guides ANEEL’s PDP. The government has a role in workforce development through the Federal Administration’s Civil Personnel System (Sistema de Pessoal Civil da Administração Federal – SIPEC) of the Ministry of Economy. The SIPEC may make suggestions on the PDP of the agency and reviews the agency’s annual reports on the execution of the PDP.
Performance assessment
The rules for individual performance management are spelled out in decree (Presidência da República, 2010[57]). The decree lists the minimum factors to be used in the individual performance assessment of civil servants. These include:
productivity at work;
knowledge of methods and techniques necessary for the development the activities related to the effective position in the exercise unit;
teamwork;
commitment to work; and
compliance with the rules of procedures and conduct on performance position assignments.
Performance assessment feeds into career development at ANEEL, and the annual performance assessment has an impact on the employee’s bonus and whether they are eligible for progression, promotion, or graduating from a probationary period (along with additional training, as described in law). A midterm and annual assessment of each employee, conducted by the manager, identify development needs and define goals for the next evaluation period. In combination with any new experience and qualifications, the performance evaluation determines whether the employee increases in career level with a commensurate increase in salary (although Ministry of Economy restrictions have limited this movement in the past, as mentioned earlier in this section). The board of directors evaluates heads of departments. All senior managers are also evaluated by their assistants and teams, which complete an assessment of the managers’ strategic management, human performance management, internal conflict mediation, negotiation, change orientation and innovation and management communication. While the individual performance evaluation procedure is shared between civil servants and commissioned staffers, the evaluation of occupants of commissioned positions is optional.
Process
Decision-making and governance structure
The Board
The Board of Directors is the highest authority in the regulatory agency. The Director General and the four other directors serving on the board are nominated and appointed for five-year terms19 without renewal by the President of Brazil. The appointment is subject to approval by the Senate. Candidates must meet several conditions: they must be of Brazilian nationality, maintain an unblemished reputation, have expertise in the field, and have a compatible academic background. Additionally, they must have ten years of experience in activities related to ANEEL’s mandate, or four years of experience in a senior management position in a company or a commissioned position in government or a teaching or research position relevant to the work of ANEEL. These requirements were specified in a 2019 law; previously, the law stated that board members should have a university education and expertise in the field (Câmara dos Deputados, 2000[58]). Other pre- and post-employment restrictions applicable to board members are discussed further in Conflict of interest).
Alongside senate approval, these requirements restrict presidential discretion in choosing directors. De Bonis (2016[59]) notes that the two critical criteria in presidential appointments are competence and responsiveness (p. 136[59]). Technical and sector expertise is one ingredient to fulfil the “competence” criterion. The law, updated in 2019, does not preclude the possibility of the appointment of board members with a non-technical background. Although the current board members have extensive experience in the energy sector, there is some concern about the possibility of political appointments without appropriate technical backgrounds. For example, (Fujiwara and Gesner, 2006[60]) found the proportion of appointees with no relevant technical or academic experience increased across federal regulatory agencies in Brazil between 2002 and 2005 (OECD, 2008, p. 214[1]). De Bonis finds that between 1997 and 2014, 25% of ANEEL directors had previous experience in public or private companies operating in the regulated sector, and 33% had a post-graduate degree (de Bonis, 2016, p. 152[59]).
In terms of the “responsiveness” criterion, presidents may appoint directors that share their political parties, or appointees suggested by parties in the executive’s government coalition (de Bonis, 2016, p. 138[59]). An analysis of the party affiliation of directors finds that a significant minority of appointees are affiliated to a party at the time of nomination across federal infrastructure regulators:20 15% in the Fernando Henrique Cardoso government, 23% in the Luiz Inácio Lula da Silva government, and 15% in the Dilma Roussef administration (p. 154[59]). The analysis shows the strongest alignment between the political affiliation of the nominee and the political party in the executive office was strongest in the Cardoso administration, when 82% of directors across infrastructure and social/environmental regulators were affiliated with his party (compared to only 38% in the Dilma and Lula administrations) (p. 163[59]). Another indicator of this criterion is the completion rate of mandates over presidential transition. The same analysis shows that independent regulators’ board members were less likely to complete their terms if their terms coincided with a presidential transition (p. 110[59]).
The politicisation of the board may also occur through other mechanisms. Correa et al. (2019[61]) point to strategic vacancies, whereby the executive delays the nomination of new board members. This process hobbles the agency’s effectiveness by threatening quorum. In addition, the naming of an interim director does not require ratification by the Senate and the interim director can be replaced at will. De Bonis (2016[59]) provides evidence of high vacancy rates across federal regulators during the administrations of three presidents – Fernando Henrique Cardoso, Luiz Inácio Lula da Silva, and Dilma Roussef. The senate approved appointments within two months in 82% of cases in an analysis of several federal agencies, suggesting that the executive was the main driver of vacancies. Presidential influence can also manifest in the completion rate of directors’ mandates when there is a change in administration. Data shows higher turnover in director positions when administrations change across federal agencies including ANEEL, although it is not clear whether this trend is driven when directors receives direct political pressure to resign or whether the perception of lack of support is sufficient to create pressure for resignation (de Bonis, 2016, p. 110[59]), While the law imposes a requirement for fixed and non-coincident mandates to avoid the first two mechanisms, de facto practice shows that this de jure measure does not always produce the intended result.
The board’s role is broad, with executive and non-executive functions. Their remit includes decisions related to the day-to-day functioning of the organisation, such as personnel management. The board issues regulatory decisions, ensures compliance with the law and policy, administers contracts and reviews appeals. Finally, the board sets strategic direction and has a role in monitoring performance.
The board decides administrative matters in weekly ordinary meetings. The organisation’s four-year strategic plans inform this type of board decision. The board discusses budgets, personnel, acquisitions and services, goals and strategies issues with the responsible departments, and the board holds meetings with senior managers to discuss managerial issues. When these day-to-day decisions come before the board in ordinary meetings, board members have often considered and discussed these issues with the relevant parties before the meeting.
ANEEL’s organisational norms codify the procedures and rules for the decision-making process on regulatory matters. The relevant technical area initiates the process of deciding on regulatory matters, publishing a technical analysis with recommendations for regulatory approaches for a given issue. The board members have eight weeks to consider the content of the proposal before the vote. The Rapporteur, selected among directors by draw, and a legal advisor evaluate the proposal from the technical area. The rapporteur may call upon the technical areas and the Federal Attorney’s Office as they are performing their analysis. The rapporteur reports the analysis to the entire board, and the Federal Attorney’s Office may provide a legal opinion before the floor opens for debate. Each director has four to five advisers to support them in the decision.
ANEEL reports that usually board members’ votes follow the recommendations of the technical teams bringing the matter before the board, creating a degree of consensus. Board decisions require a majority of three aligning votes. Board members cannot modify a proposal, but they have the right to present a separate proposal for vote if there is divergence from the proposal of the technical team. In this case, if the vote on the alternative proposal receives three board member votes, it becomes the approved resolution.
Organisational structure
ANEEL is divided into three levels of management: the board, the heads of areas and their assistants, and team co-ordinators. An area head is responsible for outcomes and administrative management at the unit level, while the team co-ordinators are responsible for team-level procedures and work. Day-to-day operations often involve the participation of more than one unit. Internal co-operation occurs formally and informally, and the board defines formal co-ordination mechanisms.
ANEEL is organised into seven thematic areas under the board: management advisory and control, economic regulation of the market and stimulus to competition, relations with society, grants and hydraulic potential management, inspection of electricity services and facilities, technical regulation and service standards, and planning and administrative management. Departments fall below these macroprocesses, as detailed in Table 2.9 and pictured in .
