Service Quality in the Brazilian Electricity Distribution Sector: Challenges, Regulatory Approaches and Results

Abstract

In the Brazilian electricity distribution sector, the average service quality provided to consumers is monitored mainly by collective indicators which represent the equivalent duration and frequency of outages. Service quality regulation in Brazil underwent important enhancements in the past years. However, due to the lack of adequate response from some electricity distributors, collective indicators stagnated from 2009, particularly the duration of outages. As an attempt to tackle the tendency, new mechanisms were adopted in parallel to existing regulation. To a certain extent, they can be argued to be among the factors which have influenced the decreasing trajectory of collective indicators from 2016. The paper describes the regulatory mechanisms implemented in Brazil and their accomplishments, with focus on the incentives and penalties approaches to improve service quality.