| SAO PAULO
SAO PAULO Dec 12 A sharp recession in Brazil
has forced electricity distributors to buy power they cannot
sell, adding to their struggles during the downturn, the most
senior Brazilian executive for U.S. power company AES Corp
said on Monday.
Julian Nebreda told investors that the company's Eletropaulo
unit, the country's largest power distribution firm, could lose
up to 110 million reais ($33 million) in 2016 due to rigid
"I can't understand how they can force a power distribution
company to buy more energy than it needs. What world is this?"
said Nebreda, who held positions in Europe and Latin America
before taking over as chief executive of AES Brasil in April.
He added that the firm is actively talking with Brazil's
electricity regulator Aneel to find a solution.
The situation described by Nebreda is not exclusive to
Eletropaulo Metropolitana Eletricidade de São Paulo SA
, as the company is formally know. Other power
distribution firms in Brazil are facing the same problem due to
the impact of Brazil's deepest recession since the 1930s.
In the country's regulated power market, distributors have
to buy energy from generators at regular auctions, closing
contracts to meet the expected demand for periods of up to 20
However, the recession caused a sharp reversal in
electricity usage after years of steady growth. For the last two
years, demand fell in Brazil and distributors are paying
generators for energy they are not selling.
The rules also bar distributors from selling excess supply
in the open market. Companies are arguing for compensation or
the option to trade the excess electricity on the open market.
Aneel has opened a public consultation to receive
suggestions for modifying contracts, but there is no date set
for a decision on the subject.
Eletropaulo, which supplies 20 million people in
metropolitan Sao Paulo, said power demand fell 2.4 percent in
the nine months to September.
The company had a net loss of 56 million reais in the
period, compared to a profit of 66 million in 2015. Its shares
gained 13 percent in the last 12 months in Sao Paulo, compared
to a 31 percent gain for the exchange's main index Ibovespa.
($1 = 3.35 reais)
(Reporting by Marcelo Teixeira; Editing by Paul Simao)