The 5th Panel of the Federal Regional Court of the 1st Region (“TRF1”) ruled that power generators must be compensated for curtailment events (also referred to as constrained-off or generation cuts).
Curtailment is the practice of reducing or forcibly interrupting power generation imposed by the National Electric System Operator (“ONS”) when there is excess generation relative to demand or limitations in transmission infrastructure, affecting particularly renewable power plants.
The case concerned an interlocutory appeal filed by the Brazilian Wind Energy Association (“ABEEólica”) and the Brazilian Photovoltaic Solar Energy Association (“Absolar”), seeking interim relief compelling ANEEL to provide full compensation to associated generators for all curtailment events from that point forward, without limitation to those classified as external unavailability or subject to an hours-based deductible.
TRF1 granted the appeal, basing its decision on Law No. 10.848/2004 and Decree No. 5.163/2004, which ensure that commercialization rules must provide for charges to cover sector costs, including generation cuts, without restrictions as to their causes. According to the Reporting Judge, Des. Alexandre Machado Vasconcelos, the restrictions imposed by ANEEL on the right to financial compensation for curtailment are unlawful. The granting of interim relief was justified both by the severe and immediate effects of restricting compensation and by the public interest in preserving the country’s energy sustainability.
(Federal Regional Court of the 1st Region, Interlocutory Appeal No. 1045204-79.2023.4.01.0000, Fifth Panel, Reporting Judge Alexandre Machado Vasconcelos, judgment rendered on 12/04/2024)