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  "slug": "who-pays-who-decides-grid",
  "locale": "en",
  "sourceLocale": "pt-br",
  "localizationStatus": "translated",
  "title": "Who pays and who decides in grid expansion",
  "summary": "Cost allocation, institutional roles, and concession terms documented in law, order, and tender — in the US, Brazil, and the European Union.",
  "author": "NiLu",
  "publishedAt": "2026-08-09T00:00:00.000Z",
  "updatedAt": "2026-08-09T00:00:00.000Z",
  "canonicalUrl": "https://blog.nilu.pro/en/blog/who-pays-who-decides-grid/",
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  "bodyMarkdown": "# Who pays and who decides in grid expansion\n\nCost allocation, institutional roles, and concession terms documented in law, order, and tender — in the US, Brazil, and the European Union.\n\nAuthor: NiLu\nLocale: en\nPublished: 2026-08-09\nUpdated: 2026-08-09\nCanonical: https://blog.nilu.pro/en/blog/who-pays-who-decides-grid/\nMarkdown: https://blog.nilu.pro/en/blog/who-pays-who-decides-grid.md\nJSON: https://blog.nilu.pro/en/blog/who-pays-who-decides-grid.json\n\n## Article summary\n\n- Who pays for grid reinforcement or usage is not a free choice: it's a package of cost-allocation methods, institutional roles, and concession terms written into law, order, decree, or tender.\n- In the US, FERC requires a regional method with beneficiary pays \"roughly commensurate\" (Order 1000) and long-term planning with ex ante cost allocation (Order 1920), with room for state agreement.\n- In Brazil, the transmission auction pays out via the lowest RAP (30 years), and grid usage is charged afterward via EUST = TUST × MUST; ANEEL regulates, the ONS operates, and the MME decides on concession extensions.\n- In the European Union, access tariffs must be cost-reflective and cross-border costs are split via CBCA, with ACER as the final instance if national regulators fail to reach agreement.\n\n## Contents\n\n- [Three families of mechanism](#three-families-of-mechanism)\n- [United States: regional, participant, and state](#united-states-regional-participant-and-state)\n- [Brazil: RAP, usage tariff, and roles](#brazil-rap-usage-tariff-and-roles)\n- [European Union: cost-reflective and CBCA](#european-union-cost-reflective-and-cbca)\n- [Tariff protection: the common language](#tariff-protection-the-common-language)\n- [Ongoing disputes](#ongoing-disputes)\n- [Uncertainties](#uncertainties)\n\n<a id=\"three-families-of-mechanism\"></a>\n\n## Three families of mechanism\n\nIn the United States, Brazil, and the European Union, who pays for grid reinforcement or usage is not a choice left open to each operator: it's a package of cost-allocation methods, institutional roles defined by law or regulation, and granting contracts with terms and tariff rules written into an order, law, decree, or tender.\n\nThree families of mechanism coexist in these jurisdictions. The first is regional socialization via a usage tariff. In the US, FERC Order No. 1000 requires each transmission operator to participate in a regional process with a cost-allocation method defined before the need arises (ex ante); the order's Principle 1 mandates allocating costs to those who benefit \"in a manner that is at least roughly commensurate with estimated benefits,\" and Principle 2 prohibits involuntary allocation to those who receive no benefits. [[1]](#ref-1) In Brazil, the transmission auction pays the winning utility the lowest proposed Receita Anual Permitida (Permitted Annual Revenue, RAP) — under ANEEL's Auction Notice No. 4/2025, with a 30-year contract term and periodic review every 5 years —, and grid usage is charged afterward, under the permanent modality, as the Transmission System Usage Charge (EUST) = homologated TUST × Transmission System Usage Amount (MUST), regardless of actual use in the month. [[2]](#ref-2) [[3]](#ref-3) In the European Union, Article 18 of Regulation (EU) 2019/943 requires that access tariffs — connection, use, related reinforcements — be cost-reflective, transparent, non-discriminatory, and not include costs from unrelated policy objectives; between countries, the Cross-Border Cost Allocation (CBCA) mechanism, from Regulation (EU) 2022/869 (TEN-E), splits the efficient costs of projects of common interest among the national regulators (NRAs) involved, with ACER deciding as a final instance if no agreement is reached within 6 months. [[4]](#ref-4) [[5]](#ref-5)\n\nThe second family is participant funding, or financing by whoever connects. Order 1000 itself allows this model, but makes explicit that it does not replace the mandatory regional method. FERC's Order No. 2023, aimed at new generator interconnection, allocates grid reinforcement costs within a project cluster by proportional impact — the degree to which each generator contributes to the need for the reinforcement — and substation reinforcements at the connection point per capita among that substation's customers. This design is generation-centered; cost allocation for large loads follows in a separate regulatory discussion. [[6]](#ref-6)\n\nThe third family combines the two poles with additional consumer protection. Order No. 1920, of May 13, 2024, requires long-term regional planning — a minimum 20-year horizon, reassessed every 5 years — and an ex ante cost-allocation method included in each operator's tariff (OATT); the State Agreement Process, a voluntary agreement among states on how to split costs, is permitted, but the order makes clear it cannot be the only method proposed. [[7]](#ref-7)\n\n<a id=\"united-states-regional-participant-and-state\"></a>\n\n## United States: regional, participant, and state\n\nOrder No. 1920-A, of November 21, 2024, elevates the states' role within this design: before amending the long-term cost-allocation method, the transmission operator must consult the Relevant State Entities, and a cost-allocation proposal agreed upon by those state entities enters the compliance filing even if the operator has its own alternative proposal; the engagement period with the states is 6 months, extendable by another 6 at their request. The final decision on the method remains with FERC. The official summary in the Federal Register for 1920-A records 49 rehearing requests on the decision. [[8]](#ref-8)\n\nThis state layer coexists with the regional/interregional method from Order 1000, from 2011, which remains in force with its six principles, including the beneficiary pays already mentioned. [[1]](#ref-1) It also coexists with the cluster logic of Order 2023 for new generators — two distinct designs that answer different questions: one addresses planned reinforcement of the regional grid, the other the cost of connecting a specific project. [[6]](#ref-6)\n\nThe common legal basis for these mechanisms is the Federal Power Act. Section 205 requires that any tariff charged by a public utility be \"just and reasonable\" and prohibits undue preference or difference; under Section 206, FERC can set tariffs it finds unjust, unreasonable, unduly discriminatory or preferential. It is this standard — not an editorial preference — that anchors both the regional method of Order 1000/1920 and the review of any contested cost allocation. [[9]](#ref-9) [[10]](#ref-10)\n\n<a id=\"brazil-rap-usage-tariff-and-roles\"></a>\n\n## Brazil: RAP, usage tariff, and roles\n\nIn Brazil, the map of roles is described in law and decree, not in market custom. Law No. 9.427/1996 assigns ANEEL the regulation and oversight of the generation, transmission, distribution, and commercialization of electricity; in the sector's documented practice, ANEEL also tenders concessions by delegation and homologates usage tariffs. [[11]](#ref-11) Decree No. 5.081/2004 assigns the ONS the coordination and control of the operation of the generation and transmission facilities of the Sistema Interligado Nacional (SIN), under ANEEL's regulation and oversight. [[12]](#ref-12) For