Brazil Power Bills to Drop as Expensive Thermo Plants Shut Down

Electricity prices will start falling in Brazil next month as Latin America’s largest country shuts down some of its thermoelectric power plants, taking pressure off the fastest inflation in over a decade.

Brazil will turn off 15 thermoelectric plants in March as cheaper sources of power generation including hydro come back online, Energy Minister Eduardo Braga said Thursday.

That comes in addition to seven thermo plants the government this month said it would shut down. The reduced dependence on thermoelectricity will allow regulators to start phasing out a surcharge that was established so consumers could help bear the cost of operating the more expensive plants.

"We guarantee that, by April, consumers won’t have to bear that burden any more," Braga said.

The minister said the good news is the result of reduced electricity use and increased rainfall. The electricity industry also will benefit, saving an estimated 8 billion reais ($2 billion) a year from the reduced dependence on thermoelectricity, he said.

Lower electricity bills will be particularly welcome in Brazil, where annual inflation last year hit double digits for the first time since 2003. That, coupled with rising unemployment and increasing borrowing costs, has strained an economy now headed for its longest recession in more than a century.

Analysts surveyed by the central bank estimate consumer prices will continue to surge this year, with inflation ending 2016 at 7.6 percent. The government targets annual inflation of 4.5 percent.

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