Brazilian Government Will Exclude 5 Million Families from Energy Subsidy Program

03/04/2015 - 09h19

In an attempt to curb inflation and control spending on electricity in 2015, the government decided to revise thoroughly the applications of the "Tarifa Social" program. Five million families will lose the benefit by the end of this year.

They represent 38% of the 13.1 million families that were given energy bill discounts in December.

To be entitled to the benefit, the applicant is required to have a specific income and consumption.

According to Aneel (Brazilian Electricity Regulatory Agency), these cases do not comply with the criteria of the program, either by a mistake in the application process or a change in the family's economic profile or consumption.

The cut represents a reduction of approximately US$ 206 million on the social program's cost, which is paid by all consumers.

By reducing the benefit, the cost to finance the program is likely to be around US$ 737 million in 2015. In 2014, it costed US$ 750 million, but after the power rate hiked, it should reach US$ 948 million.

Excluding beneficiaries should avoid further increases in power rates.

Until last year, the benefit was also paid by the Treasury, which will not transfer US$ 3.07 billion to the sector this year. It has been announced that the cost will be paid by the consumer only.

This month's energy bill has already increased an average of 32% due to the extraordinary adjustment and the "red flag" rate [meaning power is being supplied by thermal plants, which is more expensive].

According to Aneel's forecast, in the coming months the increase in energy prices might reach 42%, after the regular readjustment is approved.
 
p(tagline). Translated by JULIANA CALDERARI

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