A model to measure the migration potential of Brazilian consumers from the regulated market to the free energy market

Abstract

Due to the constant evolution occurring in the electricity market, new possibilities of contracting electricity arise. In Brazil, there are two possibilities: the Regulated Contracting Environment (RCE) or captive market and the Free Contracting Environment (FCE) or the free market. In the regulated environment, consumers are subject to electricity tariff rules defined by energy utilities. On the other hand, in the free market, consumers negotiate directly with energy generators or energy traders. Since these two options offer distinct benefits, risks, and uncertainties, the main objective of this study is to propose a mathematical model to measure the performance of consumers in the migration from the regulated market to the free energy market. The model that aims to support this decision-making, presents 18 critical success factors measured by 32 key performance indicators. The modeling uses the Analytic Hierarchy Process, with 15 experts from the Brazilian electricity sector weighing and validating the information. For testing purposes, the model was applied to six Brazilian companies, where migration potentials were evaluated, and feedback was provided on which indicators each company can act on to improve its performance. For example, in the indicator that reflects the insecurity of companies in unstable environments such as the free market, in which three companies achieved unsatisfactory performance. All six companies participating in the study achieved potentially satisfactory performance for migration. This study contributes to policymakers, society, and especially companies, as it provides information that allows consistent decisions and the effective targeting of efforts to improve, stimulate and develop the free market.