Facing El Niño, regulator weighs advancing fuel stockpiles for North

Brazil’s National Electric Energy Agency (Aneel) will study the possibility of advancing funds to companies for the purchase and stockpiling of fuel used to generate power in the North of the country, given the risk of an extreme drought in the region this year amid the effects of a super El Niño. The concern is that, should the forecasts play out, falling river levels could hinder or even block barge transport of supplies.

The measure aims to let operators prepare for a potentially more severe drought and for possible logistical difficulties in supplying fuel to power plants in the region.

The remarks came during the opening of the event “Super El Niño and the Resilience of Brazil’s Electric Power Sector,” held by the regulator in Brasília on Thursday (20).

The case in question was assigned on Wednesday (19) to board member Willamy Moreira Frota and is proceeding under seal. It involves administrative requests filed by Powertech Engenharia, Aggreko Energia, and Oliveira Energia. The companies are asking Aneel to recognize extraordinary costs tied to contingency measures for maintaining power supply during the period when El Niño’s effects are expected to hit Amazonas state in 2026.

After the event, the director-general told reporters that the measure concerns independent producers responsible for serving isolated areas in the Amazon—that is, areas not connected to the National Interconnected System (SIN). According to him, the idea is to advance funds to ensure enough fuel to supply these locations, particularly during the election period.

“I’ve already informed the Superior Electoral Court that we’re operating under contingency measures, so the Court is aware. I’ve also told the Court that I’m advancing funds to isolated areas so they receive this fuel ahead of time—in other words, we’re doing everything possible in terms of prevention, preparedness and communication with every institution we can,” he said.

The funds will come from the Fuel Consumption Account (CCC), a charge paid by electricity consumers nationwide to subsidize generation costs in the “isolated” systems, meaning they are not connected to the national grid.

The idea is to advance funds that companies would already receive by the end of this year through that charge, and which are already budgeted under the Energy Development Account (CDE), a sectoral fund used to finance public policy and subsidies for the power sector. As a result, according to Feitosa, the measure should not generate any additional impact on electricity rates.

“This money that the companies will receive in advance is money they would receive anyway. So there’s no extraordinary cost involved,” he stressed.

The director-general also noted that the power sector as a whole is heavily affected by weather conditions. He said Thursday’s event was designed to bring together companies and institutions to prepare a coordinated sector-wide response to a climate event that, according to the projections presented, is expected to occur between October and December. “Beyond the problems, we also want to show that there are solutions here,” he said.