Brazilian Utilities: ANEEL’s proposed Factor X review: limited immediate valuation

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Brazilian Utilities: ANEEL’s proposed Factor X review: limited immediate valuation

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Brazilian Utilities

ANEEL’s proposed Factor X review: limited

immediate valuation

Government Regulations

New X Factor proposal: modernization, but limited impact 25 June 2026 Corrected

ANEEL published its Regulatory Impact Assessment proposing changes to the X Factor Equity

methodology for Power DisCos, focused on the productivity component (“Pd”). The X Brazil

Factor is the mechanism applied to distribution tariffs to share expected productivity Utilities

gains with consumers, reducing annual tariffs adjustments. In our view, the proposal is Gustavo Faria >>

aligned with ANEEL’s agenda to modernize distribution regulation, making tariffs more Research Analyst

responsive to a sector that is becoming more complex. We ran sensitivities using Merrill+55 11Lynch2188 (Brazil)4295

ANEEL’s disclosed results and see a limited impact for our coverage with CPFE/EQTL as gustavo.faria@bofa.com

the highlights and ENGI as the lowlight. We believe part of the market expected a more Andre Silveira >>

Research Analyst

constructive proposal, particularly around better annual recognition of quality and Merrill Lynch (Brazil)

resilience investments, but this was only timidly addressed. The proposal will still go +55 11 2188 4476

andre.silveira@bofa.com

through public consultation and further discussion before approval.

Key changes: more dynamic and partially company-specific Glossary:

ANEEL recommends moving from a static and sector-based factor to a combination of

sector and individual productivity with annual updates. Under the current framework, Pd ANEEL = Regulatory agency

is based on historical productivity, broadly comparing growth in regulatory output —