IMPACTS OF THE INTERNAL CARBON PRICING ON A BRAZILIAN ELECTRIC ENERGY DISTRIBUTOR

This paper aimed to assess the impacts of implementing an internal carbon price on the economic outturn of a Brazilian power distribution company and on the energy tariff paid by end consumers. It includes simulations carried... [ view full abstract ]

This paper aimed to assess the impacts of implementing an internal carbon price on the economic outturn of a Brazilian power distribution company and on the energy tariff paid by end consumers. It includes simulations carried out according to Coelba’s corporate planning model from the adoption of internal carbon prices associated with greenhouse gas emissions. This study drew on the polluter pays principle to set the premises that consider the company’s full responsibility or the consumer’s full responsibility and shared responsibility. The results show a decrease of 1% in the net income for every US$ 1.6 million to US$ 1.7 million internalized under the company’s responsibility and an increase of 1% in the energy tariff for every US$ 18.6 million internalized under the end consumer’s responsibility. The economic and financial impacts can be significant on all the responsible parties due to the implementation of the carbon price. In this respect, it is important that companies, consumers and the government adopt proactive initiatives in order to reduce the impacts in a future pricing scenario. Some suggestions for future studies are to take into account alterations in the consumption pattern, to analyze the cost-benefit of implementing mitigation actions as variables in the analysis of carbon pricing, to compensate and to identify the existing correlation between the impacts on the company and on the end consumer. Additionally, future studies can expand this type of study to other power distribution companies and propose a general corporate planning model for all the companies.