The latest decision by the local power regulator in Brazil, Aneel, to impose an additional charge on electricity bills due to low reservoir levels at hydroelectric plants has raised concerns among Brazilians. This move comes at a time when the country is experiencing a dry season and has led to consumers having to pay more for their electricity consumption in September.
Despite the efforts to diversify the energy mix in Brazil with the growth of wind and solar power, more than half of the country’s power supply still relies on hydroelectric plants. Aneel’s pricing system, which includes different levels ranging from “green” to “red level 2”, has implications for consumers. When the “red level 2” is activated, as it has been in September, Brazilians are required to pay an additional 7.88 reais ($1.40) for every 100 kilowatt-hours of electricity consumed.
This increase in electricity costs is likely to have a direct impact on consumers, particularly those who rely heavily on electricity for their daily activities. The additional charge imposed by Aneel can lead to inflation concerns in the country, affecting the overall economy. With the forecast of below-average rainfall in Brazil’s main hydroelectric areas, power generators are forced to rely more on thermoelectric plants, which are known to be more expensive to operate.
This is not the first time Brazil has faced such a situation. In August 2021, the country struggled with a major drought, leading to the implementation of the “red level 2” pricing system. The recurrence of this scenario highlights the vulnerability of Brazil’s energy infrastructure to weather-related challenges and the need for long-term solutions to ensure a reliable and affordable power supply.
As Brazilians grapple with the rising electricity costs in September, it becomes evident that the country’s heavy reliance on hydroelectric plants poses challenges during periods of low rainfall. The decision by Aneel to activate the “red level 2” pricing signals the importance of diversifying the energy mix and investing in alternative sources of power generation. It also underscores the need for robust regulatory mechanisms to address fluctuations in energy supply and ensure stability in the electricity market.