By Brazil Stock Guide – Brazilian electricity tariffs are expected to rise by an average of 9.4% in 2026, nearly twice the country’s projected inflation rate for the year.
The estimate comes from the September edition of InfoTarifa, a bulletin published by Brazil’s electricity regulator Aneel. The agency compares the projected tariff impact with consumer inflation, or IPCA, of 5.0% and an IGP-M inflation forecast of 4.4%.
What stands out, however, is not only the size of the increase but what is driving it.
According to Aneel, financial components account for 4.7 percentage points of the projected nationwide tariff impact — roughly half of the overall increase. Sector charges add another 1.6 percentage points, energy costs 1.1 points, transmission 0.9 point and distribution costs 0.8 point.
In other words, the pressure on electricity bills is not simply coming from the cost of generating, transmitting or distributing power. A large share reflects financial adjustments accumulated within Brazil’s highly regulated electricity system, including differences between forecast and actual costs and mechanisms designed to compensate utilities for expenses incurred over previous tariff cycles.
One of the main drivers is the CVA Energia, a regulatory mechanism that compensates distributors for differences between the power-purchase costs embedded in tariffs and the amounts they actually paid.
Aneel said the combined tariff impact from energy-related CVA adjustments and overcontracting rose from an estimated 1.3 percentage points in March to 3.5 percentage points in its September revision. The increase reflects higher costs from regulated power-purchase agreements amid hydrological conditions that proved worse than initially expected.
At the same time, one of the mechanisms that had been helping cushion electricity bills has weakened.
The amount of PIS/Cofins tax credits expected to be returned to consumers was cut from R$6.5 billion to R$5.3 billion, reducing the projected tariff relief from 2.4 percentage points to 1.9 percentage points.
Some consumers face much steeper increases
The national average also masks significant differences across distribution companies.
Aneel’s projections show that 16% of the distribution market is served by utilities expected to post average tariff increases of more than 15% in 2026. For that group, the average projected impact is 17.6%.
Another 10% of the market falls into the 12%-to-15% range, with an average increase of 12.4%, while 18% is in the 9%-to-12% bracket, where the average impact is 10.2%.
Combined, those three groups account for 44% of the distribution market.
At the other end of the spectrum, only 5% of the market is in the bracket where tariff increases are expected to remain below 3%.
Subsidies exceed R$56 billion
Subsidies financed through Brazil’s power sector are another important part of the bill. Aneel’s subsidy tracker shows R$56.26 billion in subsidies between September 2025 and August 2026.
A significant portion is funded through the CDE, or Energy Development Account, a sector fund used to finance a range of public policies and tariff benefits.
According to Aneel, higher CDE quotas related to network use and distributed generation are contributing a combined 1.4 percentage points to the 2026 tariff impact.
And some of those charges are poised to keep rising. New contracts awarded in Brazil’s 2026 capacity reserve auctions are expected to increase the ERCAP capacity charge from R$192 million in June to around R$650 million per month by December.
By the end of 2027, Aneel estimates that the monthly cost could exceed R$1 billion, equivalent to roughly R$9.3 billion a year. The charge is paid by consumers in both Brazil’s regulated and free electricity markets.
The mechanism remunerates generation and other capacity resources that can be made available to the system during periods of high demand or when power supply from other sources is constrained.
Transmission costs are rising too
Transmission infrastructure is adding another layer of pressure. For the tariff cycle running from July 2026 through June 2027, the Annual Allowed Revenue, or RAP, granted to transmission companies reached R$55 billion, up 9.43% from the previous cycle.
Aneel estimates, however, that the average impact of the increase on final consumers will be around 1.1%.
There are also consequences from the privatization of the former Eletrobras, now known as Axia Energia.
The final phase of the gradual removal of 13 former Eletrobras hydropower plants from Brazil’s regulated quota system reduced total Annual Generation Revenue, or RAG, by 6.34% for the 2026/2027 cycle, to R$8.1 billion.
Yet the average tariff for the plants that remain under the quota regime increased 19.8%, to R$257.54 per megawatt-hour.
The reason is that the volume of energy allocated to the system is falling faster than the recognized revenue of the remaining plants. The gradual exit of some of the cheaper former Eletrobras hydro assets has also increased the relative weight of higher-cost plants in the quota system.
For consumers, the result is something of a paradox.
Even as some regulated revenues decline and several mechanisms are used to soften tariff increases, the combination of financial adjustments, subsidies and sector charges continues to push electricity costs higher.
Aneel’s 9.4% projection suggests that Brazilian electricity prices will rise substantially faster than overall consumer inflation in 2026 — with much of the pressure coming not from the electricity itself, but from the complex financial and regulatory architecture surrounding the sector.
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