ANEEL takes certain actions to build a shared culture and harmonise its regulatory actions within the large and diffuse agency. The departments have a high degree of autonomy in management and conduct, which creates a risk to the harmonisation of processes, products and culture. For example, ANEEL’s Digital Transformation Plan notes that the horizontal structure can result in the proliferation of information silos and the creation of parallel IT structures (ANEEL, 2018[62]). On the other hand, ANEEL credits its “matrix structure” with its ability to ensure that messages permeate throughout the organisation. Regular meetings between the board and senior staff allow management to report on recent developments and the board to set direction. Senior staff are then responsible to disseminate relevant information to their own teams. An internal institutional newsletter also helps diffuse key messages across the entire organisation.
Table 2.9. ANEEL macroprocesses and departments
Figure 2.2. ANEEL organigram with staff count
Note: Staff counts do not include ANEEL's civil servants who are stationed elsewhere in the public administration and civil servants that are on long-term leave.
Source: ANEEL, 2020.
Figure 2.3 shows the distribution of professional staff over ANEEL’s departments. The greatest number of professional staff fall under the Planning and Administrative Management and Inspection of Electricity Services and Facilities departments.
Figure 2.3. Percent of total professional staff by thematic area
Note: All categories of staff other than support staff are considered professional staff. Data from 2019 is from September, and does not include contracts providing IT services.
Source: Information provided by ANEEL, 2019.
Regulatory quality
ANEEL is a frontrunner among Brazilian federal agencies with regard to the use of regulatory quality tools. ANEEL systematically uses public participation at two stages in the regulatory process, and has implemented measures to make decision-making more transparent. ANEEL was the first federal body to systematically implement regulatory impact assessment (RIA), before it was a legal obligation for regulatory agencies. While still in the early stages, ANEEL is taking measures to institutionalise the use of ex post analysis and regulatory stocktaking.
ANEEL’s regulatory cycle starts with the identification of problems. ANEEL creates a regulatory agenda presenting the regulatory activities that will be developed in the coming two years, subject to public comment. A computer system monitors the progress of the delivery of the products of the regulatory agenda. Each agenda is defined following a public consultation and presents a schedule for each subject and the main products (including an ex post analysis). The schedule ensures that details of planned ex post reviews and any associated public participation processes are available to the public.
Stakeholder engagement
Public participation processes are managed by the department behind new proposed regulation. The Superintendence of Administrative Mediation, Sectorial Ombudsman and Public Participation (SMA) offers support and training for departments using public participation, and is charged with increasing the uniformity of processes. SMA is also in charge of ANEEL’s work with the consumer councils. SMA offers technical support to the board in this area.
All normative resolutions go through the public consultation process before the Board of Directors makes their decision. ANEEL may open a public consultation process for other relevant activities, proposals or decisions, especially if they directly affect consumers’ lives or are of general interest of stakeholders. The law spells out the three main mechanisms of public engagement:
preliminary information-gathering: This involves the relevant regulatory area within ANEEL asking targeted parties for information and opinions through meetings or communications.
Public consultations: ANEEL releases a draft regulation, concession contract or regulatory impact analysis to the public to receive inputs.
Public hearings: the public is invited to participate in a live listening session to gather public opinions and information about the subject being regulated.
ANEEL generally consults in two stages: first it solicits input on the draft RIA, and second it presents the draft normative act. ANEEL may consult stakeholders while it is drafting the RIA study. Once a draft RIA study is prepared, ANEEL consults stakeholders before the Board approves it. At this stage, ANEEL uses a range of instruments to engage with stakeholders to collect information and data: technical meetings with stakeholders, seminars, direct letters to stakeholders, as well as a formal instrument of public consultation (tomada de subsídios in Portuguese). During consultations, stakeholders can access a digital file of the RIA report which includes related technical analysis and the underlying data, as well as an executive summary written in plain language.21 During the second phase, the draft text for the normative act is made available. During this stage, the RIA report includes a section on comments collected from stakeholders indicating how they were taken into consideration. This stage of consultation generally involves public hearings. Throughout the stakeholder engagement process, ANEEL tries to broaden participation by communicating to strategic audiences affected by the regulation. After the decision is made, ANEEL announces it through press releases available on ANEEL’s homepage and mobile app. When an issue directly relates to residential consumers’ tariffs, rights or duties, or whenever ANEEL aims to raise awareness of some relevant issue, ANEEL also communicates through press conferences, campaigns, videos and other educational content on social media.
Representation in public participation processes is an area in which ANEEL is making an effort to improve, attempting to understand the consumer experience of ANEEL’s processes and providing tailored invitations to public hearings for affected parties. Several analyses have noted a strong presence of experts in ANEEL’s public hearings, with a smaller representation of non-expert stakeholders (de Castro, 2013[86]; Batista da Silva, 2012[87]; Aguiar Santos, 2017[88]). In addition, one study noted the presence of governmental organisations including political parties in ANEEL public hearings. When these political actors use hearings for political marketing, they create a risk of provoking conflict or misleading discussions during consultation processes (de Castro, 2013[86]). As part of its strategic objective to increase representation in decision-making processes, ANEEL created a commission to look at the regulatory process from the consumer perspective, the Regulatory Process Support Committee (discussed in greater depth below). ANEEL also tries to attract affected consumers by conducting targeted outreach to individuals who have complained to ANEEL, informing them via email or SMS that ANEEL will be considering an issue relevant to their complaint.
The Regulatory Process Support Committee brings together representatives from external entities with the goal of evaluating the consumer needs in the regulatory process. ANEEL selected the representatives for the committee from research and legal areas and the five main consumer categories: industrial, commercial, rural, residential and public authorities. Senacon, the Electricity Consumers Council, the National Confederation of Agriculture and Livestock, the National Confederation of Trade in Goods, Services and Tourism, and the National Confederation of Industry represent consumers on the commission. The Institute of Applied Economic Research and the Brazilian Bar Association will contribute with relevant economic, public policy, and legal analysis (ANEEL, 2018[89]). The Committee is tasked with assessing impacts on consumers, highlighting improvements for proposals under discussion in public hearings (ANEEL, 2018[90]). It will issue opinions on proposed regulations subject to public consultation, and will support the consumer voice in public debates. Indeed, the commission serves a consultative function, considering proposed regulations before they are brought to public consultation. The Committee has also provided input on ANEEL’s communications strategy.
Supplementing the public consultation procedure described above, consumer councils institutionalise stakeholder engagement related to electricity distribution in the Brazilian electricity sector. By law, each energy distributor must maintain its own consumer council. The consumer councils serve as consultative bodies regarding topics such as bills and quality of service (Presidência da República, 1993[91]). The consumer councils must formally comment on tariffs and the quality of electricity supply of the relevant distributor. Formal opinions from the council are not binding to the distributor. The councils also work with the distribution company to conduct consumer outreach, including helping develop and disseminate educational materials for consumers. Each consumer council writes an annual activity and goals plan which specifies its exact activities (ANEEL, n.d.[92]).
These bodies are autonomous, and the actions are paid for by revenues from a tariff on distributors. They conduct their own annual planning, which must be published on their webpage along with the composition of the council and information about its actions (Aguiar Santos, 2017[88]). The councils are composed of two representatives from each of the five main groups of consumers: residential, industrial, commercial, rural, and government. ProCon, the network of consumer agencies, may participate in the councils. Selection criteria are defined by the council, which also nominates members of the council to a four-year term with the possibility of renewal (ANEEL, n.d.[93]; ANEEL, n.d.[92]). Members receive training from distributors and from ANEEL.
ANEEL is responsible for encouraging the organisation and operation of consumer councils by law (Presidência da República, 1997[94]). ANEEL defines the general conditions for formation and operation of the councils. It also participates in meetings and provides relevant information, as well as holding technical meetings and trainings with the councils. Through its work with consumer councils, ANEEL aims to encourage meaningful participation in agenda setting and engagement processes (ANEEL, n.d.[95]). ANEEL encourages the councils to participate at all stages of the stakeholder engagement process, including preliminary studies and public hearings.
