Skip to content 
The proposed reform of the Brazilian electricity sector, presented in April 2025, promises to profoundly reshape the functioning of the country's energy market. With measures ranging from expanding social tariffs to fully opening the free energy market, the initiative seeks to promote tariff fairness, increase competitiveness, and balance sector charges.
However, the proposed changes have generated intense debate among different stakeholders in the sector.
Main proposals of the reform
- Expansion of the Social Electricity Tariff
The reform proposes a complete exemption from electricity bills for families registered in the Unified Registry (CadÚnico) with a per capita income of up to half the minimum wage and monthly consumption of up to 80 kWh.
Furthermore, it provides for gradual discounts for families with per capita income between half and one minimum wage and consumption of up to 120 kWh per month. It is estimated that around 60 million Brazilians will benefit from these measures.
- Opening of the Free Energy Market
Currently restricted to large consumers, the free energy market will be gradually opened to all consumers. Starting in March 2027, medium-sized companies will be able to choose their energy suppliers, and in March 2028, this option will be extended to residential consumers.
- Review of sectoral subsidies and charges
The proposal foresees a review of the subsidies currently granted to incentivized sources, such as wind and solar energy. New contracts or renewals will no longer benefit from the 50% discount on the Distribution System Usage Tariff (TUSD). Furthermore, the charges of the Energy Development Account (CDE) will be redistributed more equitably among consumers.
Market reactions
Favorable sectors
Energy distributors and traders see the reform as an opportunity to solve structural problems in the sector and promote greater efficiency and competitiveness.
The Brazilian Association of Energy Traders (Abraceel) emphasizes that the complete liberalization of the market will allow for greater competition and benefit society as a whole.
Critical sectors
Large industrial consumers are expressing concern about the potential cost increases resulting from the redistribution of charges and the review of subsidies. Studies indicate that industries and large consumers may face increases of up to 12% in their electricity bills.
Companies that provide incentivized power generation, especially those operating with renewable sources, are also expressing concerns about the loss of competitiveness due to the elimination of subsidies.
Impacts for consumers and businesses
- Residential consumers
The proposed reform presents two distinct paths of impact for residential consumers, with direct effects on accessibility and freedom to contract electricity.
For low-income populations, the expansion of the Social Electricity Tariff represents a significant step forward in energy inclusion. The measure proposes a total exemption from electricity bills for families registered in the Unified Registry for Social Programs (CadÚnico) with consumption up to 80 kWh/month, and proportional discounts for higher consumption brackets, benefiting millions of Brazilians in vulnerable situations. This reduces delinquency, improves quality of life, and guarantees access to energy as a basic right.
For residential consumers outside the subsidy range, the reform opens the possibility of entering the free energy market starting in 2028. This means that families will be able to choose their energy supplier, breaking with the current model in which the local distributor is the only option. This opening tends to stimulate competition among energy suppliers, promoting more advantageous contractual conditions, such as personalized prices, specialized service, and the possibility of acquiring certified renewable energy.
However, experts point out that the success of this model will depend on energy education for the population, regulatory clarity, and simple mechanisms for migrating between markets. It will also be necessary to ensure that consumers have access to price comparison tools, affordable contracts, and reliable trading platforms.
Companies
For the business sector, the impacts are ambiguous and vary according to the consumption profile and the market segmentation category.
Medium-sized companies, which currently still operate in the regulated market, will gain access to the free market, and with this, they will be able to negotiate directly with traders or generators, with the potential to reduce their energy costs and adapt contracts to their operational demand.
Contractual flexibility will allow for everything from the use of energy with guaranteed renewable origin to supply agreements with predictable prices, which is strategic for sectors such as agribusiness, the food industry, and logistics services.
On the other hand, the review of subsidies granted to incentivized sources, such as wind and solar, tends to negatively affect large consumers who currently benefit from these advantages. The proposal stipulates that new contracts will no longer be entitled to the discount on the TUSD (Transmission System Usage Tariff), which could represent considerable increases in the cost of electricity for energy-intensive industries, sectors such as mining, steelmaking, and pulp and paper, which have contracts with large volumes and depend on tariff predictability.
Furthermore, the redistribution of charges from the Energy Development Account (CDE) could generate a redistributive effect that transfers part of the costs to consumers with higher demand, putting pressure on their operating budgets. The international competitiveness of exporting companies may also be compromised if the adjustments are not offset by contractual efficiency or a reduction in parallel charges.
As a result, companies will need to reassess their energy supply strategies, considering not only price, but also predictability, sustainability, and regulatory compliance. The role of energy traders and integrators will be even more strategic in this new scenario.
The reform of the Brazilian electricity sector seeks to promote a fairer distribution of charges and subsidies, increase competitiveness, and guarantee access to energy for the most vulnerable segments of the population.
However, the proposed changes require careful analysis of the impacts on different market segments and the implementation of measures that ensure the long-term sustainability and efficiency of the sector.