Electricity taxes: what is my company paying?

Taxes collected in Brazil equate to more than 31% of the country's GDP. On electricity bills, charges and taxes on electric energy are responsible for further increasing the cost for the consumer, representing about half of the electricity bill.

Companies have additional options to save money outside the conventional market, which also allow them to choose renewable energy sources. Understanding the factors that drive up the electricity bill is the first step in developing saving strategies.

To know how to achieve these savings, it is important to understand the composition of electricity bills and the various elements that are part of the calculation. To help unveil the details of the bill, we have listed the main incident taxes below so you can better understand the topic. Check it out!

What are the main taxes that make up the electricity bill?

When we talk about electricity taxes, we are referring to a series of tributes at various levels: federal, state, and municipal. Therefore, the amounts charged may differ according to the location.

Those who wish to obtain detailed values of each of the taxes and charges collected, with tax rates and their impact on the amount paid on the energy bill, can check the values on their electricity bills or use the tables provided by utilities on their websites, as determined by National Electric Energy Agency (ANEEL).

To understand which taxes appear on the electricity bill, see each of them below.

PIS and Cofins

The Social Integration Program (PIS) and the Contribution for the Financing of Social Security (Cofins) serve to maintain unemployment insurance, social security, and social programs of the Federal Government.

The calculation method for these taxes has changed. Previously, tax rates—which vary monthly—were applied directly. Now, both taxes are detailed on a separate note on the bill at an amount indicated by the supplier, which must be equivalent to the taxes actually paid by the company.

Tax on Circulation of Goods and Services (ICMS)

The ICMS incident on electricity may vary depending on the state, as the tax rate can range from 12 to 17%. Before the Supreme Federal Court decision, which set the maximum value at 17%, the amount was even higher, reaching up to 30%. Even with the significant reduction in values, it remains one of the taxes that most increases the electricity bill.

Public Lighting Service Funding

The municipal contribution that falls on electricity is the CIP, also known as Cosip. It refers to the funding of the design, implementation, maintenance, and expansion of public electricity grids.

This tax varies according to the tax rates set by the municipality. Generally, the rates are related to the load made available by the utility and the type of consumer.

What is the importance of seeking alternatives to save money?

Considering that about 30% of the bill amount is actually the cost of energy, it is clear that the price paid by the consumer is quite high. In companies, this can mean even higher values, driving up operational costs.

In addition to taxes, the energy bill is influenced by tariff flags, charges, and market variations. In times of water scarcity, for example, the cost of electricity provided by utilities increases, and these costs are later passed on to the consumer.

One way to mitigate the costs associated with taxes embedded in energy values is to seek initiatives that reduce the cost of energy purchasing.

Company participation in the Free Energy Market is one of the most interesting options to achieve relevant savings.

The Free Energy Market is a trading environment where companies can choose who to buy from. In addition, it is possible to agree with one or more suppliers on quantity, price, contract term, and payment conditions.

Unlike utility supply, where the price is fixed (tariffs) and delivery conditions are standardized, in the Free Energy Market it is possible to seek negotiations according to the company's profile.

To acquire energy in the free market, consumers must join the Electric Energy Commercialization Chamber (CCEE), conduct negotiations with distributors, and carry out the migration. Participating in the Free Contracting Environment brings numerous benefits to companies, but it is important to have clarity about the company's needs and plan strategically before seeking the best contracts.

Companies have the option to rely on Serena's digital platform, for example, where it is possible to receive assistance to carry out the migration to the Free Market and also contract cheaper energy without bureaucracy.

How do alternative and sustainable energy sources help in this regard?

Clean energy sources, especially solar and wind, are very interesting for those who want more competitive values to acquire energy. This is because they are so-called incentivized energy sources, which have percentage discounts on taxes and charges to encourage their production.

Consumers who choose to purchase energy from incentivized sources will achieve more interesting values, in addition to getting discounts on utility tariffs. Investment in renewable energy production methods is considered a strategic sector, and therefore there are many financial incentives to increase production. Thus, it is possible to pass on a much more attractive price to the consumer than in the case of conventional energy generation.

Understanding electricity taxes is important to visualize the reasons that drive up supply costs in conventional models so much. Furthermore, companies are able to glimpse savings opportunities in new formats, such as free energy market contracts.

Discovering new possibilities and joining the Free Contracting Environment is the first step for those who want more freedom of choice and wish to opt for sustainable options.

If you enjoyed the article, take the opportunity to check out more about the energy market on Serena Talks!