Regulatory impact assessment
ANEEL must conduct regulatory impact assessments (RIA) before the issuance of every regulatory act (ANEEL, 2017[96]). ANEEL systematised the use of RIA and published its RIA norm before there was a federal law mandating the use of RIA for federal agencies. Law No. 13.848/2019 requires RIA before the adoption or modification of normative acts which are of general interest of economic agents, consumers or service users (Lei No. 13.848, de 25 de Junho de 2019, 2019[17]). Certain normative acts can be exempted from RIA, those:
of an administrative nature;
aimed to correct material mistakes;
aimed to consolidate other normative acts, as long as there are no substantive changes;
aimed to adequate texts and references, as long as there are no merit changes.
In addition, other normative acts can also be exempted from having a RIA as long as the technical area presents a justification, which needs to be approved by the Board of Directors. Justification is limited to the following situations:
the normative acts is low-impact;
the normative act aims to discipline rights or obligations defined in a superior legal instrument which does not allow different regulatory alternatives; and
in case of urgency (ANEEL, 2017[96]).
In the case of a RIA exemption due to urgency, the report must be conducted within two years from the date when the normative act comes into force.
To allow for social check on RIA quality and enable participation at an early stage, ANEEL usually subjects RIA to social participation before the draft norm. Generally, the analysis is prepared before the first phase of public hearing and prior to the drafting of any new regulatory act. The Board can waive this phase if the responsible unit within ANEEL has already carried out a public consultation on the subject. The RIA report can be submitted with the normative act only if 1) the report was not necessary but completed at the discretion of the ANEEL team, 2) the normative act is low-impact, and 3) certain other cases that are approved by the board or have been identified in the Regulatory Agenda. The proportion of draft norms going to public consultation accompanied by a completed RIA is an area where ANEEL is trying to improve. ANEEL’s has defined an objective of 100% of draft norms being accompanied by RIA during the public consultation, but in 2019, 86% of draft norms went to public consultation with RIA (ANEEL, 2019[97]).
After the public consultation, a revised version must be submitted to the board. At this point, the Directors will either approve the no regulation alternative or launch a second stage of public consultation, this time with the objective of receiving contributions regarding the draft regulation that reflects the alternative recommended in the RIA Report from the previous stage. The board must comment on the RIA report indicating whether the proposed regulation is suitable to achieve the intended outcomes and whether the evidence supports adoption (Lei Nº 13.848, de 25 de Junho de 2019, 2019[23]).
While, the technical team within the responsible unit develops the RIA, a centralised commission aims to enhance ANEEL’s RIA across the agency. The technical team is supported by a Technical Commission (CT-REG), created through ANEEL ordinance in 2013 (ANEEL, 2013[98]). CT-REG, which meets monthly, comprises of fifteen members: four Directors’ advisors and two members of the Director-General’s cabinet, and nine representatives from regulatory areas and other teams. One director has CT-REG in their portfolio; this arrangement combined with the involvement of the advisors to the board allow the directors to remain updated on developments related to RIA. CT-REG has two main functions: 1) to support the technical areas in the implementation of RIA, and 2) to co-ordinate the exchange of experiences with regulatory agencies in Brazil and abroad regarding RIA. As a technical support body, CT-REG also provides support to the Board in analyses of RIA waiver requests. The commission aims to enhance the quality of RIA produced by technical areas. To this end, it developed a Questions & Answers guideline and a model RIA report. With the support of the Superintendence of Human Resources, CT-REG is also involved in the organisation of training actions regarding RIA.
The criteria for RIA are published in ANEEL’s RIA norm (ANEEL, 2017[96]). The norm establishes a standardised internal RIA framework and a mechanism to enhance the uniformity of the assessments conducted by the different technical areas. It establishes minimum aspects to be analysed and how they should be approached. The analysis is presented in a report that follows a common model within the agency. The analysis must describe and compare alternatives to address the identified regulatory problem, including the “business-as-usual” or “do nothing” option and alternatives to traditional regulation if available. The norm clearly states that the methodology can vary according to each concrete case, taking into consideration the complexity of the problem and the availability of data. The core of this assessment is the comparison of positive and negative aspects of the possible regulatory interventions considered. RIA assessments do not always quantify costs and benefits and, in many cases, qualitative methods are used. However, when the analysis identifies significant impacts of the alternatives and/or if the problem to be addressed is complex, ANEEL must measure the impacts of alternatives quantitatively if possible. The norm does not set a specific methodology to compare alternatives, stating that it should be chosen according to the characteristics of each case and availability of data.
The main quality checks of the RIA come from analysis by the directors and the public hearing about the RIA. External control of the RIA could come from the General Comptroller of the Union (Controladoria-Geral da União – CGU), the entity responsible for oversight over the executive branch, which could analyse the RIA in the course of an audit.
ANEEL collaborated with other federal Brazilian regulators and public institutions to produce the handbook “Diretrizes Gerais e Guia Orientativo para Elaboração de Análise de Impacto Regulatório – AIR” (General guidelines and guide for preparation of Regulatory Impact Analysis) in 2018. The handbook, co-ordinated by the Chief of Staff of the Presidency, outlines guidelines for RIA within the public sector (Brazilian Government, 2018[99]). The creation of this guide was a driver in the introduction of a legal requirement for regulatory agencies to conduct RIA in Law No. 13.848/2019.
Ex post analysis and regulatory stocktaking
ANEEL has recently started systematically producing ex post analysis of regulatory decisions, and has produced four analyses at the time of writing. As of July 2018, all normative acts must include a deadline to implement a Regulatory Outcome Evaluation (Avaliação de Resultado Regulatório – ARR) which assesses the performance of the normative act which is adopted or modified, considering the achievement of intended objectives and results, as well as other impacts observed on the market and society due to its implementation (ANEEL, 2017[96]). When a normative act is exempted from the requirement for a RIA report due to urgency, the deadline for review is set automatically for two years from the date the act comes into force. Certain normative acts are exempted from this requirement; those:
of an administrative nature;
aimed to correct material mistakes;
aimed to consolidate other normative acts, as long as there are no merit changes;
aimed to adequate texts and references, as long as there are no merit changes; and
of evident low impact.
The technical area which conducted the RIA and proposed the corresponding normative act is generally responsible for the ARR. If the subject matter concerns multiple technical areas, a group specifically formed to conduct the evaluation or an external consultancy may take responsibility for the ARR. Technical areas are responsible for planning for future expenses relating to ex post analysis, which are submitted to the financial administration unit and follow the normal budget planning process.
ANEEL does not define the minimum aspects that must be evaluated ex post, nor does it have a model for reports. The Technical Commission is evaluating the ex post reports to identify which elements should be covered with a view to provide general guidance to the technical areas. There is no formal unit responsible for reviewing the quality of the Regulatory Outcome Evaluations developed by the technical areas in ANEEL.
There is no requirement for ex post analysis to be subject to public comment. The technical areas and the Board of Directors can define in each case whether the Regulatory Outcome Evaluation report will be submitted to a public participation instrument. ANEEL submitted the first Regulatory Outcome Evaluation, focusing on the results achieved with regulatory incentives applied to the distribution operators, it developed to public consultation in 2019.
ANEEL monitors the volume of consumer complaints to assess the adequacy of existing rules. For example, a high volume of consumer complaints spurred ANEEL to call a public hearing on the regulation on the information displayed on the electricity bill as well as conducting additional RIA (ANEEL, 2016[100]). Analysis of the IASC consumer satisfaction survey also informs ANEEL’s regulatory agenda. In 2017, for example, the evaluation of the IASC historical data on the “access to the company” aspect indicated room for improvement of the corresponding regulation (ANEEL, 2017[101]).
