In an attempt to stave off lawsuits from opponents of energy rationing and in the face of plummeting personal popularity, Brazil’s president Fernando Cardoso has signalled his government’s intention to reduce the fines for rationing defaulters. The fine had been set at 200 per cent of the consumer’s bill; reducing it may secure the legality of rationing measures, which the country’s courts have brought into question by allowing injunctions suspending the government’s right to fine or cut off consumers who do not abide by rationing rules.
Now the energy crisis is threatening to create a national financial crisis and possibly a recession. The country’s electricity supply has been hit hard by drought leading to low water levels, the worst in 70 years. 90 per cent of Brazil’s power supply is hydro generated, but reservoir levels are already at 30 per cent. If they fall to 10 per cent before the seasonal rains, power blackouts will be the inevitable consequence. In any case extreme measures are being initiated to avoid shortages and blackouts, including a review of the country’s energy policy to allow a greater use of gas, and power rationing. Avoiding blackouts is seen as essential, or the country is likely to face serious civil unrest. In addition, national elections are to be held soon.
In May, the government came up with an outline plan to impose power rationing from 1 June, with the sanction that power would be cut off to consumers who exceeded quotas. However it had trouble firming up the plan and the delay sparked off allegations of obfuscation that were, it was predicted, likely to hurt the economy. Brazilian stocks promptly dropped 3 per cent.
President Fernando Cardoso’s response was to create a ‘task chamber’ to handle the crisis. Meanwhile solar generator and genset sales were going through the roof and critics were blaming past anti-gas policies for creating a vulnerable supply situation.
A week later the task force came up with a provisional plan. Rationing, for users of 200 kWh per month or more, would be set at around 20 per cent, with heavy surcharges for defaulters and incentives for savers. Consumers that managed 34 per cent savings would get their power free, persistent defaulters would be cut off for days at a time. Industrial consumers that saved above quota could trade their surpluses or save them up. Street lighting would be cut by 35 per cent, but not the lighting for the famous Christ the Redeemer statue. And poorer households would not be penalised – in fact a plan was hatched to distribute fluorescent lamps to poorer users, the cost to be borne by the electricity licensees.
Electrobras and Petrobras announced plans to speed up the development of existing power station projects, some by as much as two years, and development banks were prepared to finance power projects to the extent of 50 per cent. But the immediate problems escalated. Transmission networks were revealed as inadequate to the task of importing electricity from neighbouring countries. Power companies warned that they could not start cutting power, legally or technically, until August at the earliest. In the event, the government pushed through the necessary penalising legislation on the basis of a national emergency, only to have it ruled unconstitutional by federal courts. The government has appealed to the Supreme Court, but opponents of the measures have threatened an avalanche of lawsuits whatever the result of the Supreme Court ruling.
•Theft of electricity in Brazil is endemic – reckoned at 18 per cent of production. If it could be prevented, rationing could probably be avoided. But utilities are resigned to that being a practical impossibility. Most of the transparent theft occurs in shanty towns where the residents guard their interests by force. Utility employees who turn up to cut off the nests of illicit wiring on power lines are likely to be shown off the premises at the point of a gun, unless backed up by police. Nonetheless power companies hope that such illegal users will also stick to the conservation plan. Their real worry is the power ‘outlaws’, who consume large quantities of electricity to power semi-legal back street businesses such as car repair shops and even small bars.
