Evaluating the effect of the white tariff on a distribution expansion project in Brazil

This work presents an evaluation of the new time-of-use tariff that is being implemented in the Brazilian electricity distribution segment, called White Tariff (WT). It is a three band tariff and is applied to low voltage consumers, who can choose to migrate to the new tariff. The assessment is in the context of expansion projects. The main question answered in the paper is about the possibility and the conditions for an expansion project deferral through the application of the tariff. To this end, risk analysis tools are used in order to gain insight about the WT program behavior. A real options approach is adopted in order to conduct a flexibility assessment. It is shown that a very high adhesion to the WT will be necessary in order to effectively delay investments.