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16. CONCESSION FINANCIAL AND SECTOR ASSETS AND LIABILITIES | 12 Months Ended
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Dec. 31, 2019
Disclosure Of Financial Assets And Liabilities Of The Concession [abstract] |
Concession Financial and Sector Assets and Liabilities | 16. CONCESSION FINANCIAL AND SECTOR ASSETS AND LIABILITIES
Concession financial assets |  | 2019 |  |  |  | 2018 |
Energy distribution concession (16.1) |  | 460 |  |  |  | 396 |
Gas distribution concession (16.1) |  | 24 |  |  |  | – |
Indemnifiable receivable – Transmission (16.2) |  | 1,281 |  |  |  | 1,296 |
Indemnifiable receivable – Generation (16.3) |  | 816 |  |  |  | 816 |
Concession grant fee – Generation concessions (16.4) |  | 2,468 |  |  |  | 2,409 |
|  | 5,049 |  |  |  | 4,917 |
Concession sector assets |  | 2019 |  |  |  | 2018 |
Amounts receivable from Parcel A (CVA) and Other Financial Components (16.5) |  | 882 |  |  |  | 1,081 |
Total |  | 5,931 |  |  |  | 5,998 |
Current assets |  | 1,080 |  |  |  | 1,071 |
Non-current assets |  | 4,851 |  |  |  | 4,927 |
The changes in concession financial assets related to infrastructure are as follows:
|  | Transmission |  | Generation |  | Distribution |  | Gas |  | Total
Balances at December 31, 2016 |  |  | 2,287 |  |  |  | 2,800 |  |  |  | 216 |  |  |  | — |  |  |  | 5,303 |
Additions |  |  | 25 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 25 |
Transfers of indemnity – plants not renewed |  |  | — |  |  |  | 1,082 |  |  |  | — |  |  |  | — |  |  |  | 1,082 |
Amounts received |  |  | (264 | ) |  |  | (232 | ) |  |  | — |  |  |  | — |  |  |  | (496 | )
Transfers between PP&E, Financial assets and Intangible assets |  |  | 2 |  |  |  | — |  |  |  | 146 |  |  |  | — |  |  |  | 148 |
Monetary updating |  |  | 224 |  |  |  | 317 |  |  |  | — |  |  |  | — |  |  |  | 541 |
Adjustment of expectation of cash flow from the Concession financial assets |  |  | 54 |  |  |  | — |  |  |  | 9 |  |  |  | — |  |  |  | 63 |
Disposals |  |  | (2 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (2 | )
Adjustment of BRR of Transmission Assets |  |  | 149 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 149 |
Adjustment on indemnities of plants not renewed (Ministerial Order 291) – including financial updating |  |  | — |  |  |  | 271 |  |  |  | — |  |  |  | — |  |  |  | 271 |
Balances at December 31, 2017 |  |  | 2,475 |  |  |  | 4,238 |  |  |  | 371 |  |  |  | — |  |  |  | 7,084 |
Effects of first-time adoption of IFRS 15 |  |  | (1,092 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1,092 | )
Amounts received |  |  | (249 | ) |  |  | (1,389 | ) |  |  | — |  |  |  | — |  |  |  | (1,638 | )
Transfers from PP&E |  |  | — |  |  |  | — |  |  |  | 27 |  |  |  | — |  |  |  | 27 |
Others transfers |  |  | — |  |  |  | (1 | ) |  |  | (1 | ) |  |  | — |  |  |  | (2 | )
Monetary updating |  |  | 162 |  |  |  | 377 |  |  |  | — |  |  |  | — |  |  |  | 539 |
Disposals |  |  | — |  |  |  | — |  |  |  | (1 | ) |  |  | — |  |  |  | (1 | )
Balances at December 31, 2018 |  |  | 1,296 |  |  |  | 3,225 |  |  |  | 396 |  |  |  | — |  |  |  | 4,917 |
Amounts received |  |  | (181 | ) |  |  | (259 | ) |  |  | — |  |  |  | — |  |  |  | (440 | )
Transfers from contract assets |  |  | 44 |  |  |  | — |  |  |  | 48 |  |  |  | — |  |  |  | 92 |
Transfers from (to) intangible assets |  |  | — |  |  |  | — |  |  |  | (1 | ) |  |  | 24 |  |  |  | 23 |
Monetary updating |  |  | 122 |  |  |  | 318 |  |  |  | 18 |  |  |  | — |  |  |  | 458 |
Disposals |  |  | — |  |  |  | — |  |  |  | (1 | ) |  |  | — |  |  |  | (1 | )
Balances at December 31, 2019 |  |  | 1,281 |  |  |  | 3,284 |  |  |  | 460 |  |  |  | 24 |  |  |  | 5,049 |
16.1 Distribution - Financial assets The energy and gas distribution concession contracts are within the scope of IFRIC 12. The financial assets under these contracts refer to the investments made in infrastructure that will be paid by grantor at the end of the concession period. These financial assets are measured at fair value through profit or loss. 16.2 Transmission – Indemnifiable receivable On August 16, 2016, the regulator approved the amount of R$ 892 as of November 2012, for the portion of the residual value of assets to be indemnified to the Company relating to the infrastructure not yet amortized nor depreciated nor yet refunded by the Grantor, related to the concession contracts renewed under Law 12,783/2013. The amount of the receivable, updated to December 31, 2019, of R$1,281 (R$1,296 on December, 31, 2018), for which only passage of time is required for their payment, is classified as a financial asset, at amortized cost, in accordance with IFRS 9, as follows:
· | Portion of remuneration and depreciation unpaid since the extensions of concessions
An amount of R$ 833 (R$937 in 2018), corresponding to the portion of remuneration and depreciation unpaid from the date of the extension of the concessions until the tariff adjustment of 2017, which is inflation adjusted using the IPCA (Expanded National Customer Price) index and bears interest at the weighted average cost of capital of the transmission segment as defined by the regulator for the periodic tariff review, to be paid over a period of eight years through the RAP, since July of 2017.
· | Residual Value of transmission assets – injunction awarded to industrial customers
On April 10, 2017, a preliminary injunction was granted to the Brazilian Large Free Customers’ Association (Associação Brasileira de Grandes Consumidores Livres), the Brazilian Auto Glass Industry Technical Association (Associação Técnica Brasileira das Indústrias Automáticas de Vidro) and the Brazilian Ferro-alloys and Silicon Metal Producers’ Association (Associação Brasileira dos Produtores de Ferroligas e de Silicio Metálico) in their legal action against the regulator and the Federal Government requesting suspension of the effects on their tariffs of payment of a portion of the indemnity related to the concession contracts renewed under Law 12,783/2013. The preliminary injunction was partial, with effects related to suspension of the inclusion in the customer tariffs paid by these associations of the portion of the indemnity corresponding to the capital cost remuneration, included since the date of extension of the concessions – amounting to R$448 at December 31, 2019 (R$359 at December 31, 2018), inflation-adjusted by the IPCA index. In compliance with the court decision, the Regulator, presented a new calculation, excluding the amounts that refer to the capital cost remuneration. The Company believes that this is a provisional decision, and that its right to receive such amount is enforceable by law, so no adjustment to the amount recorded at December 31, 2019 is necessary. 16.3 Generation – Indemnity receivable As from August 2013, with the extinction of the concession for various plants operated by Company under Concession Contract 007/1997, it has a right to receive an amount corresponding to the residual value of the infrastructure assets, as specified in the concession contract. These balances are recorded as financial assets at fair value through profit or loss, and totaled R$ 816 on December 31, 2019 and 2018.
