Brazil Suffers Fifth Power Outage Since Crackdown on Utilities

Power was knocked out in 11 Brazilian states last night, leaving residents in the dark for several hours as the country’s latest blackout raises questions about the reliability of the electricity grid.

The outage beginning after midnight local time, which grid operator ONS said resulted from a short circuit on a transmission line, was the fifth since President Dilma Rousseff said in September that she would force utilities to cut rates that manufacturers say are the fourth-highest in the world.

“We have had a decrease in the system’s reliability and we don’t yet know the reasons it is occurring,” Deputy Energy Minister Marcio Zimmerman told reporters in Brasilia today. “Events like this aren’t normal.”

Adriano Pires, head of the Brazilian Infrastructure Center, said the wave of outages is a product of a lack of upkeep as the government fails to provide a proper regulatory environment to foster investments.

“The government has to create regulation that encourages investment, maintenance, and modernization of the transmission and distribution systems in Brazil,” Pires said by telephone from Rio de Janeiro. “You’re having a lot of investment in generation, but the investment in transmission isn’t happening in the same proportion.”

The power outages are also a political challenge for Rousseff. A former Energy Minister, Rousseff rose to national prominence when as energy secretary of Rio Grande do Sul her state was the only one in Brazil that didn’t have to ration electricity during an energy crisis in 2001.

The grid’s organization, which relies mainly on far-flung hydroelectric plants, also makes the impact of errors in transmission equipment felt more widely, said Ricardo Correa, a utilities analyst at Ativa SA CTCV.

“When you do have a small problem in one point of the system, you have a potentially much bigger chain reaction,” Correa said by telephone from Rio de Janeiro last week.

Regulators and representatives of power companies will meet today in Brasilia to discuss last night’s blackout and the safety of the system.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE