Record Price
Spot prices hit the maximum allowed 822 reais level on Jan. 31 as a dry spell in parts of Brazil reduced hydroelectric energy supplies, increasing dependence on costlier thermoelectric power. Some distributors tap the spot market to cover demand.
Petrobras sold 28,529 gigawatt-hours under five-year contracts at the auction organized by the Brazilian power trading board. That was 28 percent of the 101,692 gigawatt-hours sold. The auction set a ceiling price of 271 reais ($121) per megawatt-hour.
With the rainy season running from November to April, Brazil’s dams are forecast to be below historical levels for the rest of the year, leading to a 94 percent chance of rationing, according to a March 31 estimate by Citigroup Inc. Fitch Ratings Ltd’s head of Latin American sovereigns, Shelly Shetty, said April 10 that there won’t be rationing.
To keep gas-fired power plants running as it seeks to preserve dam levels, Brazil relies on Petrobras to import liquefied natural gas, or LNG. The oil company, in which the government owns a controlling stake, sells the fuel at a loss.