Brazil orders energy cutbacks to avoid California's woes

Rationing plan offers free power as reward, blackouts as penalty

Larry Rohter, New York Times

Saturday, May 19, 2001, ©2001 San Francisco Chronicle

URL: http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/05/19/MN181346.DTL&type=news

Natal, Brazil -- Faced with a rapidly worsening energy crisis that threatens Latin America's largest economy, the government ordered consumers and businesses yesterday to cut electricity consumption by 20 percent or prepare for California-style blackouts.

The reduction is to be achieved through rationing that will start on June 1 and includes surcharges for those who do not meet their cutback quotas and rewards for those who do. The restrictions are to remain in effect for at least six months, officials said.

"We will save the energy we need if we organize ourselves," President Fernando Henrique Cardoso said in a nationally televised speech last night. "Everyone has to participate in this national effort if we want to remove the risk of blackouts."

In an innovative effort to minimize disruption for both industrial and individual users, large companies are to be allowed to sell the energy they save, and small consumers who reduce consumption by 34 percent will receive their electricity free.

But with the carrot comes a stick. Quota violators will have their power turned off for up to six days at a time.

On Thursday night, street lighting in most major cities was cut 35 percent, and police night shifts were bolstered. In another sign of the seriousness of the crisis, the government has prohibited night games of professional soccer, the country's favorite sport, and severely restricted concerts. More than 130 million of Brazil's 170 million people will be affected when the rationing begins, including all the residents of the Sao Paulo-Rio de Janeiro-Brasilia triangle, the industrial heartland.

The immediate cause of the crisis is the country's worst drought in more than 60 years. More than 90 percent of the electricity in Brazil is generated by dams. But water levels at hydroelectric plants have fallen to less than one- third of capacity as a result of the prolonged dry spell.

The power shortage also reflects a lack of government investment in the power supply that dates from the mid-1980s. Many state-owned utilities have been sold to investors, with much of the revenue from those sales used to reduce the government deficit instead of being used to build additional plants.

In the 1990s, the demand for electricity grew 45 percent, in part as a result of a successful program to control inflation, an effort that helped millions of poor people buy television sets, refrigerators, air conditioners and otherappliances. But the installed capacity rose just 28 percent, according to government estimates.

How it works Households consuming an average of more than 200 kilowatts per hour each month -- about a third of Brazilian homes -- would have to reduce their consumption by 20 percent compared to last year. Those failing to rein in consumption would face surcharges of up to 200 percent. Consumers who managed reductions of 34 percent would get their energy for free.

Brazilians who repeatedly fail to meet savings targets would have their supplies cut first for three-day and then for six-day periods.

Associated Press

©2001 San Francisco Chronicle Page A - 8

-- Swissrose (cellier3@mindspring.com), May 19, 2001