ANEEL’s Strategic Planning 2018-2019 includes an initiative aiming to institutionalise the monitoring of regulation in the Agency. To start, ANEEL formed five pilot projects with staffers from technical areas to study reference handbooks. The participants will apply monitoring and ex post assessment techniques in their own areas and report their experiences. The results of the pilots will be twofold: 1) measures for the board to implement for monitoring and ex post evaluation and 2) a handbook with good practices and recommendations for ex post evaluations to be used primarily by ANEEL's civil servants after this exercise.
Based on the economy-wide Product Market Regulation indicators by the OECD, Brazil scores relatively poor compared to OECD and non-OECD countries in terms of thcomplexity of regulatory procedures and the barriers firms face when entering and operating in network sectors (see Figure 2.4). One of the strategic objectives in ANEEL’s Strategic Planning 2018-2021 is to “enhance, simplify and consolidate regulation”, with an initiative to “review the framework for regulation development and the regulatory stock.” To manage the regulatory stock, all technical areas evaluate annually the effectiveness of normative acts in force under their responsibility. They identify acts that are no longer effective to the General Secretariat (SGE). In turn, the General Secretariat submits the consolidated information to the Board who decides whether to update the legal status of the normative acts.
Figure 2.4. Brazil has a high complexity of regulatory procedures and barriers in network sectors
Note: A higher score means a higher level of complexity of regulatory procedures or higher barriers that firms face when entering and operating in network sectors. OECD average is based on all OECD countries excluding the United States. Non-OECD average is based on scores for Argentina, Brazil, Bulgaria, Costa Rica, Croatia, Cyprus, Kazakhstan, Malta, Romania and South Africa.
Source: 2018 OECD Economy-wide Product Market Regulation Indicators.
Behavioural insights
With the support of the innovation committee, some departments use innovative methods including behavioural insights. Early attempts at using a behaviourally-informed approach to reduce electricity consumption were met with mixed success. ANEEL designed a system for demand management, signalling to consumers the real cost of generating electricity by assigning a different colour “tariff flag” to indicate the cost of generation. When combined with a surcharge, implemented in 2015, the system was expected to reduce consumption during times when the cost of generation was high. However, the TCU determined in 2018 that the system did not fulfil the regulatory objective, and ordered the MME and ANEEL to realign the system to the objective (Nascimento, 2018[102]).
To improve the tariff flag system, ANEEL conducted behavioural insights research to inform their approach to the tariff flags in partnership with the National School of Public Administration (Escola Nacional de Administração Pública – ENAP). Based on the insights gathered during the research phase, ANEEL identified three options for regulatory action:
1. To incorporate behavioural elements in the information presented in the electricity bill;
2. To develop a more assertive communication campaign for consumer engagement; and
3. To modify the tariff flag system to change the consumer’s perception of the mechanism.
This topic will be subject to an ARR with the objective of analysing the efficacy of the tariff flag system regulation to be released in 2020.
ANEEL’s Ombudsman Award and the Consumer Satisfaction Index (IASC) are behaviourally informed programmes. The publication of the top performers in customer service (in the case of the Ombudsman Prize) and the publication of a set of scores for distributors (in the case of IASC) present an additional motivation for distributors to improve services.
Enforcement and inspections
ANEEL’s powers of inspection are detailed in law (Presidência da República, 1997[94]; Presidência da República, 1996[103]). The legislation does not detail the procedures to be followed for inspection processes; instead, these are described in procedure manuals prepared by ANEEL. Three ANEEL departments – SFF, SFE and SFG – carry out enforcement activities. Other departments also engage in activities to promote compliance, such as processes of monitoring and development of regulatory incentives and disincentives.
In recent years, ANEEL has taken actions to make its enforcement and inspections regime more effective and efficient. A recent ANEEL normative resolution allows for greater compliance promotion and responsive enforcement, for example by allowing companies whose service provision is deteriorating or who are underperforming according to parameters of financial or economic sustainability22 to enter into a Results Plan with ANEEL (ANEEL, 2019[104]). In 2015, ANEEL units involved in inspection developed a proposal to improve inspection activities. This proposal resulted in the Responsive Surveillance Project, an ANEEL initiative to align its inspection to best practice. The project takes inspiration from responsive regulation, and uses new tools such as analytical intelligence and evidence-based enforcement techniques.
There is no requirement in law defining the criteria for the selection and planning of inspection and enforcement, but the relevant ANEEL departments use a risk management approach to inspections and enforcement. ANEEL monitors sector actors and selects agents for formal inspection and surveillance if it identifies a risk of non-compliance with any legal, regulatory or contractual obligation or quality standards in providing the service. Information prompting a reactive inspection can come from a variety of sources; for example, complaints made by consumers to ANEEL and demands from other public agencies like the Public Prosecution Service, the National Secretariat of Consumer Protection or the judiciary may prompt investigations into distribution companies. Strengthening indicators used in this initial diagnosis could help ANEEL make its enforcement programmes more efficient, especially as departments often have a large portfolio of operators and few employees. ANEEL communicates about its risk management strategy and risk-based enforcement approaches with meetings and events held with the regulated industry, when the ANEEL departments present the criteria, actions and desired results. ANEEL has identified their public communication strategy about risk management as a point for improvement.
While ANEEL’s inspection and enforcement is unified by a focus on risk, the three areas approach risk analysis differently. SFF uses risk analysis to plan some of its processes, while other inspections are regular and follow the tariff review schedule. SFE and SFG use a more integral risk-based responsive oversight model. The departments monitor performance indicators, benchmark companies, and select companies with the highest severity of noncompliance and the highest potential risk to service provision. However, with limited database integration and no common risk assessment process, the approach of each department is distinct. Challenges arise when the different departments are charged with collective monitoring, such as for recently-privatised dams.
The governance, literacy and quality of data, the bedrock of ANEEL’s inspections activities, present challenges for ANEEL’s enforcement departments. Data integration and process harmonisation will be important to reduce duplicate requests for information and duplicate provisions of information. A new Data Governance Commission aims to standardise processes across ANEEL to avoid information silos between departments (this commission is also involved in ANEEL’s open data initiative, described in Output and outcome. ANEEL is investing into developing data literacy and analytical capacity within its workforce, offering training for all staff and specialised statistical education for some employees. Even as ANEEL works to improve its internal data governance and literacy, data quality and consistency remain a challenge for ANEEL. An ANEEL Commission for Data Quality works to encourage the provision of quality and consistent data from regulated entities and other sources. ANEEL also relies on social auditing of data, whereby stakeholders alert ANEEL to data quality issues in publicly-available data.
All enforcement areas in ANEEL use evidence to support their enforcement actions. ANEEL’s enforcement activity can be divided into three levels: monitoring, remote action and field action. At the monitoring level, the areas analyse collected data and indicators derived from them so as to act in two stages: planning and selecting entities to be inspected. In the planning stage, indicators are taken as input to prioritise each type of inspection, while in the selection stage indicators help to identify which entity will be inspected. Inspections activities only begin after the definition of scope and entities to be inspected using this evidence-based approach. The data collected in the inspection process and the inspection reports are public.
ANEEL’s enforcement activities are proportional to the severity of the infringement. It may issue warnings, impose fines, revoke grants and suspend new grants for up to two years. Enforcement practices differentiate responses based on the type of regulated entities, by the size of the agent, by its history, type of grant and phase of the enterprise (in implementation or operation). The actions to be carried out follow the compliance pyramid and are segregated into four levels in order of severity: monitoring alerts, results plans, sanctioning actions, and recommendation for concession expiration. The first level is monitoring alerts, for the simplest cases that easy to correct. The second level is a results plan, for situations that require concentrated actions of the companies and a periodic monitoring of the results achieved. The companies themselves propose the results plan, which must spell out the actions the company will take to reverse the identified situation, the deadlines for results, and monitoring criteria. Companies with results plans meet quarterly with ANEEL to report on their progress. Sanctioning actions are reserved for the most serious cases and repeated non-compliance with the regulations. In extreme cases of noncompliance where the company is no longer responding to regulatory stimuli, ANEEL can issue a recommendation for the concession expiration and a report of failures and transgressions.