Generation plant |  | Concession expiration date |  | Installed capacity (MW) |  | Net balance of assets based on historical cost |  | Net balance of assets based on fair value (replacement cost)
Lot D |  |  |  |  |  |  |  |  |  |  |  |  |  |
UHE Três Marias |  | July 2015 |  |  | 396 |  |  |  | 71 |  |  |  | 413 |
UHE Salto Grande |  | July 2015 |  |  | 102 |  |  |  | 11 |  |  |  | 39 |
UHE Itutinga |  | July 2015 |  |  | 52 |  |  |  | 3 |  |  |  | 7 |
UHE Camargos |  | July 2015 |  |  | 46 |  |  |  | 8 |  |  |  | 23 |
PCH Piau |  | July 2015 |  |  | 18.01 |  |  |  | 2 |  |  |  | 9 |
PCH Gafanhoto |  | July 2015 |  |  | 14 |  |  |  | 1 |  |  |  | 10 |
PCH Peti |  | July 2015 |  |  | 9.4 |  |  |  | 1 |  |  |  | 8 |
PCH Dona Rita |  | Sep. 2013 |  |  | 2.41 |  |  |  | 1 |  |  |  | 1 |
PCH Tronqueiras |  | July 2015 |  |  | 8.5 |  |  |  | 2 |  |  |  | 12 |
PCH Joasal |  | July 2015 |  |  | 8.4 |  |  |  | 1 |  |  |  | 8 |
PCH Martins |  | July 2015 |  |  | 7.7 |  |  |  | 2 |  |  |  | 4 |
PCH Cajuru |  | July 2015 |  |  | 7.2 |  |  |  | 4 |  |  |  | 4 |
PCH Paciência |  | July 2015 |  |  | 4.08 |  |  |  | 1 |  |  |  | 4 |
PCH Marmelos |  | July 2015 |  |  | 4 |  |  |  | 1 |  |  |  | 4 |
Others |  |  |  |  |  |  |  |  |  |  |  |  |  |
UHE Volta Grande |  | Feb. 2017 |  |  | 380 |  |  |  | 26 |  |  |  | 70 |
UHE Miranda (1) |  | Dec. 2016 |  |  | 408 |  |  |  | 27 |  |  |  | 23 |
UHE Jaguara (1) |  | Aug. 2013 |  |  | 424 |  |  |  | 40 |  |  |  | 174 |
UHE São Simão (1) |  | Jan. 2015 |  |  | 1,710 |  |  |  | 2 |  |  |  | 3 |
|  |  |  |  | 3,601.70 |  |  |  | 204 |  |  |  | 816 |
(1) | Investments made after the Jaguara, São Simão and Miranda plants came into operation, in the amounts of R$174, R$3 and R$23, respectively, are recorded as concession financial assets, and the determination of the final amounts to be paid to the Company is in a process of discussion with Aneel (the regulator). Company does not expect losses in realization of these amounts.
On August 31, 2018 the Company received indemnity, of R$ 1,139 for the basic plan construction of the São Simão and Miranda plants. This amount had been adjusted by the Selic rate up to the date of its receipt. As specified by the regulator (Aneel), the valuation reports that support the amounts to be received by the Company in relation to the residual value of the plants, previously operated by Company, that were included in Lot D and for the Volta Grande plant have been submitted to the regulator. The Company does not expect any losses in the realization of these amounts In 2019, Publicc Hearing 003/2019 was opened to obtain inputs on improvement of the criteria and procedures for calculation of investments in assets returnable to the Grantor, not yet amortized or not depreciated, of generation concessions (whether extended or not), under Law 12,783/2013 and a Technical Note 096/2019 related to this matter was published on September 30, 2019. However the Normative Resolution has not yet been voted on by the Council of Aneel. The Company does not expect losses in realization of these amounts. 16.4 Concession grant fee – Generation concessions The concession grant fee paid by the Company for a 30-year concession contracts, related to 18 hydroelectric plants, as an amount of R$ 2,216. The amount of the concession fee was recognized as a financial asset measured at amortized cost, as the Company has an unconditional right to receive the amount paid, updated by the IPCA Index and remuneratory interest (the total amount of which is equal to the internal rate of return on the project), during the period of the concession. The changes in these concession financial assets are as follows:
