Transition from cooperative to competitive model in Brazil. The vision of a distribution utility

The paper focuses on the 8-year transition period (1999-2007), marking the migration from the present cooperative to the new competitive model in Brazil. The analysis is based on the particular case of CEB, the utility that owns the monopoly of distribution and commercialization of energy in Brasilia, Brazil´s capital. Today, CEB buys over 95% of its energy through supply contracts signed with government companies, but these will be gradually terminated during this transition period. Through study cases, the paper considers the consequences of the new regulation on open access and competition in retail. As the energy supply ensured by the initial contracts starts reducing, the study considers replacing it with new hydro plants and with long-term bilateral contracts. As well, the study considers a natural gas plant in order to assess the construction of a gas pipeline to Brasilia. Price simulations show that the future of the utility depends on the strategic decisions it will take today