Requirements to Leverage the Electricity Distributors' Sales and Revenues in the Brazilian Free Market

Abstract

This article investigates the value drivers that can help the distributors to increase sales and revenues in the Brazilian electricity free market. The findings contribute to the literature by showing that the supply flexibility adds value to the buyers, thus justifying prices slightly higher. Other services can add value, but do not influence prices. Models to support suppliers and buyers seem to be missing. The suppliers' model should define prices based on the supply flexibility presented by the supplier. The buyers' model should help to define when to buy, how much to buy and how much to pay. Such definitions can help to reduce the risks incurred by the buyers, thus helping to increase distributors' sales and revenues. The buyers' model should consider: energy demand forecasting; GDP growth rate; difference between the captive and free markets prices (currently, this value is 35%); effects of price increase on the demand; trends in the buyer's business; buyer's costs; level of risk desired by the buyer; rainfall patterns; climate warming; supplier's cost; load, outflow, availability, transmission limits between subsystems and future electricity cost; geographical, infrastructural, institutional, and resource factors; impact of technology in electricity prices; and effects of deregulation.