SPE | Plants |  | 2018 |  |  |  | Monetary updating |  |  |  | Amounts received |  |  |  | 2019 |
Cemig Geração Três Marias S.A. | Três Marias |  | 1,370 |  |  |  | 171 |  |  |  | (139 | ) |  |  | 1,402 |
Cemig Geração Salto Grande S.A. | Salto Grande |  | 430 |  |  |  | 54 |  |  |  | (44 | ) |  |  | 440 |
Cemig Geração Itutinga S.A. | Itutinga |  | 161 |  |  |  | 23 |  |  |  | (19 | ) |  |  | 165 |
Cemig Geração Camargos S.A. | Camargos |  | 120 |  |  |  | 17 |  |  |  | (13 | ) |  |  | 124 |
Cemig Geração Sul S.A. | Coronel Domiciano, Joasal, Marmelos, Paciência and Piau |  | 157 |  |  |  | 24 |  |  |  | (20 | ) |  |  | 161 |
Cemig Geração Leste S.A. | Dona Rita, Ervália, Neblina, Peti, Sinceridade and Tronqueiras |  | 107 |  |  |  | 18 |  |  |  | (15 | ) |  |  | 110 |
Cemig Geração Oeste S.A. | Cajurú, Gafanhoto and Martins |  | 64 |  |  |  | 11 |  |  |  | (9 | ) |  |  | 66 |
Total |  |  | 2,409 |  |  |  | 318 |  |  |  | (259 | ) |  |  | 2,468 |
SPE | Plants |  | 2017 |  |  |  | Monetary updating |  |  |  | Amounts received |  |  |  | 2018 |
Cemig Geração Três Marias S.A. | Três Marias |  | 1,330 |  |  |  | 174 |  |  |  | (134 | ) |  |  | 1,370 |
Cemig Geração Salto Grande S.A. | Salto Grande |  | 417 |  |  |  | 55 |  |  |  | (42 | ) |  |  | 430 |
Cemig Geração Itutinga S.A. | Itutinga |  | 156 |  |  |  | 23 |  |  |  | (18 | ) |  |  | 161 |
Cemig Geração Camargos S.A. | Camargos |  | 116 |  |  |  | 17 |  |  |  | (13 | ) |  |  | 120 |
Cemig Geração Sul S.A. | Coronel Domiciano, Joasal, Marmelos, Paciência and Piau |  | 152 |  |  |  | 24 |  |  |  | (19 | ) |  |  | 157 |
Cemig Geração Leste S.A. | Dona Rita, Ervália, Neblina, Peti, Sinceridade and Tronqueiras |  | 103 |  |  |  | 18 |  |  |  | (14 | ) |  |  | 107 |
Cemig Geração Oeste S.A. | Cajurú, Gafanhoto and Martins |  | 63 |  |  |  | 11 |  |  |  | (10 | ) |  |  | 64 |
Total |  |  | 2,337 |  |  |  | 322 |  |  |  | (250 | ) |  |  | 2,409 |
SPE | Plants |  | 2016 |  |  |  | Monetary updating |  |  |  | Amounts received |  |  |  | 2017 |
Cemig Geração Três Marias S.A. | Três Marias |  | 1,283 |  |  |  | 172 |  |  |  | (125 | ) |  |  | 1,330 |
Cemig Geração Salto Grande S.A. | Salto Grande |  | 403 |  |  |  | 54 |  |  |  | (40 | ) |  |  | 417 |
Cemig Geração Itutinga S.A. | Itutinga |  | 150 |  |  |  | 23 |  |  |  | (17 | ) |  |  | 156 |
Cemig Geração Camargos S.A. | Camargos |  | 112 |  |  |  | 17 |  |  |  | (13 | ) |  |  | 116 |
Cemig Geração Sul S.A. | Coronel Domiciano, Joasal, Marmelos, Paciência, Piau |  | 147 |  |  |  | 23 |  |  |  | (18 | ) |  |  | 152 |
Cemig Geração Leste S.A. | Dona Rita, Ervália, Neblina, Peti, Sinceridade, Tronqueiras |  | 99 |  |  |  | 17 |  |  |  | (13 | ) |  |  | 103 |
Cemig Geração Oeste S.A. | Cajurú, Gafanhoto, Martins |  | 60 |  |  |  | 11 |  |  |  | (8 | ) |  |  | 63 |
Total |  |  | 2,254 |  |  |  | 317 |  |  |  | (234 | ) |  |  | 2,337 |
