Journal of Power and Energy Engineering, 2017, 5, 75-90 http://www.scirp.org/journal/jpee ISSN Online: 2327-5901 ISSN Print: 2327-588X DOI: 10.4236/jpee.2017.51006 January 22, 2017 Assessment of Initial Investment Valuation Methodology of Brazilian Power Transmissions Auction André L. V. Gimenes, Raphael B. Heideier, Miguel E. M. Udaeta, Marco A. Saidel Department of Electric Power and Automation, Polytechnic School of the University of Sao Paulo, Sao Paulo, Brazil Abstract This paper aims to assess the Initial Investment Valuation Methodology of the local regulator, facing the results of auctions, due to the high occurrence of low clearing prices observed from 2003 to 2008 and the high percentage of auctions without any bidder recently. The regulator investment forecasted de- fines the maximum value of Yearly Allowed Revenue and the bidder that of- fers the lowest YAR value wins the auction. The first type of analysis considers project cost, location, execution deadline, transmission line extension and type of all actions from 1999 to 2015, totalling about 3.36 1 billion USD. It was not found any correlation of those variables and the result of the actions. The second analysis compared the equipment and the additional costs breakdown of the regulator investment forecast with the real investment in projects from 2009 to 2013 and it rarely surpasses 5%. Suggestions are proposed based on the analysis. Keywords Brazilian, Auction, Clearing Prices, Transmission Line, Valuation 1. Introduction As the largest electricity market of the world, Brazil has implemented reforms to liberalize its energy sector to increase efficiency and promote low tariffs. Thus, an extensive restructuring process started in 1995 where distribution, transmis- sion, and generation were unbundled to promote competition and motivate fi- nancing from the private sector to expand the power system. These changes have characterized the existence of an electricity free market [1]. However, this mod- 1 Exchange rate from central bank of Brazil, assessed at 11/07/2016, 3.30 BRL per USD. Available at: http://www.bcb.gov.br How to cite this paper: Gimenes, A.L.V., Heideier, R.B., Udaeta, M.E.M. and Saidel, M.A. (2017) Assessment of Initial Invest- ment Valuation Methodology of Brazilian Power Transmissions Auction. Journal of Power and Energy Engineering, 5, 75-90. http://dx.doi.org/10.4236/jpee.2017.51006 Received: December 22, 2016 Accepted: January 19, 2017 Published: January 22, 2017 Copyright © 2017 by authors and Scientific Research Publishing Inc. This work is licensed under the Creative Commons Attribution International License (CC BY 4.0). http://creativecommons.org/licenses/by/4.0/ Open Access