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Mediation in energy ... reducing conflict costs

Energy contracts in Brazil (regulated and deregulated): Conflicts occur daily in our industry and the courts and arbitrators still take years to resolve them. 

Across the globe, Mediation - an informal way to resolve conflicts, led by a Mediator - is the preferred choice before attempting Justice or Arbitration. 

Mediation offers great potential for significant reduction in costs and time for all involved.

We are bringing to Brazil a 40+ hour training session, delivered by internationally acclaimed Mediators that has proven to be highly successful in Europe, North America and a list of other countries around the world.

If you are an executive, manager, engineer, lawyer or administrator, send your contact information to rafael.herzberg@gmail.com and you will receive more information about our training program that will certainly open a new window of opportunity in your career.

Content Discussion

Matt Chester's picture
Matt Chester

Who is this mediation between? Utilities and the large customers buying large amounts of power?

Rafael Herzberg's picture
Rafael Herzberg

Most of the times it is between power traders and their clients. Power traders must follow the deregulated rules that apply to the free power markets. On the other hand the clients have a natural tendency to not accepting so many changes in the regulations. So there is a lot of room for conflicts.

Let me give a few actual "situations".
 

  1. Power clearinghouse - CCEE

    It is an official entity that follows the Federal Government rules. Since a few years ago a number of large industrial energy users did nor accept selected new charges created by CCEE and decided to open a lawsuit. Since then these large energy users are not paying these charges and accordingly CCEE told the market that because of this situation they are not able to pay settlements (those energy users who did not consume the take or pay volume and therefore had excess energy to sell).
     
  2. Settlements outside of CCEE

    I recommended all my consulting clients to set up another "transaction" - not using CCEE just to avoid this above mentioned problem. The idea is well in advance in the current month, set up the sale of the estimated excess energy (that will not be consumed) through power traders without settling at CCEE. For a fee of course.

    This at least avoids building large amounts "to be paid in the future by CCEE".
     
  3. Power price escalation indexes

    A number of power contracts were created using a list of indexes: official inflation, regulated rates, or even the spot power prices (collar arrangements for example). 

    Easier said than done along many years when distorcions might happen easily.
     
  4. SPOT power prices

    The Federal Government's CCEE definitions for power prices have changed and significantly, affecting therefore all that happens for a client if there is a need to buy or sell at the spot. Not too long ago there was a ceiling price for the spot at close to USD 300/MWh. These days the Government decided to reduce it to USD 200/MWh in rough numbers. At the expense of charging an extra fee to all deregulated energy users. This because the Brazilian power matrix is becoming increasingly "thermal" as opposed to the historically hidro profile.  This situation generated a lot of conflicts also.

I hope this gives you a glimpse of our challenges! Please feel free to "speak out" again. I will be more than happy to help you understanding the local power market challenges!