EPE’s central office is in the city of Rio de Janeiro, where it hold an area of two floors in the RB1 Building, at 1 Rio Branco Avenue. The company’s headquarter is in Brasilia, the capital of Brazil.
Those who visit the EPE Central Office, especially the meeting room of the Executive Board, are delighted with a breath-taking wide view of the Guanabara Bay, noticing in this landscape, the President Costa e Silva Bridge (Rio-Niteroi Bridge)and the mountains of the Serra do Mar, which embraces the Northern Zone of the city and the region known as Baixada Fluminense. In a closer perspective, the lower view contemplates the remodelled Maua Square, the passenger terminal at the Port of Rio de Janeiro, the modern Museum of Tomorrow and, occasionally, the passage of the VLT, light vehicle on rails, a legacy of the 2016 Olympics Games to the downtown.
Everything good. Everything fine. But that was not always the case, even when EPE was already working at the same address.
Initially, it is interesting to mention that EPE’s location was discussed in the federal congress. The original text of the executive order that created EPE, sent to the Congress by the President, left the issue open for the decision of congressmen, even though there was an understanding on the convenience of centralizing its activities in Rio de Janeiro. In fact, many important institutions of energy sector are in Rio such as Eletrobras and one of its main subsidiaries (Furnas), Petrobras, the regulation agency for oil, natural gas and biofuels (ANP), the independent electrical system operator (ONS) and the most important Brazilian financial agent for power system investments, the BNDES. Moreover, in the city of Rio de Janeiro and its surroundings, are located four of most important universities of the country2 and advanced education programs dedicated to, among other areas, energy planning (e.g. Coppe/UFRJ).
The discussion was intense. Based on the aforementioned elements, the House of Representatives, where the Presidential executive order started the approval process, defined that the headquarters and the EPE Central Office would be located in Rio de Janeiro. This argument, however, did not sensitize the Federal Senate, which defined Brasilia as the location for EPE’s headquarter and central office.
As the text approved by the Representatives was modified, the project returned to the House. Finally, it was established that headquarter of EPE would be in Brasília and that its central office would be in Rio de Janeiro, alike other state-owned companies such as Eletrobras and Petrobras. That is how Law No. 10,847, which authorized the Executive to create the EPE, was approved on March 15th, 2004.
The next steps were legal and bureaucratic procedures to make that authorization effective. On August 16th of the same year, Decree No. 5,184 was issued. It was created the EPE. A few months later, on November 9th, the President of the Republic appointed the first director of EPE. On January 2nd, 2005, EPE began its operations.
Prof. Dr. Mauricio Tolmasquim, former Deputy Minister of the MME, was the first CEO of EPE and was responsible for structuring the institution. He wrote: "all has started from zero, literally. On August 2004, there was not even an employee linked to EPE, nor there was a place that could be called as the institution's office. We were in a small room furnished by Eletrobras, on Marechal Floriano Avenue, in downtown Rio de Janeiro. There was where the first actions of the EPE began. Much more than any other factor, it was the enthusiasm and the will to make the right thing of a small group of people that pushed everything forward”.
In 2005, EPE central office has moved to the address where it’s working until today. But, it did not happen without setbacks. Half of the area was occupied by the technical staff, already heavily involved in their routine jobs, while the other half was under adaption to the institution’s needs. When completed the construction work on half of the area, another move has happened in order to prepare the first half properly. Something like changing the car tire in motion.
The view of Guanabara Bay and the mountains could be seen back then. However, Maua Square did not look like it is today. There was the decayed building of the passenger terminal at the port and the old building of the customs authority, which was equally in bad conditions (later it was transformed into the Rio Art Museum). There was also the Perimetral highway, which contributed to the hostile aspect of the region. The neighborhood was populated somewhat differently than other parts of the downtown, where most of the offices were concentrated. Not rarely, robberies or small thefts occurred in the surroundings. The building was nice, but maybe because of these circumstances, the rent was not so high.
