Anuario Brasileiro do Cobre | Brazilian Copper Yearbook 2018

2018 Anuário Brasileiro do Cobre Brazilian Copper Yearbook 38 MERCADO MARKET 2018: the last year déjà vu I n 2018, energy prices are behaving in a similar way as they did in 2017, when the spot market prices varied widely due to climate conditions and, consequently, requiring a strong thermal dispatch, therefore, increasing the price of long-term contracts due to the following year. The difference is that, in the beginning of 2017, the price expectation of conventional energy for the year in course and for the next ones should be around R$130/MWh, while in 2018, prices would go up to R$200 during the year and would return to R$170 in the following years. On the other hand, the number of consumers at the free market in the last 2 years jumped from 1,882 units in January, 2016, to 5,544 in July, 2018, encouraged by the strong increase in tariffs’ review by the main distributors in the last few years. In 2018, such increase was above 20% on average, leading the free market to represent 30% of the national usage, according to the CCEE (Electric Energy Trading Chamber) data. This increase of the consumers’ number resulted in a bigger competition for the available energy that did not grow at the same proportion as the free market. This can cause a problem to the market liquidity where, sometimes, when the price has a falling projection, power generators can take a long time to assimilate the movement. After the election, the market expectation is of a strong resumption of investment and of power use, per consequence. This shall further magnify the situation above. The regulatory environment for 2019 may provide opportunities through Normative Resolution nº 824/2018 that will allow release of incentivized energy from distributors to the free market, which nowadays, is bought at the regulated market, since there was a restriction for its release by the MCSD (the Compensation Mechanism of Surpluses and Deficits) for new energy for 2019. This energy that remained left with distributors is a result from the reduction of its industrial usage due to the economic crisis that our country has faced during in the last few years and because of the strong migration movement to the free energy mentioned above. In addition, another regulatory mechanism define, according to what was approved in Law 13.360/2016 - §2º - item A, that from January 1 st , 2019, “onwards the consumers that, as of July, 7,1995, uses a load equal to or higher than three thousand kilowatts (3,000 Kw) and were served at a voltage lower than 69 kV may choose to purchase electric power from any grantee, permittee, or authorized company of the electric energy system”. In practice, this represents a potential increment of incentivized energy to the free market of 952 MW in the average, supposing that consumers exercise their rights of choosing the best opportunities to hire conventional energy. It is very important that companies discuss this theme more frequently and consistently, for a question of energy planning for the new few years, and in order to pursue better opportunities in the market and allow large competitiveness gains. At this moment, all indications are that 2019 will be a year of intense emotions!  “The market expectation is of a strong resumption of investment and of power use, per consequence”