Minister defends separating generation, distribution companies

Brazil's mines and energy minister Dilma Rousseff has indicated that she wants to separate generation companies from distribution companies, reversing pledges made earlier this year, according to local press. Companies generating their own power often pay prices that are much higher than market prices, Rousseff told the Minas Gerais state industries federation. Rousseff said companies such as Cemig and Copel would have to spin off their generation and distribution assets into separate companies. "We won't allow a company to buy power at 150, 170 [reais/MWh] when energy is being produced for much less than that," Rousseff said. "The new model is designed to provide the lowest price, the lowest rate," she said. The Minas Gerais state government has long opposed spinning off its assets, and has so far refused to do so, incurring fines from power regulator Aneel. The state government argues that putting assets in separate companies would cost it an extra 80mn reais a year (today some US$28.2mn).