Energy prices: the harsh reality in Brazil
- Jul 30, 2018 5:00 pm GMTJul 30, 2018 5:00 pm GMT
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The blue line shows the marginal operating cost of the electric system of the Southeast/Midwest region from July 2017 to July 2018
The red line is the annual average of the blue line, of R$ 375/ MWh
The green line is Eletropaulo's rate of R$ 235/MWh for a typical consumer, connected in medium voltage.
The analysis is simple: the average annual operating cost of the electric system is well above the ongoing rates granted by the regulator (ANEEL).
We thus have a picture that clearly shows a systemic imbalance. It is no wonder that investments in energy businesses have to include a major "country risk". It is no wonder that the financial cost of the moneys is - to include the power sector's risk = usually higher than 20% a year!
It's more than time to wake up to reality and turnaround the situation. Or is there any other consistent alternative?
1 USD = R$ 3,7
PS The above mentioned costs refer only to the "commodity" and do not include transmission and distribution costs