Integrating Spatial and Temporal Aspects in Distribution Pricing: the Brazilian Experience

This paper discusses the current regulation of distribution pricing in Brazil making a diagnosis of the main drawbacks. Actually the Distribution Usage Tariff (DUT) is based on the old version of the tariff when energy and wire transportation were charged together to the end-consumer. The restructuring process separated the wired activities from the generation. Meanwhile, in the distribution side there has not been much development in terms of wire tariff design as has been witnessed in the transmission side. The electricity retail market, where the DUT has a crucial role, is not yet well developed in Brazil, but some free consumers with low load are opting to connect to the transmission network instead of the distribution network because of the tariff. This movement usually known as a network bypass, is not correct in terms of overall economic efficiency and should be avoided. The main problem is related to the DUT signal that is based on olf concepts of a radial system. An alternate methodology is under construction and will be discussed in this paper.