Then, works associated with the Olympic Games came and today the panorama is completely different. Rent has tripled due the improvements in the surroundings. Today, with the real state crisis and the excess of supply due to the attraction of urban investments made in the area, rent returned to values close to those of 2005, in real terms, in a region that is revitalized and quite pleasant now. New CEO of EPE, Dr. Luiz Augusto Barroso often says that "EPE bought a lottery ticket when it went to the Maua Square. It was lucky that the ticket was prizewinning”.
Structuring
The EPE was structured in four Boards: Energy Economy; Power System; Petroleum, Natural Gas and Biofuels; and Corporate Management. When EPE started to work, it gave a natural priority to the activities in the power sector. After all, at the same time when EPE was created, significant changes in the institutional arrangement of the power sector were implemented, changing the characteristics of the supply auctions. That is why the Environment Department was initially linked to the Power Studies Board. Later, in 2009, Environment Department was relocated to the Energy Economy Studies Board, which, in this way, began to act, in technical terms, in a completely transversal way regarding the others final areas of EPE.
With the new form of the auctions for expansion of energy supply, as such they are carried out until today, EPE was assigned to do the procedures for technical qualification of projects and, progressively, to carry out the basic studies which guide the process of transmission auctions. This came in addition to the company’s responsibility of developing classic energy planning studies.
In the Oil, Natural Gas and Biofuels Board, the first challenge was to structure a planning area outside Petrobras, which, for many years, carried out the main prospective sector analyses. It was really a long and hard fight, especially in the first years of EPE, which was overlooked within the oil sector.
In this context, the Corporate Management Board of EPE was facing the challenge of promoting bids for hiring studies and to implement the appropriate infrastructure for the institution as well. Additionally, the area has organized the first national exams in order to hire EPE’s technical staff.
The first national exam was carried out in 2005 and hired the first EPE employee in 2006. Since then, EPE has carried out more six national exams and, as a result, formed a skilled and young technical team. Indeed, EPE has a permanent highly skilled multidisciplinary staff, which comprised in December 2016 a workforce of 314 people with an average age of 39, being 286 with Bachelor’s degree, 169 of them (or about 55%) with at least a Master’s degree.
With such a skilled team and considering the institutional role defined by law, we can say that the major asset of EPE is its technical staff. Because of this, EPE was present in the main happenings in the energy sector in last years. The recognition comes from the Government and the whole society, thus allowing its continuity and even the expansion of its institutional role.
Since its foundation, EPE has consolidated itself as a key element in the chain of activities that begins with the definition of guidelines by the Energy Policy National Council and the MME. Considering these guidelines, EPE carries out studies and researches in order guide the development of the Brazilian energy sector.
In this context, EPE has worked on three main fronts: formulation of ideas; development of studies and execution of actions.
In the first front, EPE acts like a true think tank of the Brazilian energy sector, being recognized as a respected center of reflections about potential directions of the sector.
Indeed, since when was created, EPE has actively participated in the most important discussions about the Brazilian energy sector. We can note the outstanding performance of EPE in the discussion of relevant topics such as improvements in the regulatory framework of both power sector and oil and gas sector; environmental licensing for hydropower plants; review of energy security criteria adopted in the power sector; introduction of renewables (wind, photovoltaic and biomass) in the power system; evaluation of areas with oil and natural gas resources; integrated environmental assessments of sedimentary basins and river basins; stimulation of distributed generation and energy efficiency; formulation of the national targets for greenhouse gas emissions reduction in the direction of a low carbon economy, among others.
On the second front, the most visible aspect is the regular publication of several studies developed by EPE team, among which stand out: the Ten-Year Energy Expansion Plan (PDE, in Portuguese abbreviation); the Brazilian National Energy Outlook (PNE); the National Zoning of Oil and Gas Resources; the Transmission System Expansion Plan (PET); the Ten-Year Pipeline Transport Network Expansion Plan (PEMAT); the Monthly Review of Electric Energy Consumption; the Statistical Yearbook for Electric Energy; the Brazilian National Energy Balance (BEN). And still: hydrographic basin inventories, hydroelectric feasibility studies, integrated environmental assessments of hydrographic and sedimentary basins, among others.
