On May 21, the federal government enacted Provisional Measure No. 1,300, introducing sweeping reforms to Brazil’s electricity sector. The measure brings significant changes to self-generation, transmission and distribution tariff discounts (TUSD/TUST), and the management of hydrological risk, among other key innovations.
Self-Generation: New regulatory framework
The new rules for self-generation are among the most notable changes. To qualify as a self-generator under the new regime, consumers must now have a minimum aggregate contracted demand of 30,000 kW, while maintaining the individual threshold of 3,000 kW per consumption unit. This equivalence can also be recognized within the same corporate group, provided there is at least a 30% equity interest—even in cases where non-voting shares or super-preferred economic rights are issued.
A critical transition period has been established for industry participants. The new thresholds do not apply to those who had already registered their contracts with the Electric Energy Trading Chamber (CCEE) prior to the enactment of the Provisional Measure, to companies within groups holding 100% of the generation entity, or to those who, within 60 days of publication, submit documentation to the CCEE proving acquisition of the necessary shares or quotas—provided the transaction is completed within 24 months.
After this 60-day window, only new projects (those commencing commercial operations after the Provisional Measure’s publication) will be eligible for either the classic or equivalent self-generation models.
TUST/TUSD Tariff discounts: New eligibility rules
Another major change concerns the eligibility for transmission and distribution system usage tariff discounts (TUST and TUSD). These discounts will only remain available for contracts already registered with the CCEE or for new contracts registered by December 31, 2025. Transferred, extended, open-ended, or late-registered contracts will not be eligible.
Additionally, the Ministry of Mines and Energy will regulate the financial settlement of discrepancies between registered and actual volumes, with any resulting funds reverting to the Energy Development Account. As a result, contracts registered with zero volumes will not secure discounts, nor will short-term contracts or swap operations.
It is also important to note that low-voltage consumers who migrate to the free market are expressly excluded from these discounts.
Limited-Time Opportunity
The Provisional Measure creates a crucial 60-day window during which already-operational projects may be reclassified as self-generation, either classic or equivalent. During this period, it is possible to register equivalent self-generation contracts with the CCEE, allowing the energy produced to benefit from both self-generation advantages and transmission/distribution tariff discounts.
Competitive hydrological risk mechanism
The measure also introduces a competitive mechanism, administered by the CCEE, for the negotiation of hydrological risk exposures. Participants who opt in must withdraw any pending litigation on the matter and, in return, may extend their concessions by up to seven years. The negotiated amounts will correspond to the accumulated unpaid balances in the Short-Term Market settlement.
Other noteworthy changes
In addition to the above, the Provisional Measure includes further innovations, such as opening the market to low-voltage consumers starting in 2026, expanding the social tariff program, increasing CDE discounts, and revising the allocation of sector charges.
