Instituto Internacional Arayara de Educação e Cultura vs. Federal Union, Ministry of Mines and Energy and Others

In March, 2026, the Arayara International Institute of Education and Culture filed a Public Civil Action (ACP) with a request for a preliminary injunction against the Federal Government, the Ministry of Mines and Energy (MME), the Energy Research Company (EPE), and the National Electric Energy Agency (ANEEL) due to the inclusion of coal-fired thermoelectric plants in the 2026 Capacity Reserve Auction in the Form of Power (LRCAP 2026). It argued that the aforementioned auction, conducted by the MME, presents flaws in its justification and deviation from its purpose by allowing the participation of coal-fired plants in a mechanism intended for contracting flexible power to meet peak demand in the National Interconnected System. It also argued that these plants lack the technical capacity for rapid response due to their low operational flexibility, long start-up times and need for continuous operation, which disqualifies them as a suitable source for capacity reserve.

The complaint alleged that the auction model unduly favors these power plants, guaranteeing longer operating times and revenue predictability, which generates competitive distortions, risks of tariff increases, and potential future litigation. It also highlighted that this structure encourages the maintenance of highly emitting sources, increasing greenhouse gas emissions and exacerbating the impacts of climate change. Finally, it argued that the inclusion of coal contradicts climate commitments made by Brazil, the National Energy Transition Policy, and the constitutional principles of environmental protection, constituting environmental regression and incompatibility with the transition to a low-carbon energy matrix.

The complaint seeks a preliminary injunction to suspend the administrative act by the Ministry of Mines and Energy (MME) that included the possibility of participation by coal-fired thermal power plants in the LRCAP 2026 (Brazilian National Auction for the Reduction of Coal-Fired Power Plants). Additionally, it requests the subsequent exclusion of proposals by similar projects, as well as the prohibition of any acts that would continue the auction with regard to such plants. On the merits, the plaintiff requests that the action be granted to declare the nullity of the administrative acts that authorized the inclusion of the coal-fired thermal power plants in the LRCAP 2026, with their definitive exclusion from the bidding process, as well as the permanent prohibition of any acts continuing the auction in relation to these projects.

In the context of urgent relief proceedings, the Court denied the preliminary injunction request, finding that the legal requirements for granting it were not met and due to the potential risk of harm to the public interest involved.

In its defense, the Federal Government argues that the inclusion of coal-fired power plants in the LRCAP 2026 falls within the regular exercise of the MME's (Ministry of Mines and Energy) competencies, based on technical studies by EPE (Energy Research Company) and ONS (National System Operator) that indicate a systemic need for additional power starting in 2026. It rejects the allegation of flawed motivation and misuse of purpose, emphasizing that the bidding process was structured in a competitive and neutral manner, restricted to existing plants, without structural expansion of this energy source in the national electricity matrix. Regarding operational flexibility, it highlights that the required parameters are significantly more restrictive than those currently practiced, with a reduction in the minimum operating time (T-on) from 168 hours to 18 hours, representing an improvement of approximately 90%. It maintains the compatibility of the measure with the National Energy Transition Policy and with the climate commitments of the Paris Agreement, in a matrix that already boasts 88.2% renewable participation. Therefore, it requests: (i) the dismissal of the requests made in the initial petition; and (ii) the plaintiff being ordered to pay the costs of the proceedings and attorney's fees.

The Energy Research Company (EPE), in its defense, raises, preliminarily, the lack of standing of the plaintiff, as no express authorization from its associates for filing the lawsuit was presented, which requires the dismissal of the case without prejudice. It further argued its own lack of passive standing, maintaining that its role in the LRCAP 2026 is limited to the registration and technical qualification of projects, and that the decision to include coal-fired power plants in the bidding process is the exclusive prerogative of the Ministry of Mines and Energy (MME), by virtue of Normative Ordinance No. 118/2025, without it having any decision-making power over the technological scope of the auction. On the merits, it refutes the plaintiff's technical allegations, pointing out that coal-fired power plants do not operate continuously, being activated predominantly during the dry season, and that the new flexibility parameters represent a significant advance compared to previous conditions. Based on studies by the ONS (National System Operator), it refutes the claim of worsening curtailment of renewable energy sources, demonstrating that, in regions such as the Northeast, the operation of these plants alleviates transmission restrictions and reduces cuts in wind and solar generation. It defends the regularity of Factor "a" as an economic equalization mechanism that ensures equality and tariff moderation between different technologies. Finally, it argues the impossibility of judicial intervention in the merits of energy planning, as this would constitute a violation of the principle of separation of powers, highlighting that any review of the administrative decision would require, at least, the performance of expert evidence. In conclusion, it requests: (i) the dismissal of the case due to the plaintiff's lack of standing; (ii) the recognition of EPE's lack of standing and its exclusion from the proceedings; (iii) the recognition of the legal inadmissibility of the requests seeking the review of a discretionary administrative act under the exclusive competence of the Executive Branch; (iv) a declaration that the Judiciary cannot substitute the Public Administration in national energy planning decisions. and (v) the complete dismissal of the claims made by the plaintiff.