For situations where ANEEL imposes penalties, the procedures are spelled out in ANEEL’s Normative Resolution No. 846/2019 (ANEEL, 2019[105]). The process begins with an inspection, of which the results are consolidated into an inspection report. ANEEL sends the report to the company, after which the company has the right to file a statement. After reviewing the statement, the superintendent of the relevant department can fine the companies for each of the identified nonconformities. ANEEL delivers infraction notices that include an explanatory memorandum detailing the reason and motivation for the fine. The company can appeal the Notice of Infringement; the appeal is first sent to the superintendent who can exercise reconsideration judgement, and then is sent to the board, which can confirm or modify the decision of the superintendent in whole or in part.
The magnitude of the penalty ANEEL imposes should be proportional to the severity of the infraction. Penalties range in magnitude from a warning to a fine, embargo of works, temporary suspension of participation in bids to obtain new concessions, permits or authorisations, revocation of authorisation, and an expiry of the concession or permit. Penalties are bound by an upper limit for penalties of 2% of the company’s revenues in the last twelve months, or an estimate in case the offender has not been in operation for a full period of twelve months. In case of self-production, the maximum fine corresponds to 2% of the estimated value of the energy produced during the last twelve months. For smaller offenses, a lower maximum applies. To promote proportionality, the calculation of the fine takes into account the company’s income, the severity of the sanction, the extent of the infraction, the damage caused, economic advantages obtained and the existence of previous sanctions.
ANEEL databases support enforcement activities. This data content is collected by diverse means, sometimes directly from regulated entities using online systems and forms, sometimes automatically by web services and applications. These data are provided in data warehouse and informational systems in the form of reports and dashboards that inform indicators, ranking, level of performance, which support the decision-making process, particularly regulatory and monitoring activities.
While a large volume of data is stored in ANEEL’s databases, ANEEL does not have a single procedure to continuously share monitoring and enforcement information internally. ANEEL tries to reduce duplicate information requests, inspections and reporting by investing in database integration and improving the governance of information-sharing. Every inspection is registered in a central system, and ANEEL is working to integrate departmental data structures into the central database. ANEEL participates in the Energy and Mineral Sectors Strengthening project (Projeto de Assistência Técnica dos Setores de Energia e Mineral – META)23 to improve its digital infrastructure. One of the project’s goals is to develop a new technical solution for ANEEL to store and structure data on generation agents, and to improve ANEEL’s analytical capacity.
ANEEL shares data with other regulatory entities through an automatic system of data recovery. Shared data includes company registration data from the Tax Office Department; energy trade and contracts data with the Electricity Chamber for the Commercialization of Electricity; data about grid operation with the National Power System Operator; and economic and financial data from the Brazilian Central Bank.
ANEEL assesses the performance of inspections and enforcement activities using compliance levels and public welfare outcomes. In addition, it uses effort indicators measuring the number of inspections performed, terms issued and notices issued.
Appeals and complaints
Decisions of the regulator may be appealed to the Board as the only instance of administrative appeal (if the decision came from the Board, the rapporteur will be a director other than the one who served as rapporteur for the decision). For most appeals, the same department that provided input for the initial decision provides any additional input necessary for the decision subject to appeal. The appeals process requires significant resources from ANEEL. One researcher finds that 41.5% of decisions made by the board in 2016 were appeals (far outnumbering decisions on other topics, such as rule-making (Gouveia, 2017[106])).
There is not a separate body accepting second-instance appeals, and the only remaining opportunity for appeal apart from the board is the judiciary. ANEEL’s acts can be appealed to the five Federal Regional Courts, whose competence is established through territorial criteria. Appeals must be submitted within 10 business days after the publication in the Official Gazette or the notification. Although there is no requirement to exhaust administrative appeal options before appealing to the judiciary, an administrative appeal procedure without a second instance for appeals may contribute to a stronger judicial component (“judicialisation”) in the regulatory process. Facing long processing times for administrative appeals and an unfavourable possibility for changes, many companies may opt to bypass administrative appeal altogether and appeal directly to the judiciary. While the judiciary tends to rule in favour of the decisions of ANEEL in technical matters (Prado, 2016[107]), where companies see an error in the regulatory framework itself, they may turn to the judiciary (Golfetto, 2020[108]).
The judicialisation of the sector, driven by a range of factors, creates a significant legal burden for the agency. The causes of the judicialisation of the Brazilian electricity sector are manifold and complex. One driver is the policy within the sector, which ANEEL must translate into regulation. A 2012 provisional measure launched a change in sector legislation and tariff framework, with consumers paying a high share of sectoral fees. Tariffs increased, creating a strong driver for judicialisation in the sector especially involving consumers. In many of the consumer protection lawsuits related to energy, ANEEL is not a party to the lawsuits (Prado, 2016[107]). Nevertheless, ANEEL handles a large litigation portfolio. As part of its performance indicator targets, linked to its strategic objectives, ANEEL set as a target to limit the number of new legal procedures to 170. However, ANEEL was not able to meet this goal in 2019 with 451 new legal procedures (see Assessing the performance of the regulator). ANEEL also invests into strengthening familiarity with sectoral issues in the judiciary, hosting workshops to educate judges and prosecutors about basic issues.
Regarding complaints by consumers against companies, the sectoral ombudsman provides information and guidance on matters related to the supply of electricity to consumers and registers complaints about the quality of service provided by distributors. Its system to receive complaints is integrated with consumidor.gov.br, the government platform that facilitates direct exchange between consumers and participating companies. ANEEL does not mediate complaints in this platform, but it monitors the quality of service and trends in complaints. Most of Brazil’s distribution companies participate, and ANEEL and the National Consumer Secretariat of the Ministry of Justice (Secretaria Nacional do Consumidor – Senacon) are working to expand the number of participating companies. Distributors must also offer an ombudsman that liaises directly with consumers, as well as maintaining access channels such as a dedicated phone line or brick-and-mortar offices where consumers can file complaints or request information (ANEEL, 2011[109]) (ANEEL, 2010[110]).
If the problem is still not resolved, a consumer can register the complaint with ANEEL directly. SMA maintains multiple channels for consumer input and questions: a dedicated phone line, a chat service, a smartphone app and a website form. The telephone line and the website are the most popular, with nearly 70% of complaints coming through this channel. The website comes second, with over a quarter of complaints. Email accounts for 1.7%, while the smartphone app is only used for around 3% of complaints. ANEEL receives very few complaints via letter, chat and in person.
ANEEL’s structure provides two additional avenues for conflict resolution among consumers and companies: mediation and arbitration. ANEEL also offers mediation for conflicts in which regulation does not clearly provide an answer. ANEEL’s approach for these more complex conflicts draws from alternative dispute resolution. The volume of administrative mediation is low; ANEEL received 15 requests for mediation in 2019. Finally, ANEEL can serve as an arbitrator, providing 1st instance decisions in administrative processes about consumer relationships. ANEEL can arbitrate on the transportation price for use of the transmission system by free consumers in cases of frustrated negotiations between market players (Presidência da República, 1995[111]). For the transportation price of fossil fuels used in electricity generation, ANEEL can arbitrate on frustrated negotiations together with the ANP.
Transparency and accountability
Transparency
Several measures promote the transparency of regulatory decision-making. Technical reports feeding into regulatory decision-making may be published, and the organisation of discussions around these reports are public, if not the discussions themselves. During a board meeting, the drawing to select the rapporteur and the meeting of the board are public; members of the public can attend in person or watch a live-stream on ANEEL’s website. Following a decision of the board, the act along with information about the vote and supporting documents are published in the Official Gazette and ANEEL’s website. After the meeting, the video record is uploaded to ANEEL’s YouTube channel. Additionally, the agenda of the meeting is released at least five days in advance. A record of meetings is also public, and summaries of other official meetings are published.