Regarding the execution of actions, we can say that EPE has played a central role in the electricity generation and transmission auctions, participating both in the methodological design, preparation phase and instruction phase by developing, among others, studies for the definition of cap prices of the generation auctions. Additionally, EPE is also responsible for the studies that lead to public calls for natural gas carriers and the bidding process for the construction or expansion of pipelines.
We can say that EPE is today consolidated in the institutional arrangement of the energy sector, being present in the main events of the area and being directly responsible for a set of relevant actions in the Brazilian energy sector. However, EPE still need to prepare in order to face the numerous challenges of ensuring the expansion of energy infrastructure in Brazil, a country with great potential for development, while global energy sector undergoes a big transformation, able to change dramatically its way of operation.
Challenges
On July 2016, EPE faced a major institutional test, its first change of command. The new young CEO of EPE, who came from private sector and is a specialist by training, has sat on the chair with humility, respecting and valuing the technical excellence of EPE’s team.
The four basic principles of the new administration – transparency, objectivity, communication and loyalty – were quickly and broadly assimilated by EPE’s team, who embraced enthusiastically the decentralizing concept and participative management style, putting always in first place technical excellence, freedom of thought and a constructive process that come from the disagreement of opinions. All of this can be synthesized in a symbolic statement that is "if it is not to do the right thing, it is better to not even start it". As the new CEO of EPE often says, “we are here to do the right thing in the right way".
Thus, communication and dialogue with society were greatly expanded, especially in face of the new guidelines to rapprochement with the various sectoral stakeholders (e.g. financial market) and through the expansion of cooperation agreements with international entities related to the EPE business, such as CENACE in Mexico. Additionally, there is, of course, the continuous work driven to intensify domestic institutional integration, with other important sectoral stakeholders such as ONS, CCEE, ANEEL, ANP, universities, research centers and organizations like Cigré. Internally, the approach between the board and the functional body was widened, intensifying discussions between the board and the technical staff, allowing open discussions that constantly seek to improve analyses and results.
Within the guideline of restoring realism in sectoral planning and thus obtaining the long-term benefits required by the Brazilian society, this openness and transparency in communication have been fundamental to clarify to stakeholders the reasons behind the extremely tough, but necessary, decisions regarding the industry rearrangement taken since mid-2016.
EPE has played an important role in the efforts to improve the sectoral business environment, either by supporting governmental programs, such as "Gas para crescer", "RenovaBio", "Combustível Brasil", "REATE", or by formulating innovative initiatives, such as an auction to "uncontract" the exceeding energy which would be supplied by delayed projects. Of course, this also includes the review of studies directly developed by EPE, such as the PDE and the PNE, emphasizing the better communication about the perspectives of the energy industry in Brazil.
However, EPE's budgeting panorama has deteriorated dramatically in recent years, to the point that key expenditures are strongly impaired. Indeed, there is virtually no funding for basic expenses such as training. As an example, the budget for the training of 314 employees is around BRL 350.000 per year, which means a little bit more than BRL 1.000 per year per capita. This is definitively crucial for an entity that seeks to keep its intellectual excellence.
Despite the significant lack of resources in a challenging environment both energetically and institutionally in the country, EPE has not been losing ground in its relentless seek to be on the state of the art in the generation and diffusion of knowledge, preserving the technical and scientific rigors.
In conclusion, the path taken by EPE involves strengthening communication channels with society, exchanging the most relevant experiences with its international peers, improving its analytical tools and, above all, delivering results based on guidelines that seek the best management practices and the contribution to a business environment in the levels desired by Brazilian society. This is how, EPE will successfully carry out its ambitious longterm vision, which is to become the worldwide reference in energy planning studies, being increasingly recognized by the high quality of its work and for its technical independence and by the availability of unbiased information.