Large consumers could be treated as distributors

Energy intensive industries such as aluminum smelters could be treated as distributors in Brazil's new energy model being drawn up by the federal government, Luiz Pinguelli, the president of state energy holding Eletrobras, told BNamericas. "One hypothesis that is being discussed is that large consumers be treated as distributors," said Pinguelli, speaking at a seminar on the role of state-owned power companies in the new model. Being considered as a distributor would allow large consumers to buy energy at cheaper rates than if they were treated as industrial clients, he said. "In exchange, these companies might be obliged to fulfil investment or [meet] export-performance criteria," Pinguelli said. How energy-intensive users are included in the new model is the responsibility of the energy and mines ministry, the Eletrobras head said, adding that no definite rules have been outlined yet. Providing cheaper power suppliers to large consumers such as aluminum companies is important so that investors in those industries do not move to other countries where electric power is cheaper, he said. Local aluminum smelters Albras and Alumar - both located in north Brazil - are renegotiating a new supply contract with state power company Eletronorte, controlled by Eletrobras, which generates at the Tucurui plant in the northern state of Para. Their energy supply contracts are due for renewal at the start of next year. Albras wants to renew a 20-year contract at the same rate of US$12/MWh, and Alumar at US$22/MWh, both of which are considered to be subsidized rates. "We intend to increase the price paid by these companies," said Pinguelli, who would not give an exact figure of the increase or specify a deadline for the negotiations. Electric power accounts for 30% of the cost of making primary aluminum.