A central government portal promotes transparency in the management of public finances. The federal government maintains a Transparency Portal (www.portaldatransparencia.gov.br) providing information on the execution of public programmes and policies. The site can present data from public organs, and data for ANEEL is easily accessible. A visitor can explore data on revenue, expenditures (including expenditures on payment cards and travel expenses), staffing, bids and contracts (CGU, n.d.[112]). The data is updated in real time, extracted automatically from information systems of the public administration. The Transparency Portal has earned widespread recognition as good practice; for example, the 2nd Conference of State Parties to the United Nations Convention Against Corruption recognised this system as a good practice for transparency and anti-corruption (OECD, 2012[113]).ANEEL’s expenses are entered into the transparency portal as a matter of course. ANEEL’s Superintendence of Administration and Finance (SAF) has to authorise the expenses of every unit in ANEEL before each procurement. The expenses are subsequently recorded in an integrated government system that processes all expenses into the transparency portal (see Transparency for more information about the transparency portal).
ANEEL must implement a Charter of Citizens’ Services and an annual communication plan to inform the public about its opportunities for engagement and rights of consumers. As of 2009, public bodies are required to publish a Charter of Citizens’ Services to improve transparency and accountability. The law specifies what elements a charter must contain: services provided and access channels, procedures and maximum time for delivery of services, and channels of communication between federal public entities and citizens (OECD, 2012[113]). First published in 2011, ANEEL’s 41-page charter lists in plain language the services offered for the public and describes the agency, agency processes and the functioning of the Ombudsman (ANEEL, 2016[114]). ANEEL implements an annual communication plan that discloses the activities of the agency and the rights of users before the regulated agency and companies in the sector (Presidência da República, 2019[51]).
Passed in 2011, Brazil’s Law of Access to Information (Lei de Acesso à Informação Pública) specifies rules for the disclosure of information from public organs and entities that administer public money such as state-owned enterprises. With 3 558 requests for information in 2019 alone, ANEEL has been among the top 10 public institutions in recent years of the 300 institutions covered by the law in terms of the volume of requests for information (Controladoria-Geral da União, 2020[115]). Since 2014, ANEEL’s median response time has been between 6 and 7 days. ANEEL reports a high satisfaction rate with its responses to requests for information. However, a 2018 analysis showed that fewer than half of request receive responses from entities, and more than half of requestors wait longer than the time limits established in the law (Michener, Contreras and Niskier, 2018[116]).
Accountability to congress
As described in Article 71 of the 1998 Constitution, the National Congress provides an external control of ANEEL (Constituição da República Federativa do Brasil de 1998, 1988[117]). The legislature provides external control with the help of the Federal Court of Accounts (Tribunal de Contas da União – TCU), a superior supervisory entity that started carrying out external control work of infrastructure regulators after the wave of privatisation and regulatory reform in the 1990s and the creation of infrastructure regulators (TCU, 2009[118]).
TCU can act on a broad range of issues. In addition to routine inspections, TCU oversees concession auctions and contracts. TCU engages in analysis prior to concession auctions and can recommend corrections. TCU continues to be involved by monitoring the execution of concession contracts (TCU, 2018[119]). TCU can also review and challenge ANEEL determinations, making judgements on the results, the economy, efficiency and effectiveness of regulatory agencies’ activities (TCU, 2009[118]). The TCU has been criticised for infringing on ANEEL’s technical discretion (Bonacorsi de Palma, 2019[120]). For example, it can impose methods of regulatory action, define the mode of stakeholder dialogues and affect the organisational structure of regulatory entities.
One example of a TCU determination relating to ANEEL’s technical decision-making occurred in 2016. TCU reviewed ANEEL’s decision to change the methodology for calculating the ceiling price of the permitted annual revenue for transmission concessionaires. TCU found that the methodology, which ANEEL had changed in response to trends in previous auctions, was inadequate. Among other issues raised, TCU also called into question ANEEL’s estimation of country risk (Tribunal de Contas da União, 2016[121]).
ANEEL has opposed this sort of control with technical motivation explaining its reasons for not complying. In 2018, the TCU determined that a system assigning tariff flags did not fulfil the regulatory objective of encouraging conscious consumption after conducting an audit to verify the effectiveness of the tariff flag system (see the section on Behavioural insights for more information about the tariff flags). The judgement ordered the MME and ANEEL to realign the system to the objective, prohibiting ANEEL from communicating that the purpose of the tariff flags was consumer signage. The judgement also requires that ANEEL work with the National System Operator (ONS) and the Electric Energy Trading Chamber (CCEE) to publish monthly reports including all the information necessary to verify the data underlying the tariff flags (TCU, 2018[122]). ANEEL requested TCU to review its determination. ANEEL argued that provoking a reduction in electricity consumption was not an objective of the programme, but rather to present an economic signal to the consumer about the cost of energy generation. TCU’s review in 2019 resulted in a revised recommendation for ANEEL and MME. The recommendation states that, if economic signal is one of the objectives of the programme, they should take measures to ensure the effectiveness of the tariff flags, defining objectives and mechanisms for the periodic monitoring of the results (Canal Energia, 2019[123]; Tribunal de Contas da União, 2019[124]).
ANEEL provides information regularly to Congress. In accordance with articles 70 and 71 of the Federal Constitution, ANEEL must submit its Annual Account Processes and Management Reports (which are both elements of the Annual Accountability) to TCU via TCU’s online system and to the legislative bodies through official letter. Based on the information contained in the Management Report, Congress may request that the TCU carry out inspections. ANEEL frequently receives information requests from senators and representatives relating to the electrical sector, sector regulation, and ANEEL’s role that ANEEL must answer within 30 days. In addition, Congress frequently invites ANEEL to explain specific matters or participate in public audiences. However, ANEEL’s annual report is not subject to congressional debate (OECD, 2008[1]).
Conflict of interest
Pre-employment restrictions are designed to limit conflicts of interest and the “revolving door” at the level of the board. An individual is not eligible if they or their relatives hold a position as Minister, Secretary of State, Municipal Secretary or leader of a political party. In addition, candidates (and their relatives) must not hold a position in a trade union or in an association representing labor or employer interests in the regulated industry. Finally, a candidate may not have held a position in the decision-making structure of a political party or electoral campaign for the previous 36 months.
The Federal High Administration Code of Conduct requires that new directors submit to the Public Ethics Committee a declaration of assets and income that may cause conflict with the public interest (a Confidential Information Statement) (Governo Federal, 2010[125]). Appointees must also send to the Public Ethics Commission a declaration of potential conflicts of interest. Office-holders must notify the Commission with a new Confidential Information Statement when there are relevant changes in assets (Comissão de Ética Pública, 2004[126]).
During their term, board members are bound by additional employment restrictions, which can serve as the basis for termination. They cannot exercise any other professional activities apart from teaching. In addition, members of the board:
Cannot act as a director, trustee, manager, administrative board member, board of auditors member or representative, in any company or society;
Cannot exercise any union or political activity, participate in any company, issue an opinion on matters of their position or act as a consultant, or be in any other situation with a conflict of interest as defined in law (Lei No 9.986, de 18 de Julho de 2000, 2000[127]);
Cannot receive any fees, percentages or costs;
Can only lose their mandate in case of resignation, a judicial sentence or conviction in a disciplinary administrative proceeding, or in case they breach the prohibitions set by law during their term.
Directors cannot be in a situation of conflict of interest during their term, defined further in Brazil’s conflict of interest law:
Disclosing or making use of privileged information for personal or third party benefit, obtained in as a result of activities in public sector employment;
Activities implying the provision or services or the maintenance of a business relationship with an individual or legal entity with interest in the decision of the regulator;
Exercising, directly or indirectly, activities that are incompatible with the duties of the position, even in related areas or matters;
Acting, even informally, as a proxy, consultant, advisor or intermediary of private interests in the public administration;
Acting in the interest of a legal entity that may benefit the public employee, spouse, partner or relatives (by blood or other), participate, up to the third degree;
Receiving gifts from anyone interested in decisions by the public employee or the regulator outside of the limits and conditions established in regulations;
Providing services (even occasionally) to companies whose activities are supervised, controlled or regulated by the regulator (Presidência da República, 2013[53]).
