Ceará Court suspends approval of capacity auction

The Federal Court of Ceará ordered the immediate suspension of the approval of the results of the 2026 Capacity Reserve Auctions (LRCap) and the execution of the respective Capacity Reserve Power Contracts. The preliminary decision was handed down this Monday (8) by federal judge Luis Praxedes Vieira da Silva, from the 1st Federal Court of Ceará, in a lawsuit filed by the Federation of Industries of the State of Ceará (Fiec) and Sindienergia.

The measure represents a new twist in the auction process held in March, which contracted around 19.5 GW of power. The decision was made on the eve of the Aneel board meeting scheduled for this Tuesday (9), called to approve the results of the event.

In the decision, the judge states that the requirements for granting urgent protection are present and highlights the risk of consolidating effects considered irreversible if the contracts are formalized. According to him, the contracts have a term of up to 15 years and would trigger a series of financial, contractual and large investment commitments.

"I understand that the plaintiff's arguments are relevant and need to be assessed immediately. These are very significant, large amounts that could compromise, in the future, the financial balance of the energy bills of companies and families", wrote the judge.

The judge also cites notes made by the technical area of the Federal Audit Court (TCU) regarding the auction, including questions related to the competitiveness of natural gas and mineral coal thermoelectric products, the low discounts observed and the potential tariff impact of the contracts.

In the judge's assessment, approval could render a future judicial decision on the merits of the action ineffective, given the complexity of the contracts and investments associated with the winning projects.

Despite granting the injunction, Luis Praxedes also recognized that the action is connected to another case already underway in the 6th Federal Court of the Federal District, which discusses the same auctions. For this reason, it declined jurisdiction in favor of the Brasília court, which will now handle the case.

The judge, however, determined that his decision take immediate effect and remain valid until a decision by the Federal Court of the Federal District. "The urgent protection, given here in these files, is now fully effective, immediate and subject to deliberation by the competent Court", he wrote.

The action questions the legality and modeling of the 2026 capacity auctions. Among the arguments presented by the authors are the increase in ceiling prices before the auction takes place, the low competitiveness observed in part of the products, the volume of power contracted and the tariff impacts of the contracts for consumers and industries.

Source: CNN