An inflationary bomb in the hands of the STF

In an article published on the website Energia Hoje, from Revista Brasil Energia, partners Lucas Mayall and Luis Eduardo Maneira analyze the charge for the use of right-of-way on federal highways against energy concessionaires for the passage of their transmission lines.

An inflationary bomb in the hands of the STF

Lucas Mayall and Luis Eduardo Maneira, from Maneira Advogados, analyze in an article the charge for the use of right-of-way against energy concessionaires

By Lucas Mayall and Luis Eduardo Maneira

Amidst the impressive variety of cases of enormous political and economic repercussion that orbit the agenda of the Federal Supreme Court (STF), almost nothing has been said about a potentially overwhelming discussion on the national economy: the maintenance of the free access that electric energy concessionaires have always had to use the right-of-way on federal highways for the passage of their transmission lines.

Mistakenly mistaking it for a mere sectoral dispute, few realize the damage that an authorization for federal highway concessionaires to create a charge against energy distributors would have on energy tariffs and, consequently, production costs in general.

To put into perspective the impact of the charge whose creation has been endorsed by some courts, the transfer of the charge to electricity consumers would, alone, represent an increase of almost 8% in the energy tariff, according to a study by Fundação Getúlio Vargas, which was based on one of the main ongoing disputes in the country on the subject. This is a percentage that represents almost double the inflation projected for the year 2023, according to the latest Focus bulletin and which, in turn, will have a strong inflationary effect, given the impact of energy costs throughout the production chain.

For comparison purposes, the recent reduction in the ICMS rate through the issuance of Complementary Law No. 194/2022 and its respective regulatory acts generated a reduction of 6.5%, on average, on the energy tariff, according to the Ministry of Mines and Energy.

In other words, the charge intended by highway concessionaires has a substantially greater impact on energy tariffs than one of the most drastic government measures in our recent history, adopted as an emergency response to an unprecedented scenario, in which two global catastrophes took place almost simultaneously: the Covid-19 pandemic and the War in Ukraine.

The allocation of the amount added to the population's electricity bill is equally worrying. Although the principle of reasonable tariffs is invoked to support the possibility of charging – which, in a myopic view, would only apply to tolls, but not to the electricity bill –, the truth is that only a fraction of the gross revenue obtained by highway concessionaires would be converted into reasonable toll prices, under the terms of art. 4th of ANTT Resolution No. 2,552/2008, which deals with the allocation of so-called alternative revenues in highway concessions.

With this, federal highway concessionaires would enjoy a notable increase in their profits at the mercy of all consumers in the country. This is all for the use of their right-of-way that does not cause them any additional cost to justify the charge, since it is the electricity concessionaire itself that takes care of the maintenance of the transmission line, nor does it preclude other economic uses of the location, such as the installation of commercial establishments. If, on the one hand, only part of the highway concessionaires' revenue would be used to reduce the toll, on the other hand, it goes without saying that the cost generated by the energy distributors would be fully passed on to consumers in their electricity bill and, subsequently, in a multitude of goods and services that have electricity as one of their main production costs.

Temperity, however, is not limited to the economic aspects of the dispute. The free use of highways, railways, pipelines and other public assets by electric energy concessionaires constitutes a state of affairs that has prevailed without interruption for decades, under the validity of the Water Code, published in 1934, and Decree nº 84.398/80, which regulated art. 151 of the aforementioned diploma, expressly providing for the free use of “occupation of highway rights-of-way (…) by transmission, subtransmission and distribution lines of electrical energy from public electricity service concessionaires” in its articles. 1st and 2nd.

The guarantee of free highway right-of-way provided for in the legislation played a fundamental role in the development of the national electricity sector, by preventing unnecessary service burden and promoting a rational organization of land, without transmission lines avoiding overlapping roads to avoid costs.

Assuaging prospective investors with the free use of the right-of-way for electrical power transmission lines, the State was successful in the many rounds of concessions promoted notably from the mid-1990s onwards, which raised the resources and technical knowledge so that the national electrical power infrastructure was expanded to the point of being able to bring light — and, with it, health, citizenship and progress — to the most remote corners of our continental country.

Intact until then, this situation suffered the first disturbances from 2010 onwards. At that moment, the first judgments in which art. 11 of the Public Concessions Law (Law nº 8,987/95) — which, at that time, had already been in force for 15 years — a surprising interpretation, especially considering the wording of the aforementioned provision.

In effect, although the legal provision only provides in a generic way for the possibility of creating alternative revenues to tolls, some judges began to admit the possibility that highway concessionaires charge for the use of right-of-way by electric energy concessionaires, seeing in the simple provision an unthinkable repeal of arts. 1st and 2nd of Decree No. 84,398/80 and the Water Code and an authorization for the Granting Authority to grant a concessionaire the power to carry out precisely the act prohibited by the aforementioned diplomas.

As Minister Luiz Fux very well recognized in the judgment of ADI 3.763/RS, this is a flagrant non-compliance with the classic method of resolving antinomies according to which the special norm derogates from the general norm, even if the latter is more recent than the former, enshrined in art. 2nd, §2nd of the Law of Introduction to the Norms of Brazilian Law (Decree-Law No. 4,657/42).

To date, the Federal Supreme Court has faced developments in the central issue debated, ruling out, for example, the possibility of charges by state entities or concessionaires against federal entities, based on an invasion of federal jurisdiction. However, it has not yet been decided by the Court whether a federal highway concessionaire can charge a federal electricity distribution concessionaire for the passage of the transmission line through the right-of-way, which is the big debate to be had.

The Brazilian population, the final recipient of the heavy burden that would result from a favorable understanding for highway concessionaires, has reasons to be optimistic about the prospects in the STF. In judgments on similar topics, the Court has adopted positions that suggest prohibiting the institution of a charge for the use of public property by one federal concessionaire against another.

Examples of this include the unconstitutionality of charging for the use of right-of-way by state entities, the constitutionality of the right of passage conferred by art. 12 of the General Antenna Law to telecommunications operators and the judgment that charging fees for the use of public spaces in municipalities by electricity distributors is unconstitutional (Extraordinary Appeal 581.947/RO). In fact, in these judgments, some ministers made strong considerations that will certainly be invoked when the matter is considered by the STF.

Still, one cannot help but be distressed by the possibility that a trial or even its indefinite postponement could result in such a brutal increase in the cost of living and production in Brazil precisely at a particularly sensitive moment in the national and global economy.

Of course, this is not a topic that can remain unnoticed.

Lucas Mayall and Luis Eduardo Maneira are partners at Maneira Advogados

https://energiahoje.editorabrasilenergia.com.br/uma-bomba-inflacionaria-nas-maos-do-stf/