distribution concessions, Decree No. 12.068/2024 establishes that ANEEL recommends and the Ministry of Mines and Energy (MME) decides on extending the contract or opening a new tender; the same decree provides that a forfeiture (caducidade) process suspends the forwarding of that extension recommendation while it is underway. [[13]](#ref-13)\n\nPayment follows two separate mechanisms. On the concession side, the transmission auction pays the winner the lowest proposed RAP — a 30-year contract in Notice No. 4/2025, with periodic review every 5 years. On the usage side, the ONS charges, under the permanent modality, the Transmission System Usage Charge (EUST) = homologated TUST × MUST (the higher of contracted and metered), by point and time slot — the RAP feeds the base that sustains the usage tariff paid by whoever uses the grid, regardless of how much was actually used in that month. [[2]](#ref-2) [[3]](#ref-3)\n\nThe contractual horizon of these concessions is a calendar fact, defined by law and decree. Law No. 8.987/1995 defines a concession as the delegation of a public service for a fixed term. [[14]](#ref-14) Law No. 9.074/1995 establishes that transmission and distribution concessions contracted under its regime have a term necessary for the amortization of investments, limited to 30 years, extendable at most once for an equal period at the discretion of the granting authority, according to the contract's conditions. [[15]](#ref-15) Decree No. 12.068/2024 operationalizes this 30-year term for distribution and conditions the extension on specific amendment clauses — prudent investment, quality targets and post-weather-event recovery, tariff affordability, and risk allocation, among others. [[13]](#ref-13) Law No. 12.783/2013 had earlier created an extension path (up to 30 years, one time only, at the granting authority's discretion) conditioned on accepting a specific regime — in the case of hydro generation, a tariff set by ANEEL and physical guarantee quotas — \"so as to ensure (...) tariff affordability.\" [[16]](#ref-16)\n\n<a id=\"european-union-cost-reflective-and-cbca\"></a>\n\n## European Union: cost-reflective and CBCA\n\nIn the European Union, Article 18 of Regulation (EU) 2019/943 sets the standard for any grid access tariff: cost-reflective, transparent, non-discriminatory, reflecting efficient costs actually incurred, and without including unrelated costs used to support policy objectives unconnected to the grid. [[4]](#ref-4) For reinforcements crossing borders — the projects of common interest (PCI) and projects of mutual interest (PMI) under the TEN-E regime —, Article 16 of Regulation (EU) 2022/869 establishes the Cross-Border Cost Allocation mechanism: the project promoter submits an investment request, including the proposed CBCA, to the national regulators (NRAs) of the countries involved; those regulators coordinate the decision on the share of efficient investment costs assigned to each country; if no agreement is reached within 6 months (or at the joint request of the NRAs), ACER decides as the final instance. [[5]](#ref-5)\n\nACER Recommendation 02/2023 completes this design with a consumer-protection test: after allocating the efficiently incurred costs across borders and including them in national tariffs, the recommendation guides NRAs to assess whether the impact on those tariffs constitutes a \"disproportionate burden for consumers\" — a textual verification standard, not an automatic verdict on any specific project. [[17]](#ref-17)\n\n<a id=\"tariff-protection-the-common-language\"></a>\n\n## Tariff protection: the common language\n\nEach jurisdiction uses its own vocabulary for the same problem — preventing the cost-allocation method from turning into an arbitrary charge —, and that vocabulary is in the legal texts themselves:\n\n- In the US, the Federal Power Act requires \"just and reasonable\" tariffs (§205) and allows FERC to correct tariffs that fail that