Duke commits to contracts, not spot, for 2005

Brazilian power generator Duke Paranapanema will use all of its installed capacity to meet sales contracts for 2005 delivery after selling some 15,000GWh at the government's existing power auction Tuesday, the company said in a statement Wednesday. Duke Paranapanema is the Brazilian unit of US power company Duke Energy. It has installed capacity of 2,300MW in eight hydroelectric plants, located in the southeastern state of São Paulo. It is Brazil's second largest privately held generator after Tractebel Energia. The decision to sell all the power available for 2005 is a strategy to stay away from spot market where prices are trading at just over 18 reais (US$6.53)/MWh. Duke sold power at 59.98 reais/MWh at Tuesday's auction, three times the spot market price. The company has power available for sale in 2007 and 2008 that it hopes to sell through bilateral contracts or in future auctions, Duke said in the statement. The government is planning to hold a second existing power auction for the end of March 2005. "We reduced the amount of power we would have liked to sell because of low prices," the statement said. The company has previously said that investments in new power generation capacity are on hold because of market and regulatory uncertainties. Duke Energy bought Paranapanema from São Paulo state in a 1999 privatization and has so far invested US$1bn in Brazil.