Aneel and OECD’S best-practice policies
July 02, 2021. By Thiago Carvalho Fonseca, energy lawyer at Tortoro, Madureira & Ragazzi Advogados
Unsurprisingly, after years of studies, discussions, and administrative contributions, the Normative Resolution No. 846, of June 11, 2019, was published. It approved the “new” procedures, parameters, and criteria for penalties on the electricity sector agents and provided for the general guidelines for inspection by the Brazilian Electricity Regulatory Agency – ANEEL.
After establishing a logical and systematic analysis of the Resolution mentioned above, it is concluded that this new regulation is not only a new procedure created to be complied with by the regulator and by the regulated agents. Still, it consolidates the regulator’s way of acting. This person in charge will seek to educate and guide the electricity sector agents, thus preventing conduct that breaches the law, regulations, and agreement, whenever possible, to the detriment of the old essentially punitive administrative process.
Therefore, in addition to preserving (or not expressly “contradicting”) constitutional and infra-constitutional principles, such as legality, impersonality, morality, publicity, efficiency, contradictory and broad defense, among others, it is worth noting the implementation of best-practice policies validated by the Organization for Economic Co-operation and Development – OECD with an emphasis on responsive regulation. It is even understood that, for this reason, ANEEL is close to becoming a global benchmark, within OECD’s guidelines, as the specialized media recently broadcasted it.
According to the principle of responsive regulation, a more specific and segmented role for the regulator in the inspection process is sought. The regulated entity’s behavior should be assessed according to the agency’s decisions, as explained below.
Any legal and regulatory non-compliances will not be handled the same way, and the regulated entities will be treated uniquely and objectively. Up to a point, this is a variant of the principle of isonomy, which aims at ensuring people equal opportunities, considering their different conditions (subjective criterion).
Therefore, when it is clear that the regulated entity tried to do the right thing in performing its activities, ANEEL’s role becomes more simplified and less costly for both parties, including preparing resources and tutorials to clarify doubts. On the other hand, when there is non-compliance, and the agent behaves deliberately and uncooperatively, the agency’s actions will be decisive, through coercive measures, such as fines, the revocation of authorizations, or even an expiration statement of the concession or permission.
Among the extreme situations exemplified above (the rule, agents that yearn for regulatory adequacy versus exception, agents deliberately predisposed to regulatory non-compliance), there are some behavioral guidelines for agents and ANEEL itself. They will influence how the inspection process is carried out and the parameters and criteria for levying fines, if applicable.
Other OECD best-practice policies were also incorporated, such as evidence-based enforcement, selectivity, compliance promotion, integration of information, and focus on risk and proportionality. Notwithstanding its specific features, this idea of establishing a more strategic, optimized, and selective performance by ANEEL prevails in a broad way. After all, inspections carried out regularly and the resources employed must be proportional to the level of risk of the regulated entity.
All these prerogatives, as well as others of a constitutional and infra-constitutional order, contribute to a fairer and more effective inspection/administrative process within the regulator’s scope.
However, this is a give-and-take process, to the extent that, on the one hand, it establishes rights and obligations to the regulated entities, on the other hand, it determines how the regulator should act. These actions should be essentially active and guiding, under penalty of invalidating the administrative act itself, which is notoriously subject to legality control.
At this point, solely for explanatory purposes about ANEEL’s restrictions on their punitive actions, it is worth remembering the Normative Resolution No. 846/2019. It established the mandatory or prohibitory injunction as a form of penalty, even though this punishment is included neither in the exhaustive list provided for in its respective law, nor in the subsequent regulatory decree.
In any case, at this moment, there is no intention of going deeper into this debate about the extension of the normative authority given to regulatory agencies, given the strict submission or not to the principle of legality. However, we wish to draw attention to these restrictions on the regulator’s actions. From now on, they must be shaped not only by the constitutional and legal order in force, but also by OECD best-practice policies, especially when exercising the police power to restrict the regulated entities’ rights.