Brazil rebounding from drought

Brazil Map

A 20% increase in Brazil's hydroelectric power reservoirs in July has allowed the country's government to shut down 21 backup thermoelectric plants.

According to state grid operator Operador Nacional do Sistema Eletrico (ONS), reservoir levels rose from 17% in January to 37% in July. Moreover, ONS said the threats of an energy deficit in the areas most impacted by the country's drought -- the southeast, central and northeast -- all stand below 1.3%.

The shutdown was applied to thermo plants generating power at a variable cost per unit exceeding US$170 per MWh, according to a statement from Brazil's Ministry of Mines and Energy, with the cuts expected to save distributors about $1.6 billion per month.

The move will also provide relief for consumers, who have seen an increase of about 40% in their utility bills based on Brazil's tiered tariff structure. With the country suffering its worst drought on-record, state regulator Agencia Nacional de Energia Eletricqa (Aneel) had applied the system's highest tariff -- the "red flag" -- since January.

Brazilian President Dilma Rousseff said she anticipates tariffs will fall by as much as 20%, though she did not specify when that might be.

The announcement preceded another made Tuesday in which Rousseff pledged more than $33.3 billion to add up to 31.5 GW of new generating capacity by 2018. The investment is intended to help spur Brazil's ailing economy.

For more news from Brazil, visit here.

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