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Brazilian electric sector: another (huge) conflict?

image credit: Balance is the key!
Rafael Herzberg's picture
Consultant energy affairs Self employed

Rafael Herzberg- is an independent energy consultant, self-employed (since 2018) based in São Paulo, Brazil* Focus on C level, VPs and upper managers associated to energy related info, analysis...

  • Member since 2003
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  • Apr 10, 2020

Brazilian electric sector: another (huge) conflict?

While the market has waited for 5 years for an outcome of the Justice on the "default" of the CCEE (official power clearinghouse) of USD 2 Billion, a new "challenge" is there. A systematic default.

1) In the regulated environment (70% of the Brazilian market)

* Electric utilities have seen their customers' consumption drop significantly
* Their contracts with energy suppliers are well above demand

2) In the deregulated  environment (30% of the Brazilian market)

* Customers are consuming well below the contracted volume
* Their contracts with traders have a take or pay clause

On these two fronts, the most likely short-term solution is default. "Force Majeure" linked to COVID-19.

I venture to predict that the leaders of the electricity sector will follow the same path as always. Leave it to the Justice to decide, even if we have to wait for years in a row.

Is this the best strategy?

Rafael Herzberg's picture
Thank Rafael for the Post!
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