Brazilian Electricity Market Reforms

On 11 September, Brazil's President Dilma Rousseff announced major tax cuts in the electricity sector in order to lower prices, keep inflation at bay and hopefully reinvigorate Brazil's stagnant economic performance. According to President Rousseff "The reduction of energy costs generates a systemic effect which will impact the economy as a whole... It will promote Brazil's international competitiveness, reduce inflation and stimulate investment... Businesses and consumers will benefit".

The measures will come into effect in 2013 and consist of the abolition of the general reserve reversion tax (reserva global de reversão or RGR) and the fuel consumption account tax (conta de consume de combustiveis or CCC), as well as a 25% reduction in the energy development tax (conta de desenvolvimento energetico or CDE). These taxes were enacted during previous governments to subsidise investments in the electricity sector and help fund improvements to Brazil's vast electricity