Brazilian Utilities: Another year with key spot power prices parameters unchanged- Positive for prices

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Brazilian Utilities: Another year with key spot power prices parameters unchanged- Positive for prices

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Brazilian Utilities

Another year with key spot power prices

parameters unchanged- Positive for prices

Government Regulations

Power price risk aversion parameters for 2027 unchanged 11 June 2026

Yesterday (June 10), Brazil's Electric Sector Committee (CMSE) has decided to keep the Equity

risk aversion parameters unchanged for 2027 spot prices formation (CVaR). The decision Brazil

follows a long period of debates between sector participants with split views around a Utilities

potential relaxation to the current operating metrics, that ultimately could lead to more Gustavo Faria >>

optimistic hydro scenarios being considered in the power pricing model and pressure Research Analyst

power prices downwards -see details below. By maintaining stricter (current) aversion Merrill+55 11Lynch2188 (Brazil)4295

settings, CMSE opted to avoid a scenario where energy Spot Prices could gustavo.faria@bofa.com

decrease sharply in 2027. Therefore, we see the decision as a major positive de- Andre Silveira >>

Research Analyst

risking milestone as it supports an environment with structurally higher thermal Merrill Lynch (Brazil)

dispatch, benefiting hydro-heavy portfolios. Within this scenario, we keep our +55 11 2188 4476 andre.silveira@bofa.com

preferences for Axia Energia and Copel, trading at attractive ~16%/13% real IRRs.

Spot Price downside risks for 2027 neutralized

CMSE has decided to keep the CVaR parameters set at 15/40 for 2027 (worst 15%

scenarios weighted at 40%), rather than moving to a less conservative setup (e.g

15/30) that could favor a more relaxed scenario in terms of earlier thermal dispatch +

reservoir conservation.