Government issues Provisional Measure to prevent high electricity bills and regulate natural gas

The Lula (PT) government issued this Friday (11) a provisional measure that changes rules for the energy sector in an attempt to reduce the increase in electricity bills caused by the overturning of the vetoes to the Offshore Wind Law in the National Congress. The Executive stated that the start of the validity of the vetoed points would generate an estimated impact of R$ 40 billion on the cost of electricity.

Provisional Measure 1,304/2025 was published in a special edition of the Federal Official Gazette (DOU) and also establishes mechanisms to regulate the natural gas market. With the measure, the government excluded the "jabutis" (additional bills)—proposals unrelated to the original text of the Offshore Wind Farms Law that were included by lawmakers—that raised electricity bills.

The measure is valid for 120 days and requires congressional approval to become official. The new provisional measure sets a ceiling on subsidies granted through the Energy Development Account (CDE) starting in 2026. The CDE is the fund that finances public policies for the electricity sector, such as the social tariff for low-income individuals, universal access to energy, and compensation for distributors in areas with more expensive generation.

Today, 71% of CDE's resources come from consumers, with charges varying according to the type of consumer, 25% from resources from companies in the electricity sector and 4% from the General Budget of the Union.

The government's proposal determines that, once the CDE ceiling is reached, companies benefiting from the subsidies will pay the difference, starting in 2027, through the Resource Supplementary Charge (ECR), to be charged proportionally to the benefit received.

The new tax will be introduced in phases. In 2027, 50% of the amount will be charged. Starting in 2028, the ECR will be charged in full, but will not apply to the Luz para Todos and Tarifa Social programs, Agência Brasil reported.

Furthermore, the text replaced the mandatory contracting of the remaining thermoelectric plants from the Eletrobras Privatization Law with small hydroelectric plants (PCHs). This mandatory contracting, even without demand, was established by Congress and has the potential to increase energy costs by R$35 billion per year.

"The contracting of small hydroelectric plants will be subject to sectoral planning decisions. It is expected that up to 3 GW of hydroelectric plants of up to 50 MW will be contracted through a capacity reserve auction by the first quarter of 2026, with the start of supply staggered between 2032 and 2034," the government said in a statement. The government may contract an additional 1.9 GW if sectoral planning identifies the need.

Natural gas

The provisional measure sets the fees for access to integrated flow, processing, and transportation systems for the commercialization of natural gas from Pré-Sal Petróleo SA (PPSA) at US$2 per million BTU. According to the government, this value could currently reach approximately US$8 per million BTU, with peaks of US$16.

The measure aims to "reverse high natural gas prices in the domestic market and allow PPSA to offer its gas at competitive prices." The National Energy Policy Council (CNPE) will be responsible for determining access conditions and fees.