standard (§206); Order 1000 translates this, in cost-allocation design, into \"roughly commensurate with estimated benefits\" and the prohibition on charging those who don't benefit. [[9]](#ref-9) [[1]](#ref-1)\n- In Brazil, Law No. 12.783/2013 and Decree No. 12.068/2024 use the expression \"modicidade tarifária\" (tariff affordability) as a condition for concession-extension paths. [[16]](#ref-16) [[13]](#ref-13)\n- In the European Union, Article 18 of Regulation 2019/943 requires cost-reflective tariffs, and ACER Recommendation 02/2023 guides testing whether the result of cross-border allocation does not represent a \"disproportionate burden for consumers.\" [[4]](#ref-4) [[17]](#ref-17)\n\nThese are textual standards protecting the tariff payer, recorded in the rules themselves — this text describes them without taking a position on which is preferable.\n\n<a id=\"ongoing-disputes\"></a>\n\n## Ongoing disputes\n\nPart of the debate on who pays and who decides is not settled in legal text, and for that reason enters here only as an attributed perspective, never as institutional fact.\n\nAccording to reporting by Valor, G1, Poder360, and iNFRA (2026), ANEEL's board opened a proceeding to assess terminating Enel's distribution concession in São Paulo for forfeiture (caducidade), after the technical area reportedly rejected an expert review requested by the company; early contract renewal is reportedly suspended while the proceeding remains open — which is consistent with the mechanism in Decree No. 12.068/2024, which provides exactly for that suspension during a forfeiture proceeding. [[13]](#ref-13) [[18]](#ref-18) Enel itself, according to the same coverage, states it complies with the contractual indicators and has a recovery plan underway; authorities cited in the reporting mention possible paths, such as a settlement or transfer of control — voices attributed to the press, with no official record attached as of this dossier's research date. [[18]](#ref-18)\n\nIn the US, explainers from state energy associations and law firms (including NASEO) describe tension between the states' expanded role under Order 1920/1920-A and the possibility of litigation after the rehearing process — a framing of institutional dispute, not an already-decided judicial outcome. [[19]](#ref-19)\n\nAnd there's an ongoing technical debate about the locational signal in the Brazilian tariff: specialized industry press (such as Canal Solar) describes a gradual intensification of the locational weight in the TUST, attributed to ANEEL Normative Resolution No. 1.041/2022, with distributive effects discussed among different types of grid user — but the exact percentages of that transition were not confirmed in the full text of the rule available for this dossier, and therefore remain a perspective, not a closed data point. [[20]](#ref-20)\n\n<a id=\"uncertainties\"></a>\n\n## Uncertainties\n\n- The primary sources consulted do not provide the exact percentages and full timeline of the locational-signal transition in the TUST under REN No. 1.041/2022.\n- It is not possible, with the sources available, to detail the cost-allocation formulas actually in force in the tariffs (OATT) of US regional operators after compliance with Orders 1000 and 1920 — only the principles of the orders themselves.\n- There is no primary document in this dossier (board minutes, board vote, or MME decision) confirming the outcome of the forfeiture proceeding involving Enel Distribuição São Paulo — only press coverage.\n- It is not clear, from the sources consulted, how cost allocation for large-load interconnection in the US will settle beyond the design already set by Order 2023 for generation.\n- This dossier has no detail on how one or two EU member states treat connection charges as deep or shallow in national practice, complementing Article 16 of the CBCA.