Brazil & Southern Cone - October 2024

BRAZIL | Electricity tariff raised amid drought. On 27 September Brazil’s federal electricity regulator (Aneel) announced an increase in the country’s tariff for power consumption in October from the second highest band (red level 1) to the highest band (red level 2). From April 2022 until halfway through this year, the tariff was set at the lowest band, or green, but it was brought up to yellow in July. It was lowered to green again in August, before being raised to red level 1 in September. A 5.91% spike in electricity bills in September contributed to an acceleration in inflation that month, which came in at 0.44% month-on-month according to data released on 9 October. The increase of energy tariffs to the highest rate, which took effect on 1 October, has brought the cost of electricity to R$7.88 (US$1.44) per 100 kilowatt-hours (KwH), up from R$4.46 last month. The tariff increase is notably due to an ongoing intense drought impacting hydroelectric production. Authorities have raised alarm over severe water scarcity in the rivers that supply the reservoirs of the country’s largest hydroelectric dams, such as Belo Monte on the Xingu River and Itaipu on the Paraná River. 

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