Of the energy produced by these plants, 70% is sold in the Regulated Market (ACR) and 30% in the Free Market (ACL). Sector assets and liabilities 16.5 Account for compensation of variation of parcel A items (CVA) and Other financial components Cemig D concession contract guarantees that, in the event of termination of the concession contract, for any reason, the remaining balances (assets and liabilities) of any shortfall in payment or reimbursement through the tariff must also be paid by the grantor. The balances on (i) the CVA (Compensation for Variation of Parcel A items) Account, (ii) the account for Neutrality of Sector Charges, and (iii) Other financial components in the tariff calculation, refer to the positive and negative differences between the estimate of the Company’s non-controllable costs and the costs actually incurred. The variations are subject to adjustment using the Selic rate and considered in the subsequent tariff adjustments. The balance of these sector financial assets and liabilities, which are presented at net value, in assets or liabilities, in accordance with the tariff adjustments that have been authorized, are as follows:
|  | 2019 |  |  |  | 2018 |
Financial position |  | Amounts ratified by Aneel in the last tariff adjustment |  |  |  | Amounts to be ratified by Aneel in the next tariff adjustments |  |  |  | Total |  |  |  | Amounts ratified by Aneel in the last tariff adjustment |  |  |  | Amounts to be ratified by Aneel in the next tariff adjustments |  |  |  | Total |
Assets |  | 1,286 |  |  |  | 2,144 |  |  |  | 3,430 |  |  |  | 1,184 |  |  |  | 2,545 |  |  |  | 3,729 |
Current assets |  | 1,286 |  |  |  | 1,269 |  |  |  | 2,555 |  |  |  | 1,184 |  |  |  | 1,505 |  |  |  | 2,689 |
Non-current assets |  | – |  |  |  | 875 |  |  |  | 875 |  |  |  | – |  |  |  | 1,040 |  |  |  | 1,040 |
Liabilities |  | (882 | ) |  |  | (1,666 | ) |  |  | (2,548 | ) |  |  | (1,140 | ) |  |  | (1,509 | ) |  |  | (2,649 | )
Current liabilities |  | (882 | ) |  |  | (1,033 | ) |  |  | (1,915 | ) |  |  | (1,140 | ) |  |  | (902 | ) |  |  | (2,042 | )
Non-current liabilities |  | – |  |  |  | (633 | ) |  |  | (633 | ) |  |  | – |  |  |  | (607 | ) |  |  | (607 | )
Total current, net |  | 404 |  |  |  | 236 |  |  |  | 640 |  |  |  | 44 |  |  |  | 603 |  |  |  | 647 |
Total non-current, net |  | – |  |  |  | 242 |  |  |  | 242 |  |  |  | – |  |  |  | 433 |  |  |  | 433 |
Total, net |  | 404 |  |  |  | 478 |  |  |  | 882 |  |  |  | 44 |  |  |  | 1,036 |  |  |  | 1,080 |
|  | 2019 |  |  |  | 2018 |
Financial components |  | Amounts ratified by Aneel in the last tariff adjustment |  |  |  | Amounts to be ratified by Aneel in the next tariff adjustments |  |  |  | Total |  |  |  | Amounts ratified by Aneel in the last tariff adjustment |  |  |  | Amounts to be ratified by Aneel in the next tariff adjustments |  |  |  | Total |
Items of ‘Parcel A’ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Energy Development Account (CDE) quota |  | 119 |  |  |  | 29 |  |  |  | 148 |  |  |  | 1 |  |  |  | 220 |  |  |  | 221 |
Tariff for use of transmission facilities of grid participants |  | (18 | ) |  |  | 114 |  |  |  | 96 |  |  |  | 24 |  |  |  | (6 | ) |  |  | 18 |
Tariff for transport of Itaipu supply |  | 9 |  |  |  | 16 |  |  |  | 25 |  |  |  | 2 |  |  |  | 16 |  |  |  | 18 |
Alternative power source program (Proinfa) |  | 11 |  |  |  | (6 | ) |  |  | 5 |  |  |  | 3 |  |  |  | 5 |  |  |  | 8 |
ESS/EER System Service/Energy Charges |  | (161 | ) |  |  | (136 | ) |  |  | (297 | ) |  |  | (246 | ) |  |  | (287 | ) |  |  | (533 | )
