The Tariff Flags, which appear on Brazilians' energy bills, are a system of color signals that indicate variations in energy generation costs. Simply put, this mechanism helps consumers to better understand the total amount of the bill, promoting more conscious use and encouraging adjustments in daily consumption.

But how are they defined? What do the colors represent? How are they added to the electricity bill?

What are the Tariff Flags and how were they created?

Since January 2015, energy bills in Brazil have had the Tariff Flag System, developed by the National Electric Energy Agency (Aneel) to make it easier to understand how variations in the cost of generation directly impact the amount paid on the bill. This mechanism clearly signals the conditions of energy generation in the country and is applied to all consumers served by distributors, with the exception of those in isolated systems. Thus, the flags serve as a warning for consumers to monitor the scenario and better understand the reasons for possible adjustments to their bills.

Before the creation of these flags, the increases were only noticed in the annual readjustments. Now, the variations are indicated on a monthly basis, providing more predictability and helping to plan energy consumption.

How are the Tariff Flags set?

Most of the electricity consumed by Brazilians comes from hydroelectric plants. However, in times of low rainfall, reservoir levels are lower than expected and other sources of energy have to be used, such as thermoelectric plants powered by oil or coal, which are more expensive to generate. This is when the tariff flags appear.

Based on the information provided by the National System Operator (ONS) and the Electricity Trading Chamber (CCEE), Aneel assesses cost estimates and the need for tariff coverage in order to set the flag for the month.

The energy concessionaires, in turn, pass on this information to consumers via their electricity bills, ensuring transparency about the costs applied.

What are the colors of the Tariff Flags and what do they mean?

The Tariff Flags follow a concept similar to that of a traffic light, using the colors green, yellow and red to indicate different cost situations. They are:

Green Flag

Power generation conditions are good. Consumers are still paying the average price they're used to, which doesn't mean they should stop saving.

Yellow Flag

The conditions for generating energy have become a little more difficult, which means that the bill will already come with a small increase. It's time for consumers to keep an even closer eye on their consumption.

Red Flag

It represents situations in which energy production is facing serious difficulties. The more critical the scenario, the higher the additional amount applied to the bill. It is the only flag divided into two levels: 

• Level 1: Power generation conditions have worsened and the bill will be higher. Consumers should be concerned about combating energy waste.
• Level 2: Power generation conditions have become more complicated. Although there is no risk of shortages, this will be reflected in the bill. 

As of September 2021, there was also a Water Scarcity Flag, created to compensate for the increase in the cost of generation during the serious water crisis the country was facing at the time. The additional tariff was R$14.20 per 100 kWh consumed.

Each flag determines the amount that will be added to the energy bill. 

What is this month's Tariff Flag and what are the values set?

For up-to-date information, consumers should check their bills and Aneel's website. According to the adjustments made in March 2024, the values of the flags are:

How to calculate your electricity bill with the Tariff Flags?

The calculation of the electricity bill using the Tariff Flags is based on monthly energy consumption and the additional amount established for each flag. To understand the impact of the flags on your bill, you need to:

1. Identify monthly consumption in kWh
   Consumers should check their bill for the total number of kilowatt-hours (kWh) consumed during the month. This data is usually highlighted at the top of the bill, indicating the accumulated consumption over the reading period.
    
2. Check the current Tariff Flag
   The flag for the month will be informed by the distributor on the energy bill. If the flag is green, there will be no additional charge. However, if the flag is yellow or red (tier 1 or 2), it will be necessary to calculate the increase according to the values established by Aneel.
    
3. Calculate the additional based on the Tariff Flag

   The surcharge is calculated according to the flag applied in the month. For example, considering Aneel's update of the values in March 2024:
   
   If consumption in the month is 200 kWh and the flag in force is Red - Level 1*, the calculation will be:
   
   200 kWh x 0.04463 = R$ 8.93
   
   This amount will be added to the base cost of consumption.
   
   *The figure takes into account the adjustments for March 2024.

Tips for reducing energy consumption during red flags

During periods when the Tariff Flags are at their highest, a few simple actions can help reduce consumption and reduce the impact on the total electricity bill:

• Avoid excessive use of electrical appliances: use appliances such as air conditioning and electric showers more sparingly.
• Take advantage of natural light: keep windows open and avoid using artificial light during the day.
• Unplug stand-by appliances: many electronics continue to consume energy even when switched off; unplugging them can save money.

Find out more:

• Learn how to adopt conscious consumption in everyday life