Cemig Jumps Most in 4 Years After Lower Rates Refusal: Rio Mover
Cia. Energetica de Minas Gerais, Brazil’s largest power company by market value, rose the most in almost four years after rejecting the renewal of three licenses under the government’s plan for cheaper energy.
President Dilma Rousseff and Energy Minister Edison Lobao last month announced measures to force power utilities to cut rates by as much as 28 percent to stoke economic growth and boost the competitiveness of Brazilian manufacturers. Cemig’s decision to exclude licenses for the Sao Simao, Jaguara and Miranda dams from the renewal shields the company from lower prices and means it can seek an extension under previous terms, BTG Pactual analysts said in a report.
“With such a decision, the worst case scenario we previously analyzed for Cemig can be ruled out,” BTG analysts Antonio Junqueira and Joao Pimentel said in a report. The decision signals that “Cemig will still fight for the automatic renewal rights for the three plants.”
The hydroelectric plants account for almost 50 percent of Cemig’s power generation capacity, BTG said.
The company is probably counting on support from lawmakers to have the licenses renewed under previous rules, Juliao Coelho, a director at electricity regulator Aneel said in Brasilia today. The previous rules granted Cemig the right for an automatic extension, BTG said.
Right to Renew
Cemig yesterday listed all the licenses it plans to renew, excluding the three dams.
“Cemig believes in its right to renew the concessions for these three plants for another 20 years under existing conditions before the measure,” the company said in an e-mailed statement late yesterday, citing Chief Executive Officer Djalma Bastos de Morais. The company said it will only sign final accords to extend its other concessions if detailed terms are favorable when presented by the government.
Cemig’s press office declined to comment further.
Other utilities including Cia. de Transmissao de Energia Eletrica Paulista, or Cteep, and state-run Centrais Eletricas Brasileiras SA (ELET6) showed interest in renewing their transmission and distribution concessions, said Aneel in a statement on its website.
According to the Aneel statement, every transmission and distribution concession, including Cia Paranaense de Energia (CPLE3), Cia Estadual de Geracao e Transmissao de Energia Eletrica and Eletrobras subsidiaries Eletronorte and Furnas, showed interest in renewal. Of the country’s power plants, 14 didn’t send their interest to the electric regulator.
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