Brazil Power Supply Cut as Demand Peaks; Stocks Plunge
By Denyse Godoy and Anna EdgertonJan 20, 2015 7:36 AM GMT+0800
At least nine Brazilian states suffered blackouts after the country's power grid operator restricted electricity distribution during hours of peak use.
Units at 11 power plants that account for 2,200 megawatts, or about 5 percent of the integrated distribution system, were automatically cut Monday, according to grid operator ONS.
The supply interruptions stoked concern that the country is facing energy rationing as dry weather depletes hydroelectric dams. Shares of CPFL Energia SA (CPFE3), which generates and distributes energy in three of the states affected by the outage, tumbled 7.3 percent as the MSCIBrazil Utilities Index lost 5.7 percent, the most among 10 industry groups.
"There has been a lot of concern among investors about new rationing, so the outage this afternoon left everyone afraid it is already happening," Fernando Goes, an analyst at brokerage Clear Corretora, said by telephone from Sao Paulo.
Dam levels in the Southeastern and Midwest regions fell to 18.3 percent on Jan. 18, according to ONS data. In 2001, the last year of widespread rationing, the levels on those reservoirs ranged from 20.6 percent to 34.5 percent.
A press officer for Brazil's Mining and Energy Ministry deferred comment to the ONS statement. The grid operator will meet Tuesday in Rio de Janeiro to analyze the failure.
CPFL said in a statement on its website that ONS requested the company turn off its lines "following the standard procedure to stabilize the national electric system," without providing further detail.
Transmission Failure
Eletropaulo (ELPL4) Metropolitana SA, which provides power to 20.1 million clients in the Sao Paulo metropolitan region, cut more than 700 megawatts from its area of operation on ONS instructions, according to its website.
Brazil will diversify its energy matrix in the future to make it less reliant on hydro-power, Mining and Energy Minister Eduardo Braga told reporters last week. Transmission line failures caused Monday's outages, he told reporters in Brasilia.
"There was a peak in consumption, but if we had not had the technical issue, we wouldn't have had any problems," he said.