The same law defines situations that constitute conflict of interest after the term of employment. After the period of employment ends, directors must not disclose or make use of privileged information obtained in the course of public duties. After their term, members of the board are prohibited to exercise any activity or position in the regulated sector during a six-month cooling-off period, unless expressly authorised by the Public Ethics Committee or the Comptroller General of the Union.
Code of conduct
In addition to the Code of Professional Ethics of the Civil Servant of the Federal Executive Branch that civil servants must abide by, ANEEL has in place a code of ethics that was approved in Ordinance No. 1.235/2009. It establishes ANEEL’s values, including impartiality, transparency, independence and social responsibility. In the code of conduct, ANEEL commits to taking a number of actions to promote good conduct, promising to inter alia establish a personnel management policy that considers ethical criteria and ensure compliance with the Code of Ethics in ANEEL contracts, agreements and related documents. Some of the commitments reach further. For example, ANEEL commits to preventing potential conflicts between regulated agents in the electricity and other segments of society and respect the needs, rights and values of society and agents of the electric energy sector with no distinction of any kind. The code of ethics includes commitments for ANEEL’s employees, too, such as acting with credibility, honesty and discretion. It provides examples of conduct that is not in line with the commitments and values defined in the document.
ANEEL’s code of ethics also establishes an ethics committee responsible for implementing, monitoring and evaluating ethics management actions and providing ethics guidance (ANEEL, 2009[128]).The ethics committee is composed of an executive secretary and three members with three alternates, all appointed by the board. The members have a two-year mandate, renewable once, and they cannot be removed from their mandate unless they leave ANEEL. They receive no additional remuneration for serving on the board. The committee is guaranteed access to all records and locations that it needs to investigate potential ethics violations. The procedures of the ethics committee are detailed in its internal regulations, approved by the board (ANEEL, 2009[128]).
Output and outcome
Measuring and assessing the performance of regulated entities
ANEEL collects information on sector performance from companies, including data on the service quality, data on the development of new generation and transmission plants, sector charges owed by distribution companies,24 hydroelectric generation dams' safety, and level of generation performance.
Data usage is complicated by the fact that the information ANEEL collects on companies comes from external sources. These external sources use databases with different purposes and structures, as well as different definitions. In other cases, data can be outdated or incomplete, or there are inconsistencies between data received by the different departments within ANEEL. To improve the effectiveness of its regulatory oversight, ANEEL issued an Electric Sector Accounting Manual (Manual de Contabilidade do Setor Elétrico – MCSE), to set common accounting practices for concessionaires and permit holders in the generation, transmission and distribution segments of the electricity sector. For the creation of the manual, ANEEL hired external consultants and collaborated with the Brazilian Association of Electric Energy Sector Accountants (Associação Brasileira dos Contadores do Setor de Energia Elétrica – ABRACONEE), the Institute of Independent Auditors of Brazil (Instituto dos Auditores Independentes do Brasil – IBRACON), representative associations of the electricity companies and representatives of the academic community (ANEEL, 2015[129]).
To analyse the data that ANEEL receives, most technical areas have data analysis experts, and ANEEL has a centralised IT team to support the data analytics. ANEEL established a Data Management and Accounting Standards team within the Superintendence of Economic and Financial Inspection, with the objective of guaranteeing the quality of data provided by the regulated companies. The team inspects the accounting data and reports of the electricity companies. ANEEL sets rules regarding the delivery of data by companies through ordinances, and publishes the deadlines on its website (ANEEL, 2020[130]).
ANEEL uses the following reporting formats to collect financial data from electricity companies:
A standardised monthly balance sheet (Balancete Mensal Padronizado – BMP), for concessionaires in generation, transmission and distribution, distribution permit holders and independent producers of hydro power;
A quarterly report (Relatório de Informações Trimestrais – RIT), for concessionaires in generation, transmission and distribution, distribution permit holders and independent producers of hydro power;
An annual accountability report (Prestação Anual de Contas – PAC), for concessionaires in generation, transmission and distribution and distribution permit holders;
A social and environmental responsibility report (Relatório de Responsabilidade Socioambiental – RSA), for all concessionaires, permit or authorisation hoolders in generation, transmission and distribution.25
ANEEL makes the monthly balance sheets and the quarterly and annual reports of all companies available on its website to the public (ANEEL, 2020[130]) (ANEEL, n.d.[131]). Information on the service quality, such as the frequency and duration of electricity interruptions and consumer satisfaction (through the IASC survey) per distribution company, are shared on ANEEL’s website (ANEEL, n.d.[132]).
ANEEL has taken measures in recent years to release more data, spurred by an increase in information requests. It developed an open data plan (Plano de Dados Abertos 2020-21) to increase the dissemination of data to society, with the goal to improve data quality, support decision-making and increase transparency (ANEEL, n.d.[133]). It releases all periodically received accounting information of the electricity companies, with the exception of the assets control reports26 which are released on demand. Certain information, such as information collected through inspections, are treated as confidential information.
For good performance, ANEEL gives an Ombudsman Award (Prêmio ANEEL de Ouvidoria) to the distribution companies with the best customer service and the best performance in terms of handling complaints. The award is based on the number of complaint channels, the design of the ombudsman within the company, the availability of monitoring reports, the speed and clarity with which it handles complaints and the compliance with deadlines. The award is awarded to three companies, which receive a trophy and can use the Ombudsman Award seal on their publications (ANEEL, 2018[134]).
Assessing the performance of the regulator
ANEEL provides information on its performance through an annual report which it publishes on its website. Furthermore, ANEEL drafts a separate report on the sectoral ombudsman’s performance, and a retrospective report on ANEEL’s actions during the year. ANEEL also reports on its regulatory delivery, by comparing the realisation of regulatory products against their anticipated delivery according to the regulatory agenda (ANEEL, n.d.[135]).
The annual report is sent to TCU and Congress. Also, the report is audited by CGU to assess consistency of information and to propose recommendations for improvement of the regulator’s operations. Congress can ask information from ANEEL on its performance and its regulatory decisions.
ANEEL measures its performance using KPIs (or “strategic indicators”) linked to the strategic objectives, either defined by ANEEL in its strategic planning or defined in regulation (see Strategic and operational objectives). The Cabinet of the Director-General (GDG) monitors the performance indicators. Any ANEEL employee is able to monitor the performance on the indicators through a portal available on the intranet.
In total, ANEEL has 61 strategic indicators, linked to the 16 strategic objectives. In the annual report, ANEEL provides an overview of performance over time for all strategic indicators and compares these against the annual targets. The indicators, as well as their targets for the start and end of the strategic cycle 2018-2021, are included in Table 2.10. ANEEL has 7 strategic indicators for strategic objectives linked to results, 34 indicators for strategic objectives linked to processes and 20 indicators for strategic objectives linked to people and resources.
Strategic indicators measure a wide range of aspects, of which some are under the direct influence of the regulator and some are the result of many external factors as well. For example, while ANEEL can directly impact the indicator on the timeliness of its regulatory decisions, the indicator on the average industry bond default rate is likely to be affected by many external factors outside ANEEL’s direct control.
For each of its strategic objectives, ANEEL monitors the progress in its annual strategic analysis report by assessing the number of indicators that have reached their intended target. While most indicators have improved over time, on average ANEEL achieves a score that is somewhat lower than the target that has been set. Most notably, ANEEL performs relatively low compared to its targets in its objectives to refine, simplify and consolidate regulation, its management and prevention of legal claims27 and its budgetary autonomy (ANEEL, 2020[4]).
