Resilience and Regulation: What Brazil's Rules Cover in Transmission, and What They Don't Yet

If you follow our articles, you already know the culprits that bring down towers and take lines out of service in Brazil. Today we look at the other side of the equation: what the regulations say about all of it. When a storm knocks down a tower, who pays? And when a transmission company invests in keeping a tower from falling, is that investment recognized? The answers show a framework that is still evolving.

Resilience Is Now Firmly on the Regulatory Agenda

If there was any doubt that climate resilience had become one of the regulator's priorities, the last two years have settled it. Consider the most recent steps. After the floods in Rio Grande do Sul and the prolonged outages in São Paulo, ANEEL, Brazil's electricity regulator, opened Public Consultation No. 32/2024. It led to Normative Resolution (REN) No. 1,137/2025, published in October 2025, the first regulation dedicated to making distribution and transmission systems more resilient to severe weather events. For transmission companies, it brought clarity and guidelines on contingency plans, with minimum requirements, weather alerts sent to ANEEL, annual drills, and the option for companies to lend each other crews and equipment in an emergency.

This isn't an isolated move. In April 2024, EPE, the federal energy planning agency, published a study on the resilience of the power sector and its adaptation to climate change, building climate projections into long-term planning. ONS, the national grid operator, keeps dedicated pages and situation rooms for extreme events. The 2026 El Niño meetings, which we summarized in our newsletter, also brought the regulator, the system operator and industry players to the same table to discuss it. Even the renewal of the distribution concessions, signed in 2026, included explicit obligations to increase network resilience. The direction is clear.

The question that remains is which economic instruments support it.

PVI: The Classic Mechanism

The main economic incentive for transmission resilience has existed for decades and is called the Variable Portion (PV). The logic is simple: a transmission company receives its Annual Permitted Revenue (RAP) for the availability of its facilities, not for the energy it carries. When a transmission function, such as a line or a transformer, is unavailable, a deduction is applied to the RAP, far larger than the outage time alone would justify (especially for unscheduled outages, through the Ko multiplier factor). This is the Variable Portion for Unavailability (PVI). In practice, every hour a transmission asset is unavailable is expensive, and that cost is what historically drove the sector to the high availability rates we see today, above 99%.

But look at the design: the PVI punishes unavailability without rewarding those who invest to prevent it. In this model, the return on a resilience investment is simply the PVI you did not have to pay, a calculation each company makes internally, with no recognition of the investment itself. Keep this asymmetry in mind, because it explains almost everything that follows.

The Main Controversy: Force Majeure Exemptions

If a tower fell because of an event entirely outside the company's control, an act of God or force majeure, current regulations and concession contracts provide an exemption from the PVI. But this is where the industry's biggest disputes play out. Until 2018, events such as a tower brought down by sabotage or an outage caused by a stray hot-air balloon, once properly documented, were assessed by ONS and exempted with relative ease. Since then, ONS, following ANEEL's guidance, has taken a much more restrictive stance, leading companies to file administrative proceedings with the agency itself. The numbers are striking. A recent academic study published in the IDP's Revista Debates em Economia Aplicada (Pessoa Cunha, 2025) analyzed the administrative proceedings on liability exemption requests filed with ANEEL between 2016 and 2025. It found that only 19% of requests were granted in full or in part, with an average decision time of 415 days. For claims citing adverse weather, the success rate drops to zero.

Numbers like these have fueled discussion in the sector. Industry players increasingly see clearer, more objective criteria for PVI exemption in force majeure cases as central to regulatory certainty: when the risk is well defined, uncertainty falls, and with it the cost of capital for new transmission investments.

Recognition (or Not) of Resilience Investments

What about the investment side? This is the structural gap in the framework. The existing paths for adding an investment to the RAP have constraints that were not designed with resilience in mind. Reinforcements do get added to the RAP, but they are defined by sector planning (ONS, EPE and MME, the Ministry of Mines and Energy) on the basis of system needs such as capacity, voltage and short-circuit levels, not the climate vulnerability of the asset. Major improvements only generate additional revenue once the asset reaches the end of its regulatory useful life: reinforcing a healthy tower against extreme winds adds nothing to the RAP. And minor improvements, the category that sensors and monitoring fall into, generate practically no additional revenue for concessions awarded through auction.

In practice, resilience only gets paid for as a byproduct: when the asset reaches the end of its life (as in the POTEE Major Improvements, 2025 Cycle, approved by ANEEL in March 2026, which authorized R$572.6 million to modernize and replace assets that reached the end of their regulatory useful life), or through regulated R&D, which makes it possible to fund innovation pilot projects. That, incidentally, is how the work that led to Resilion got started. The result is a model that, as the sector debate sums it up, penalizes failure but doesn't reward preparedness.

What ANEEL Left for Later

The agency itself acknowledges that REN 1,137/2025 was only a first stage, focused on urgent matters. What was pushed to a second phase, one that will require a full Regulatory Impact Analysis (AIR), was precisely the economic agenda: resilience indicators, risk assessment, climate monitoring and economic incentives. The vote that approved the rule also contains an important signal. The rapporteur, Director Agnes da Costa, indicated that Brazilian regulation could evolve toward a model of pre-approved resilience investment plans, with cost-benefit analysis and the possibility of additional compensation, an approach modeled on schemes abroad that reward resilience performance.

Until then, two processes deserve the attention of anyone working in transmission. The first is the review of the rules on service quality and the Variable Portion, scheduled on ANEEL's 2026–2027 regulatory agenda. This is the natural place to develop more objective criteria for liability exemptions arising from climate events, although the final scope will depend on the ongoing proceedings.

The second is the set of rules for auctioning expiring transmission concessions, currently under discussion. Remember that in distribution, resilience obligations came in precisely through the renegotiation of the contracts, and new concession contracts are the natural place to include requirements of this kind. There is no guarantee the same will happen in transmission, but the precedent is there, and it deserves public debate.

Conclusion

Brazilian regulation already recognizes resilience as a priority, but its economic instruments still look backward: they punish the failure, judge the event after it happens, and compensate the investment only when the asset reaches the end of its life. Aligning the stated agenda with the real incentives is the big regulatory task of the coming years, and it will depend on something that is scarce today: granular, auditable data translated into the regulator's language, from the risk of each asset to the wind metric that actually affects the structures. At Resilion, we believe this is one more area where our motto holds: in a changing regulatory environment, those who see sooner and measure better make better decisions.