Energy bought for resale |  | 661 |  |  |  | 632 |  |  |  | 1,293 |  |  |  | 667 |  |  |  | 1,402 |  |  |  | 2,069 |
Other financial components |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Over contracting of supply (1) |  | (84 | ) |  |  | 216 |  |  |  | 132 |  |  |  | (204 | ) |  |  | (13 | ) |  |  | (217 | )
Neutrality of Parcel A |  | (30 | ) |  |  | (12 | ) |  |  | (42 | ) |  |  | 53 |  |  |  | (15 | ) |  |  | 38 |
Other financial items |  | (71 | ) |  |  | (206 | ) |  |  | (277 | ) |  |  | (236 | ) |  |  | (212 | ) |  |  | (448 | )
Tariff Flag balances (2) |  | - |  |  |  | (103 | ) |  |  | (103 | ) |  |  | - |  |  |  | (11 | ) |  |  | (11 | )
Excess demand and reactive power |  | (32 | ) |  |  | (66 | ) |  |  | (98 | ) |  |  | (21 | ) |  |  | (62 | ) |  |  | (83 | )
TOTAL |  | 404 |  |  |  | 478 |  |  |  | 882 |  |  |  | 43 |  |  |  | 1,037 |  |  |  | 1,080 |
(1) | The wholly-owned subsidiary Cemig D was over contracted in 2017 and 2018 and the gain arising from the sale of the excess of energy in the spot market was provisionally passed through to customers by Aneel in the tariff adjustments of 2018 and 2019, including the portion in excess of the limit of 105% of the regulatory load – thus reducing the tariff that was determined. To establish whether this is a voluntary over contracting, the Company considers that the portion above the regulatory limit will be recovered in the subsequent tariff adjustment, when Aneel approves them. The Company has no expectation of loss in relation to realization of these amounts. The Company recognizes this right, in the amount of R$ 216,852, as ‘Other financial components’, to be approved by Aneel in the next forthcoming tariff adjustments.
(2) | Billing arising from the ‘Flag’ Tariff System (see below) not yet approved by the regulator (Aneel).
Changes in balances of these sector assets and liabilities:
Balance at December 31, 2016 |  | (407 | )
Additions |  | 811 |
Amortization |  | 177 |
Payments from the Flag Tariff Centralizing Account |  | (586 | )
Updating – Selic rate (Note 31) |  | (41 | )
Balance at December 31, 2017 |  | (46 | )
Additions |  | 1,638 |
Amortization |  | 335 |
Others – R&D Reimbursement |  | (115 | )
Payments from the Flag Tariff Centralizing Account |  | (794 | )
Updating – Selic rate (Note 31) |  | 62 |
Balance at December 31, 2018 |  | 1,080 |
Additions |  | 724 |
Amortization |  | (666 | )
Payments from the Flag Tariff Centralizing Account |  | (361 | )
Updating – Selic rate (Note 31) |  | 105 |
Balance at December 31, 2019 |  | 882 |
Payments from the Flag Tariff Centralizing Account The ‘Flag Account’ (Conta Centralizadora de Recursos de Bandeiras Tarifárias – CCRBT or ‘Conta Bandeira’) manages the funds that are collected from captive customers of distribution concession and permission holders operating in the national grid, and are paid, on behalf of the CDE, directly to the Flag Account. The resulting funds are passed through by the Power Trading Chamber (CCEE) to distribution agents, based on the difference between the realized amounts of costs of thermal generation and the exposure to short term market prices, and the amount covered by the tariff in force. Pass-through of funds from the Flag Account in 2019 totaled R$361 (R$794 in 2018 and R$586 in 2017) and were recognized as a partial realization of the CVA receivable previously constituted.

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