Minister Alexandre Silveira’s Statements Challenged by Lawmakers During Public Hearing at the Chamber of Deputies

Brasília, July 9, 2025, During a public hearing held by the Committee on Mines and Energy of the Brazilian Chamber of Deputies, Minister Alexandre Silveira defended the approval of Provisional Measure No. 1,300/2025, arguing it would promote “tariff fairness” and “consumer freedom.” However, the proposal reiterates outdated formulas and overlooks the real bottlenecks of Brazil’s electricity sector.

Minister Alexandre Silveira’s Statements Challenged by Lawmakers During Public Hearing at the Chamber of Deputies

By maintaining social benefits funded via the CDE (Energy Development Account) and failing to address cross-subsidies in distributed generation (DG), the measure perpetuates an unfair and unsustainable tariff structure.

The lack of transparency regarding market liberalization and the impacts of ending incentivized generation further increases uncertainty among consumers and productive sectors. Incentivized generation a key engine of development is at risk of being weakened, while lower-income populations continue to bear the burden of DG’s cross-subsidies.

Congressman Arnaldo Jardim used the occasion to demand the installation of a joint committee to analyze the provisional measure, which remains valid until September 18, 2025. The proposal must still be voted on in the Chamber of Deputies and the Senate. Until then, it is urgent to correct tariff distortions, ensure competitiveness, and protect policies that demonstrably work.

Free Market Opening: A Premature Proposal with Promises and Risks

The provisional measure revives the debate on fully opening Brazil’s electricity market to all consumers including low-voltage residential customers. Although promising in the long run, this move is premature and risky given the country’s current infrastructure and regulatory maturity.

The issue is not just technical it's also economic, legal, and structural. Without thorough adjustments, such a transition may compromise sector stability and threaten tariff balance. Consumer choice is important, but only when all consumers are equally equipped to participate which is clearly not the case in Brazil today.

Incentivized Generation: A Strategic Pillar That Should Be Strengthened

While the government’s discourse particularly the minister’s frames subsidies as inefficient, it lumps incentivized generation with problematic mechanisms, which is a serious misstep both economically and technically.

Incentivized generation is not a privilege, but a well-established public policy tool that ensures competitiveness in industry, sustainability in agribusiness, and stability for retailers. These contracts allow large consumers to reduce energy costs, maintain jobs, invest in expansion, and secure more predictable pricing for end users.

Contrary to public perception, the costs associated with incentivized generation are currently lower than those of other subsidy mechanisms particularly DG subsidies, which benefit a small, wealthier portion of the population while burdening the rest through higher CDE charges.

Cross-Subsidies in Distributed Generation: The Real Burden on Electricity Bills

One of the most glaring omissions in the provisional measure is its silence on cross-subsidies in residential solar distributed generation. While the minister criticizes incentivized generation contracts that benefit entire productive sectors, the proposal leaves untouched the subsidies for rooftop solar now one of the main drivers of CDE expansion despite offering little national economic return.

These subsidies mostly benefit affluent consumers and shift the cost burden to captive users. If the government truly seeks rationalization, this should be the first distortion addressed. Penalizing productive energy use while protecting inefficient benefits is counterproductive.

Congressman Arnaldo Jardim: A Necessary Warning to Congress

Congressman Arnaldo Jardim (Cidadania-SP) raised essential concerns during the hearing. While acknowledging the MP’s positive aspects such as modernizing regulations and broadening access he warned of serious risks to regulatory predictability, legal certainty, and investment sustainability in the sector.

He also called for the immediate formation of the joint congressional committee, cautioning against the risk of last-minute approval without proper debate. His message was clear: “Does someone not want this MP to move forward?” His tone revealed legitimate concerns about both the substance and the handling of the measure, which must be improved not passed on impulse.

Tariff Fairness: Political Rhetoric or Technical Objective?

The minister claims MP 1300/25 promotes tariff fairness, but the current structure does little to achieve this goal. The expanded social tariff for families consuming up to 80 kWh/month is commendable but once again, the CDE will foot the bill, while remaining bloated by poorly calibrated mechanisms and politically driven legislative amendments.

Silveira has promised a new provisional measure to control CDE growth, in response to the “riders” included in Law No. 15,097 most of whose presidential vetoes were overridden by Congress. But a new measure will not solve the problem if the root causes are misdiagnosed and the solutions remain politically motivated rather than technically sound.

Conclusion

Provisional Measure 1300/25 may have been introduced with good intentions, but it is being advanced hastily, with weak technical foundation and direct attacks on mechanisms that support Brazil’s real economy — particularly incentivized generation, which should be preserved and scaled. Subsidy reform is necessary, but it should begin with the most evident distortions, like residential DG.

Opening the energy market demands responsibility and strategic planning, not rushed decisions driven by election-year populism. As of now, the joint congressional committee tasked with analyzing the MP has not yet been formally established. During the hearing, Deputy Carlos Zarattini (PT/SP) stated that progress is expected only in August, following discussions with the appointed rapporteur, Deputy Fernando Coelho Filho (União/PE), a former energy minister. Senator Eduardo Braga (MDB/AM), also a former minister, was named to chair the committee — both appointments have been confirmed but are not yet official.

The energy sector cannot be the victim of improvisation. Brazil needs an energy policy that is technically sound, legally secure, and economically viable — not improvised solutions rushed in an election year.

Source: Agência Câmara de Notícias

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Minister Alexandre Silveira’s Statements Challenged by Lawmakers During Public Hearing at the Chamber of Deputies