Eletrobras' bad soap opera stifles new electricity bill disaster
May 19, 2022 - CE Noticias Financieras
Electricity will become much more expensive and the electricity sector will become even more chaotic. If the electricity bill doesn't increase even more this year, thanks to a crazy decree that Congress wants to approve, it will increase next year and beyond.
Is it because of the privatization of Eletrobras? Also, not necessarily because of the privatization itself. It is because of the whole ruinous work, undertaken by the parliamentary regents of Jair Bolsonaro's misgovernment.
The privatization of Eletrobras has entered the TV series finale phase. It seems that something important is happening. There is gossip, "excitement". There was the "decisive" vote of the TCU (Federal Audit Court), which was a bit of a foregone conclusion (a majority for the validation of the sale criteria), but would not prohibit anything, although challenges by the TCU could give the courts a lot to deal with. But there will be court or other legal wrangling, typical of the last days of any privatization. The dirty privatization is only part of the story.
Electricity bills are expected to rise sharply in 2022 - 09.17.21 - Gabriel Cabral/Folhapress
The sale of the company may even fail. For example, the tumbling stock markets in the US could get in the way. Owners of the money may feel threatened by the (remote) risk of the privatization being derailed by a PT government or by the interventions of Bolsonaro 2, a mess with a propensity to be even more authoritarian and inept.
The hole, however, is even further down.
The House of Representatives has put into emergency mode a draft legislative decree that can prevent electricity readjustments, which on average in the country should be around 20% this year.
On Wednesday, Arthur Lira (PP-AL), president of the Chamber, archrival of the centrist and Bolsonaro's regent, gave an ultimatum to the government. If they don't do something about the readjustment, the House of Representatives will overturn it.
There would be no increase -now. The energy distributors (sellers to the final consumer) might take the matter to court. Some would have financial problems (how to pay for the energy they buy from the generators). Brazil would be even more seen as a banana plantation where it is risky to invest.
Maybe the government will cover the hole (by making more debt) or try to push the bill to the states (by reducing ICMS, as in fuel). Someone is going to pay.
Where do these and other huge readjustments come from?
From inflation, partly caused by the dollar, which rose partly because of the misgovernment of the ignorant fool. Also from postponed readjustments during the worst of the epidemic, and from the extremely high price of emergency power contracted in 2021, in order to avoid rationing.
There is more. Also because of the gross drop in electricity resale during the worst of the epidemic, the distributors were left with holes. In order to plug the hole, they took out a loan, half sponsored by the government, which wanted to prevent these costs from being immediately passed on to the consumer. The cost of this loan will appear on the electricity bill, with interest and monetary correction, for five years.
Government legislators want to avoid the adjustment during the election year. It will go very wrong.
The government is even thinking of using the money it will receive from the sale process of Eletrobras to mitigate the readjustment. In theory, this money would serve to mitigate increases in energy costs that will come with the privatization of the state-owned electricity company, not to mention the extra bill that lobbyists and Congress stuck into the privatization law (creating market reserves for expensive energy production).
Old rolls rollers get wrapped up in last year's nonsense, which should be amplified by this year's nonsense. The bill will come, more salty. Bolsonaro and his regents are about to produce another disaster in the power sector.