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SAO PAULO, Feb 25 (Reuters) - Eletropaulo Metropolitana Eletricidade de São Paulo SA, Brazil's largest power distributor, reported a smaller than expected 73.3 million reais ($31.32 million) loss in the fourth quarter as a drop in operating expenses helped offset the impact of regulatory changes and higher energy costs.
Four analysts polled by Thomson Reuters had predicted a loss of 130.8 million reais, on average. Eletropaulo had posted a year-earlier net loss of 85.9 million reais.
Low rainfall has forced Brazilian power distributors to purchase costlier thermoelectric power to preserve reservoir levels, while the government reduced the tariff Eletropaulo could charge its customers in an effort to lower power rates and control inflation.
Eletropaulo was also ordered to provide a refund of 1.1 billion reais to end users, payment of which began in July last year and continues to impact the company's earnings.
Eletropaulo posted a 51 million reais loss before interest, tax, depreciation and amortization, weighed down mostly by costs related to the regulatory changes. Analysts polled had expected a 108.7 million reais loss.
The company posted a 34.6 million reais operational loss in the year-ago period.
Operating expenses in the period fell by 9.9 percent from the same quarter a year earlier, however, driven by a sharp drop in charges for electric grid and transmission usage.
Eletropaulo shares have lost about 34 percent of their value over the past 12 months on concerns over its financial outlook.
Still, the company said it plans to invest about 600 million reais in 2014, mostly on new substations, transmission lines and network maintenance.
Earlier on Tuesday Eletropaulo's board announced it would pay 69.011 million reais in dividends by the end of 2014.
$1 = 2.34 Brazilian reais Reporting by Asher Levine and Luciana Bruno; Editing by Stephen Coates