Petrobras, Eletrobras Win $1.23 Billion Contracts to Sell Power

Dec. 5 (Bloomberg) — Petroleo Brasileiro SA and Centrais
Eletricas Brasileiras SA
won contracts to sell almost 16,400
gigawatt-hours of electricity in an energy auction in Brazil
today.

The two state-run companies will receive 3.2 billion reais
($1.23 billion) under the three-year contracts, the Sao Paulo-based electricity trading board CCEE said today on its website.

“If we didn’t have the auction, distributors would be
forced to buy energy in the spot market, which is currently very
volatile,” said Frederico Rodrigues, superintendent of Brazil’s
energy regulator Aneel. “Today’s auction meets part of the
demand and it is possible that we are going to have a new
auction to adjust demand at the beginning of next year.”

Energy producers competed in the so called A-1 auction for
contracts that will take effect Jan. 1. The event lets
distributors renew expired power-purchase agreements and limits
their exposure to the more-expensive spot market.

Brazil’s worst drought in eight decades has dried up its
main hydroelectric dams. To avoid rationing, the country has
switched on in the past year nearly all of its fossil-fuel
burning thermal power plants, driving spot prices to record
highs. Hydropower produces about 70 percent of the country’s
electricity.

The average price for energy sold in today’s auction was
197.09 reais a megawatt-hour, below the 388-real price
anticipated for spot-market purchases next year by Ricardo
Savoia, director of the consulting company Thymos Energia.

‘Favorable Prices’

“Today’s auction allowed distributors to buy energy at
more favorable prices,” Savoia, said in an e-mail.

Utilities purchased energy at the maximum spot price of
822.83 reais a megawatt-hour last week, according to CCEE’s
website. That’s more than triple the 362.69-real price a year
ago.

The government has provided more than 28 billion reais in
aid to power companies this year, and last month announced plans
to reduce prices. Starting in January, the maximum spot price
distributors will pay will be 388.48 reais a megawatt-hour.

Petrobras sold 7,102 gigawatt-hours of energy from two
thermal plants at the auction. Power from its Romulo Almeida
plant, in Bahia state, sold at average price of 192 reais a
megawatt-hour, and its Aureliano Chaves plant, in Minas Gerais
state, will get an average price of 191.99 reais.

Eletrobras’s Furnas unit sold 9,259 gigawatts-hours at an
average price of 201 reais a megawatt-hour.

In Brazil’s energy auctions, the government sets a ceiling
price and developers bid down the price at which they are
willing to sell power. The lowest bids win contracts.

To contact the reporter on this story:
Vanessa Dezem in Sao Paulo at
vdezem@bloomberg.net

To contact the editors responsible for this story:
Reed Landberg at
landberg@bloomberg.net
Will Wade, Jim Efstathiou Jr.

About BloombergNEF

BloombergNEF (BNEF), Bloomberg’s primary research service, covers clean energy, advanced transport, digital industry, innovative materials and commodities. We help corporate strategy, finance and policy professionals navigate change and generate opportunities.

Available online, on mobile and on the Terminal, BNEF is powered by Bloomberg’s global network of 19,000 employees in 176 locations, reporting 5,000 news stories a day.
 
Sign up for our free weekly newsletter →

Want to learn how we help our clients put it all together? Contact us