Brazil’s new government faces prospect of power rationing

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Elections take place in Brazil later this month and whoever succeeds may have to address a power shortage crisis that may well see the return of power rationing.

Lack of rainfall has exposed the country’s huge dependency on hydroelectric power, with that energy driver responsible for 70 per cent of Brazil’s normal electrical capacity.
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Present office holder Dilma Rousseff has reminded the electorate that her presidential challenger’s party were in power the last time rationing was introduced in 2001.

Erico Evaristo, head of energy trading company Bolt Comercializadora told Bloomberg that if drought conditions persist, the country may have to rely on expensive energy generated by thermal plants, meaning high energy prices and the possibility of rationing.

“We’re very worried about energy rationing for next year,” Evaristo said in telephone interview. “None of the models forecast the volume of rain necessary to recover the level of water in reservoirs. Everything depends on rains in the first quarter of next year,” Evaristo said. “The situation is pretty critical.”

The worst drought in more than 40 years has forced distributors to buy more expensive energy on the spot market, reselling it for a loss under a government-set price cap.

The Electricity Sector Monitoring Committee, which met at the Mining and Energy Ministry today, sees a 4.7 percent chance of an energy deficit in 2015, down from 4.8 percent last month, according to a statement on the ministry’s website.

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