Brazil plans to hold power auction

Brazil's mines and energy minister Dilma Rousseff and electric power sector representatives have announced plans to hold a power auction as soon as possible, probably within 90 days. Rousseff explained that there are some 7,500 MW of uncontracted electric power in Brazil, as a result of the deregulation of the sector, which abolished 25 % of so-called initial contracts on January 1 this year.
As demand is weak, generators did not manage to place much of this power on the market, and total losses as a result are estimated at around 4 bn reais this year. Each generator would be free to decide how much power to place at the auction to meet its strategic objectives.

Distributors would be excluded from the auction, making this the first real drive to encourage direct purchases by large-scale unregulated customers. A resolution to regulate the auction is likely to be put to an extraordinary meeting of the National Energy Policy Council (CNPE).
Potential buyers will have to register with the ONS national system operator, indicating the point in the grid where they want the power delivered. The MAE wholesale market would manage the sale using a Dutch (or reverse) auction model. Contracts will be offered for 6, 12 and 24 months.

The ministry said two different products would be offered: one to encourage substitution of fossil fuels for electric power, and another to increase baseload.
Rousseff is reported to have made the announcement after meeting with the large-scale consumers association (Abrace) and the electric power generators association (Abrage). The distributors are reported to be concerned that they are being left out of the power auction, although some media reported that a similar auction would also be held to satisfy their needs at the same time.