Table 2.10. ANEEL’s performance indicators
Source: ANEEL (2020), Relatório de gestão – ANEEL 2019, https://www.aneel.gov.br/documents/653889/14859944/Exerc%C3%%20ADcio+-+2019/b755a474-25e9-994d-7f00-c8a6ec8d8b86.
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Notes
← 1. The creation of independent regulatory agencies in Brazil was inspired by international experience, especially the North American institutional model of independent regulatory agencies. The creation of ANEEL in 1996 was followed by: the telecommunications agency (Agência Nacional de Telecomunicações – ANATEL) and the petroleum, natural gas and biofuel agency (Agência Nacional do Petróleo, Gás Natural e Biocombustiveis – ANP) in 1997; the sanitary surveillance agency (Agência Nacional de Vigilância Sanitária – ANVISA) in 1999; the supplementary health agency (Agência Nacional de Saúde Suplementar – ANS) and the water agency (Agência Nacional de Águas – ANA) in 2000; the water transport agency (Agência Nacional de Transportes Aquaviários – ANTAQ), the land transport agency (Agência Nacional de Transportes Terrestres – ANTT) and the cinema agency (Agência Nacional do Cinema – ANCINE) in 2001; the civil aviation agency (Agência Nacional de Aviação Civil – ANAC) in 2005.
← 2. ANEEL can delegate certain supervisory, sanctioning and arbitral activities to state regulatory agencies, see Co-operation with state-level regulatory agencies.
← 3. According to article 1 of Law No. 12,783/2013, the granting authority can extend the concession of certain hydro generation concessionaires for a period of up to 30 years, provided these concessionaires accept a fee remuneration based on tariffs set by ANEEL, as well as an allocation of quotas of physical guarantee of electricity to distribution concessionaires and quality standards as defined by ANEEL.
← 4. Att the time of writing, ANEEL finalised co-operation agreements with the state agencies of Mato Grasso do Sul and Santa Catarina, but did not yet complete any co-operation agreements with the state agencies of Parà and Rio Grande do Sul.
← 5. The Federal Constitution is in force since 1988.
← 6. The Odebrecht case concerns the period 2001 to 2016. It involves the payment of $788 million in bribes by the Brazilian holding company Odebrecht S.A. to government officials, politicians and political parties in a wide range of countries in order to earn infrastructure projects. Of this amount, an estimated $349 million was paid to bribe Brazilian public officials (OECD, 2019[136]).
← 7. The SBM Offshore case concerns the period 1996 to 2012. It involves the payment of $180 million by the Dutch company SBM Offshore N.V. to intermediaries, amongst others to bribe public officials in Brazil, Angola, Equatorial Guinea, Kazakhstan and Iraq (OECD, 2019[136]).
← 8. The term “isonomy” suggests that all actors in the sector are governed by the same standards and legal framework and that decisions are based on the same policies and rules.
← 9. Respondents were asked if they saw ANEEL as balanced, independent, impartial, isonomic, open to dialogue and transparent. The respective percentages of respondents attributing these traits to ANEEL were: balanced – 55.9%; independent – 57.3%; impartial – 50.7%; isonomic – 58.2%; open to dialogue – 56.0%; transparent – 53.7%.
← 10. While the results for most countries reflect the score for the energy regulator, in case of Argentina and Brazil the scores are included for the electricity regulator (as there exist separate electricity and gas regulators in these countries).
← 11. ANEEL’s mission is unchanged since its creation, and mirrors the purpose as defined in article 3 of decree 2 335 from 6 October 1997.
← 12. ANEEL’s vision has evolved over time from “To be recognised as an essential institution for society's satisfaction with electrical services” in the 2014-17 strategic cycle to “To be essential to ensure the quality and sustainability of electrical services” in the 2018-2021 cycle.
← 13. The new methodology involved a greater involvement of employees, managers and directors, the use of training events and the formulation of clearly defined milestones and deliverables.
← 14. An example can be found in Ordinance 422/2020 by ANEEL, which approves a change to the strategic initiatives that are related to the strategic objective to refine, simplify and consolidate regulation (ANEEL, 2020[149]).
← 15. Law 9 427 from 26 December 1996, article 11, also describes other possible revenues, such as resources transferred from the federal government, donations, subsidies and the proceeds from the sale of assets (Lei Nº 9.427, de 26 de Dezembro de 1996, 1996[2]).
← 16. The change in the Electric Energy Services Supervisory Tax was part of a broader set of changes made through Law 12.783/2013, aimed to reduce sector charges and to moderate the tariffs.
← 17. In 2019, changes to the budget implementation degree have been made through decree 9,741 of 29 March 2019, decree 9,809 of 20 May 2019, decree 9,943 of 30 July 2019, decree 10,028 of 26 September 2019, decree 10,079 of 23 October 2019, decree 10,119 of 21 November 2019, decree 10,136 of 28 November 2019 and decree 10,181 of 19 December 2019. (Decreto nº 9.741 de 29 de Marco de 2019, 2019[137]) (Decreto nº 9.809, de 30 de Maio de 2019, 2019[138]) (Decreto nº 9.943, de 30 de Julho de 2019, 2019[139]) (Decreto nº 10.028, de 26 de Setembro de 2019, 2019[140]) (Decreto nº 10.079, de 23 de Outubro de 2019, 2019[141]) (Decreto nº 10.119, de 21 de Novembro de 2019, 2019[142]) (Decreto nº 10.136, de 28 de Novembro de 2019, 2019[143]) (Decreto nº 10.181, de 19 de Dezembro de 2019, 2019[144]).
← 18. Citizens with “political rights” (direitos políticos) are able to vote and participate in the political process (Tribunal Superior Eleitoral, n.d.[145]).
← 19. The law includes transition rules that impose different terms of office for each new member when the current Board of Directors changes). New board members are nominated to mandates from 2 to 6 years (Presidência da República, 2019[51]). Only those vacancies in the board of directors that are filled for a remaining period of 2 years or less are allowed, one renewal of term for an additional five years is allowed.
← 20. Including ANEEL, ANATEL, ANP, ANTT, ANTAQ and ANAC.
← 21. There are specific initiatives in various areas of ANEEL to improve the clarity of communication with the external public. As an example, SMA from ANEEL participated in plain language training in 2019. The area has an employee whose job is to revise and simplify the texts of communication with consumers.
← 22. ANEEL’s assessment of economic and financial sustainability contains multiple dimensions, including level of indebtedness, efficiency, investment, profitability, returns to shareholders, the controlling stakeholders and future prospects (ANEEL, 2017[146]).
← 23. This META project is funded by the World Bank and implemented under the responsibility of the MME. A wide range of public bodies participate in the project, alongside ANEEL. It aims to modernise the Brazilian energy and mining sectors, by “strengthening capacity, planning activities, and sustainability ii) institutional and regulatory development, and iii) South-South cooperation” (World Bank, 2011[148]). The project is currently in its second phase, which is expected to run until 31 December 2025 (Word Bank, 2020[147]).
← 24. Sector charges include charges such as the Energy Development Account (Conta de Desenvolvimento Energético – CDE) and the Electric Energy Services Supervisory Tax (Taxa de Fiscalização de Serviços de Energia Elétrica – TFSEE). Distribution companies provide a role in collecting the charges on behalf of the different accounts, as the charges are included in the tariffs that distribution companies charge to their consumers.
← 25. Generators with a total installed capacity below 30 MW, transmission companies below a certain annual revenue threshold (BRL 18 000 000 in 2016 price level) and distribution companies with a market below 500 GWh per year are excluded from the obligation to submit an RSA.
← 26. The asset control reports monitor the registration of assets and their valuations.
← 27. While ANEEL aimed to limit the number of lawsuits it would be active to 170, the realisation was significantly higher with a total of 451 lawsuits, indicating an increase in judicial processes.