\n\n## References\n\n1. <a id=\"ref-1\"></a>[FERC Order No. 1000 — Transmission Planning and Cost Allocation](https://www.ferc.gov/sites/default/files/2020-04/OrderNo.1000.pdf). FERC. Accessed August 09, 2026.\n2. <a id=\"ref-2\"></a>[Edital Leilão de Transmissão nº 4/2025-ANEEL](https://ppi.gov.br/wp-content/uploads/2025/02/SEI_0202054_Edital_de_Leilao_04_2025.pdf). ANEEL / PPI. Accessed August 09, 2026.\n3. <a id=\"ref-3\"></a>[ONS — Submódulo 15.8 (Encargos de Uso do Sistema de Transmissão)](https://www.ons.org.br/ProcedimentosDeRede/M%C3%B3dulo%2015/Subm%C3%B3dulo%2015.8/Subm%C3%B3dulo%2015.8%202018.12.pdf). ONS. Accessed August 09, 2026.\n4. <a id=\"ref-4\"></a>[Regulation (EU) 2019/943 — Art. 18 network charges](https://eur-lex.europa.eu/eli/reg/2019/943/oj/eng). EUR-Lex. Accessed August 09, 2026.\n5. <a id=\"ref-5\"></a>[ACER — Cross-Border Cost Allocation (Reg. (EU) 2022/869 Art. 16)](https://www.acer.europa.eu/electricity/infrastructure/projects-common-interest/cross-border-cost-allocation). ACER. Accessed August 09, 2026.\n6. <a id=\"ref-6\"></a>[FERC Order No. 2023 explainer — interconnection cost allocation](https://www.ferc.gov/explainer-interconnection-final-rule). FERC. Accessed August 09, 2026.\n7. <a id=\"ref-7\"></a>[FERC Order No. 1920 explainer — transmission planning and cost allocation](https://www.ferc.gov/explainer-transmission-planning-and-cost-allocation-final-rule). FERC. Accessed August 09, 2026.\n8. <a id=\"ref-8\"></a>[Order No. 1920-A (rehearing) — Federal Register, 2024-12-06](https://www.govinfo.gov/content/pkg/FR-2024-12-06/pdf/2024-27982.pdf). Govinfo. Accessed August 09, 2026.\n9. <a id=\"ref-9\"></a>[Federal Power Act §205 — just and reasonable rates (16 U.S.C. §824d)](https://www.law.cornell.edu/uscode/text/16/824d). Cornell LII. Accessed August 09, 2026.\n10. <a id=\"ref-10\"></a>[Federal Power Act §206 — unjust/unreasonable rates (16 U.S.C. §824e)](https://www.congress.gov/crs-product/IF11411). Congress.gov (CRS IF11411). Accessed August 09, 2026.\n11. <a id=\"ref-11\"></a>[Lei nº 9.427/1996 — cria a ANEEL](https://www.planalto.gov.br/ccivil_03/leis/l9427compilada.htm). Planalto. Accessed August 09, 2026.\n12. <a id=\"ref-12\"></a>[Decreto nº 5.081/2004 — regula o ONS](http://www.planalto.gov.br/ccivil_03/_ato2004-2006/2004/decreto/d5081.htm). Planalto. Accessed August 09, 2026.\n13. <a id=\"ref-13\"></a>[Decreto nº 12.068/2024 — prorrogação/licitação de concessões de distribuição](https://www.planalto.gov.br/ccivil_03/_ato2023-2026/2024/decreto/D12068.htm). Planalto. Accessed August 09, 2026.\n14. <a id=\"ref-14\"></a>[Lei nº 8.987/1995 — regime de concessão e permissão de serviços públicos](http://www.planalto.gov.br/ccivil_03/leis/l8987cons.htm). Planalto. Accessed August 09, 2026.\n15. <a id=\"ref-15\"></a>[Lei nº 9.074/1995 — normas de outorga e prorrogação de concessões do setor elétrico](http://www.planalto.gov.br/ccivil_03/leis/l9074compilada.htm). Planalto. Accessed August 09, 2026.\n16. <a id=\"ref-16\"></a>[Lei nº 12.783/2013 — prorrogação de concessões e modicidade tarifária](https://www.planalto.gov.br/ccivil_03/_ato2011-2014/2013/lei/l12783.htm). Planalto. Accessed August 09, 2026.\n17. <a id=\"ref-17\"></a>[ACER Recommendation 02/2023 — CBCA good practices](https://acer.europa.eu/sites/default/files/documents/Recommendations/ACER_Recommendation_02-2023_CBCA.pdf). ACER. Accessed August 09, 2026.\n18. <a id=\"ref-18\"></a>[Valor — ANEEL abre análise para romper contrato da Enel SP](https://valor.globo.com/brasil/noticia/2026/04/08/aneel-abre-analise-para-romper-contrato-da-enel-sp.ghtml). Valor. Accessed August 09, 2026.\n19. <a id=\"ref-19\"></a>[NASEO — FERC Order 1920 Explainer (updated)](https://naseo.org/data/sites/1/documents/publications/FERC%20Order%201920%20Explainer%20Updated%20FINAL.pdf). NASEO. Accessed August 09, 2026.\n20. <a id=\"ref-20\"></a>[Canal Solar — ANEEL aprova adição de sinal locacional no cálculo da TUST](https://canalsolar.com.br/aneel-aprova-adicao-de-sinal-locacional-no-calculo-da-tust/). Canal Solar. Accessed August 09, 2026.\n"
}