What do you need to know about tariff flags?

In June 2015, Aneel implemented the tariff flag system with colors indicating power generation conditions. Green means favorable conditions with no extra charge, yellow adds R$ 0.015 per kWh, red level 1 charges R$ 0.030, and level 2 adds R$ 0.045. The system aims to pass on production costs based on reservoir levels and the use of thermal power plants. During 2015, the red flag predominated due to the water crisis, but in 2016, there was variation among the colors depending on rainfall and power generation conditions.

Aneel Tariff Flag System

In June 2015, Aneel, the National Electric Energy Agency, implemented the tariff flag system. Differentiated by the colors red, yellow, and green, the signaling began to appear on the consumer’s bill. But do you know what they mean?

Meaning of the Colors

Each of the colors indicates the conditions of energy generation in the country. The less favorable the scenario, the higher the cost of energy passed on to the consumer. According to Aneel, the flag colors mean:

Green

Favorable energy generation conditions. The tariff does not incur any additional charge.

Yellow

Less favorable generation conditions. The tariff incurs an additional charge of R$ 0.015 for each kilowatt-hour (kWh) consumed.

Red – Level 1

More costly generation conditions. The tariff incurs an additional charge of R$ 0.030 for each kilowatt-hour kWh consumed.

Red – Level 2

Even more costly generation conditions. The tariff incurs an additional charge of R$ 0.045 for each kilowatt-hour kWh consumed.

System Coverage

The system was adopted in almost all Brazilian states. Only Amapá and Roraima did not adopt the mechanism because they are not yet connected to the National Electric Energy System – SIN.

Objective and History

With the severe water crisis experienced by the country last year, the objective of adopting the tariff flags was to pass on the costs of energy production to the final consumer. Thus, month by month, Aneel announced the color of the flag that would be adopted, always depending on the conditions of the reservoirs, the percentage of use of thermoelectric plants, and the higher or lower cost of energy production.

Evolution of the Flags

With the lack of rain, throughout the 12 months of 2015, the tariff flag remained red. This year, the highest flag also prevailed in January and February. With the increase in rainfall, however, it turned yellow in March. In April, fortunately, it turned green again, eliminating additional costs for the consumer. Although it has already normalized, stay alert! Red flag means a more expensive bill.