CORRECTED-UPDATE 1-Default on Brazil electricity market grows - traders
(Corrects headline to default instead of insolvency, corrects paragraphs 1 and 7 to default instead of insolvency. Translation error.)
By Luciano Costa
SAO PAULO, Sept 29 (Reuters) - Default on the Brazilian electric energy market has spread to critical levels, energy traders said on Tuesday, as hydroelectric generators balk at hefty bills for which the local regulator says they are on the hook.
After nearly two years of drought and long delays in completion of new generation projects such as large scale dams in the Amazon, Brazil's hydro generators have been unable to produce enough electricity to cover their supply contracts.
And the energy market regulator Aneel said they must buy energy on the spot market to cover their commitments.
Conditions on Brazil's energy markets continue to deteriorate due to a growing number of hydroelectric companies that have secured court injunctions exempting them from paying these additional costs for costly spot energy, local energy traders said.
The CCEE is next due to settle accounts between buyers and sellers of energy again on Oct. 14-15.
Cristopher Vlavianos, president of energy trader Comerc, said 80 percent to 90 percent of the expected 5 billion reais ($1.2 billion) settlement coming due will not be paid because of financial distress among such hydropower producers.
"If you have default of this size, whoever has credit (for supplying energy) will not be paid," said Vlavianos. Continuación...