With the arrival of 2025, an issue that will guide the next 30 years of the energy distribution sector must be resolved. The sector awaits the final model of the additive term that will be used to renew the concessions of 20 distributors – which account for around 60% of the distribution segment – starting this year.
Equatorial (), Energisa (), CPFL () and Neoenergia () are some of the companies that will submit to the new rules. The renewal season runs until 2031 and should be positive for the sector, according to analysts. But rising costs – which should impact dividends – and stricter rules are factors of concern.
What will change?
Energy distributors are authorized by the government to operate via concessions. The company assumes the costs of the operation and undertakes to make investments to be remunerated through the tariffs that consumers pay. On July 15th, the first concession contract of the batch that needs to be renewed expires and the market is already looking at the long-term impact.
All distributors with contracts expiring between 2025 and 2031 are analyzed as part of the same group because they will be under the same rules. In June last year, . It is based on this document that the National Electric Energy Agency (Aneel) is preparing an amendment to the concession contract, awaited by the sector.
Although still out of the market spotlight, the topic “is at the basis of discussion in the electricity sector”, says Marcos Duarte, analyst at Nova Futura. He explains that one of the points that the new contractual model addresses is the creation of mechanisms to avoid severe interruptions in supply – as has been happening in Greater São Paulo, where Enel currently operates.
However, “there is concern about the possibility of imposing new financial obligations that could pressure margins and impact the sector’s attractiveness to investors”, including fears about lower dividends.
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According to the rules written by the Ministry of Mines and Energy, concessionaires that do not reach the required supply quality levels may have limitations on the distribution of dividends and even terminate the contract – which is more difficult to happen under current regulations.
For Ligia Schlittler, partner in the Infra & Energy area at TozziniFreire Advogados, the decree’s regulations have similar points to the rules proposed 10 years ago for transmission companies. As transmission regulation worked and companies were able to deal with the increase in investments to achieve higher quality standards, “it is reasonable, from the point of view of the granting authority, that the same rules should now be applied to the distribution sector”, says the expert.
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Affected companies
Light () and Enel, responsible for distribution in the regions of Rio de Janeiro and São Paulo, are on the list of companies that need to renew their concession contracts. Recently, the first caused an uproar in the private credit market with a request for judicial recovery and the other became the target of criticism after frequent interruptions in energy supply.
According to Duarte, the two “may face greater challenges in meeting regulatory requirements without compromising margins”, as they operate in regions with high population demand and with older networks.
See the list of distributors that must renew their concession contracts between 2025 and 2031:
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| Distributor | Concession expiration | Controller |
| EDP Espírito Santo | 17/jul/2025 | EDP Energias do Brasil |
| Light Electricity Services | 04/jun/2026 | Light |
| Enel Distribuição Rio | 09/dez/2026 | Enel Americas |
| Neoenergia Coelba | 08/ago/2027 | Neoenergia |
| RGE Sul Energy Distributor | 06/nov/2027 | CPFL Energia |
| Companhia Paulista de Força e Luz | 20/nov/2027 | CPFL Energia |
| Energisa Mato Grosso do Sul | 04/dez/2027 | Energisa |
| Energisa Mato Grosso | 11/dez/2027 | Energisa |
| Energisa Sergipe | 23/dez/2027 | Energisa |
| Neoenergia Cosern | 31/dez/2027 | Neoenergia |
| Enel Distribution Ceará | 13/May/2028 | Enel Americas |
| Enel Distribution São Paulo | 15/jun/2028 | Enel Americas |
| Equatorial Pará Energy Distribution | 28/jul/2028 | Equatorial Energy |
| Neoenergia Elektro | 27/ago/2028 | Neoenergia |
| Piratininga Power and Light Company | 23/out/2028 | CPFL Energia |
| EDP São Paulo Energy Distribution | 23/out/2028 | EDP Energias do Brasil |
| Energisa Borborema | 04/fev/2030 | Energisa |
| Neoenergia Pernambuco | 30/mar/2030 | Neoenergia |
| Equatorial Maranhão Energy Distributor | 11/ago/2030 | Equatorial Energy |
| Energisa Paraíba | 21/mar/2031 | Energisa |
If the rules for the next 30 years are stricter than expected, companies most exposed to the distribution sector or that only operate in this area should be the most affected, according to Vitor Sousa, energy analyst at Genial Investimentos. The Brazilian electricity sector is full of integrated companies, operating in at least two segments between generation, transmission and distribution.
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Concessionaires that operate in regions more susceptible to extreme weather conditions are also a concern, but “investors should wait for the numbers from the next earnings season to have a more tangible view” and better price the risks, according to Duarte.
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How are the dividends?
The electricity sector is widely sought after by passive income investors due to the high volume of dividends distributed. This happens because these companies have high cash flow predictability, as electricity is essential for consumers. Another advantage is that electricity bills are frequently readjusted, which makes distributors a hedge against inflation. But now, with rules that should require more robust investments, some fear lower returns.
Duarte and Schlittler believe that dividends may be impacted, but that the effect should be restricted to the short term, when companies need to invest more heavily to adapt to the new requirements. Furthermore, Sousa remembers that “larger volumes of investment tend to be remunerated via fees after the investment cycle”.
Although she sees a reallocation of risks with “above weight” weight towards the distributors, Ligia Schlittler says that “in the medium and long term, it is possible to imagine that the new measures will provide relevant efficiency and quality gains, which can attract flow investment for distributors”.
