The drought that’s draining hydropower dams of water, the source of most of Brazil’s energy supplies, hurts distributors as they buy energy at all-time highs in the spot market and then resell it for a loss at a government-set price cap.
Today’s auction means consumers will pay “a lot less” for electricity, Mauricio Tolmasquim, the head of Brazil Energy Research Agency EPE, told reporters in Sao Paulo.
Brazil last month pledged about 12 billion reais ($5.4 billion) of aid for utilities to cope with the record spot prices. The energy sale will limit the need to draw on the funds.