The Brazilian Ministry for Mines and Energy has issued Ordinance No. 653, which outlines the procedures for the A-5 Power Bid to be held on April 30, 2015. The bid will auction Regulated Market Energy Commercialization Contracts (CCEAR) to be negotiated on two fronts: (i) Quantity for hydroelectric power plants, and (ii) Availability for coal-fired plants, natural gas-fired combined cycle plants and biomass.

The difference between the auctions is described as follows:

CCEAR Quantity – For these contracts, the hydrological risks of the operation are borne entirely by the power generation companies. Winning bidders will be responsible for all costs related to the contracted power supply. Generally, the contracts contain mechanisms for the division of financial risks arising from a possible difference of prices on sub-markets.

CCEAR Availability – In these contracts, the costs arising from the hydrological risks are borne by the purchasing agents (power distribution companies) and eventual differences on the prices will be ultimately passed on to consumers, according to ANEEL rules.

The contracts will be differentiated according to the power source, with the delivery of the energy forecast for Jan. 1, 2020 and supply terms of 30 years for Quantity CCEARs and 25 years for Availability CCEARs.

The bidders should apply to the Energy Research Company (EPE) for registration by using the AEGE official online portal. If developers are already registered on AEGE they can use the portal to directly submit new projects for A-5. Instructions are available on www.epe.gov.br, along with other documents referred to in the MME Ordinance 21, of January 8, 2008. Deadlines are as follows:

a) Noon, January 15 for hydroelectric power plants projects; and 
b) Noon, January 27 for all other projects.

In order to be able to buy energy at the bid, the distribution agents have until March 16 to submit their Energy Requirements, according to the document draft to be made available by the Ministry of Mines and Energy through its website.

The ordinance can be found (in Portuguese) here.

If you have any questions, please contact the Haynes and Boone lawyer with whom you regularly work or any of the following lawyers in the firm’s Americas Practice Group.