Brazil Congress Approves Rousseff’s Plan to Reduce Energy Price

Brazil’s Congress concluded voting yesterday on a decree that offers an early renewal of power license contracts in exchange of a reduction in energy prices.

President Dilma Rousseff’s administration will offer as much as 30 billion reais ($ 14.4 billion) in compensation to utilities companies that have agreed to renew contracts expiring in 2015-2017 under lower tariffs. The government seeks to cut energy bills by 20 percent on average next year as part of a plan to reduce productivity costs and fight inflation.

“This is one of the most important measures in Dilma’s government, without a doubt,” said Eduardo Braga, the leader of the government coalition in the Senate. “It benefits all consumers and it’s part of a strategy to stimulate the Brazilian economy,” he told reporters in Brasilia yesterday.

State-controlled Centrais Eletricas Brasileiras, or Eletrobras, Brazil’s largest power company, has tumbled 48 percent since Sept. 10, the day before Rousseff said she wanted to cut power costs by as much as 28 percent to aid manufacturers.

Cia Energetica de Minas Gerais, or Cemig, opted not to renew concessions to operate three hydroelectric dams because the company expected to be granted an automatic renewal under old rules, Chief Executive Officer Djalma Morais said Nov. 26.

Cia Energetica de Sao Paulo, or Cesp, as Brazil’s second- biggest power generator is known, has gained six percent this month after saying it won’t renew contracts accounting for 70 percent of its revenue under new rules proposed by the president.

As part of the decree, Congress has authorized large consumers, such as industrial companies, to re-sell energy in case of surplus. It has also reduced to 0.4% from 0.5% a fee charged from utilities for service and operational oversight.

To contact the reporter on this story: Maria Luiza Rabello in Brasilia Newsroom at

To contact the editor responsible for this story: Helder Marinho at

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